Bigger isn't necessarily better. The failure of MSN and Yahoo to compete with Google was never a question of size; it was a failure to be quick and innovative.
Bigger usually doesn't make a company faster, and engineers working for MSN instead of Yahoo won't think any smarter or faster. The problem isn't money; it's brilliant minds.
Yahoo was working on a new system, which had to be delayed, and never went far.
Its YPN for ads is still (!) in Beta and still limited to the US. It is also still notoriously unable to serve up relevant ads because its targetting is awful.
Google Adsense got out of Beta years ago (or was it ever in Beta?); its ads are very relevant; and it's been international for a long time.
These Yahoo failures are mostly engineering failures (which poor leaders have allowed, by not replacing the engineers).
MSN's ad network isn't very impressive, either.
So who is going to get Yahoo ads into relevancy? Who will get it out of Beta? And when will it go international?
MSN needs a Steve Jobs, who turned Apple around by ideas and vision, e.g., the ipod.
What big new thing has ever come out of MSN in the last ten years?
Online MSN is in the similar sitation compared to Google as Apple is relative to MSFT--a small fraction of the market.
Unless and until MSN can poach or find the next Steve Jobs, or some hot shot from Google, its plans leave little cause for optimism.