Lots of stories in the news today about the proposed Yahsoft/Microhoo takeover and even some folks pondering if Google is now in real big trouble. My guess is the folks at Google are cheering today. My take is that Microsoft is admitting defeat by trying to buy there way out of it. Yahoo! has been scuffling of late and has never been a better deal, but is putting two companies together that can’t really figure out how to compete with Google going to make one company that can?

Why do companies continue to believe that If you put two dogs together you get a pony? ~ Jon Fine, Business Week media columnist

My fear is that Yahoo! will fight this (heck, Google may help them) and the bid may go up if someone like AT&T jumps in, but no way this deal gets done in under a year. That will likely mean that Yahoo and Microsoft both drift while trying to put this together and Google’s position in both of their businesses gets stronger. I’m not even factoring in the massive amount of effort it would take to actually merge these companies. I’m really surprised how few people in the media took this position.

Now, having said all that, I don’t know if a stronger Google is really a good thing, but I think this move by Microsoft may actually benefit Google more in the long run.