Microsoft plus Yahoo equals what?

A year ago the rumor mill was abuzz about the possibility of Microsoft buying Yahoo! And for a pretty good amount of money - Yahoo's stock price went from $19 per share to over $30 in 1 day.
Ultimately, Microsoft didn't bite.

Turns out, they didn't have to.

They just reached a deal in which Microsoft will provide search results for Yahoo. So, when you go to Yahoo to search (instead of Google...) you will get the same results as if you went to Microsoft's own search page, the newly-minted "Bing".

Yahoo doesn't have to spend money working on search results. They will pretty-much be maintaining servers that will distribute info Microsoft gives them. This makes Yahoo's job easier. Much like you getting in a taxi to go somewhere, rather than driving yourself.

In return for the privilege to put their results on Yahoo's page, Microsoft will give 88% of the revenue made from the ads on the Yahoo search pages.

So, Yahoo is getting paid to do put up Microsoft's info. They are like an employee now. Perhaps the best way to think of Yahoo now is "call forwarding" to Microsoft.

Operationally, it shouldn't cost Microsoft much at all to hold up there end of the deal. They do the usual tweaking to improve results, and merely send them to Yahoo. They are going to pay some upfront money to Yahoo, and hire some of Yahoo's no-longer-needed search programmers.

So, there are many people who do their searching by going to Yahoo.com and now, they will be Microsoft users. And without Microsoft shelling out the mega-millions.

But does this really make sense for either side? It gives Microsoft a larger slice of the search market, but without their name on it, who would know/care. (granted, it might say "powered by Microsoft on the page somewhere, but again, who cares?) This is like a person thinking they are important because their brother scored a touchdown. Even if they did fully combine, they would only make up 1/4 of the total searches, compared to Google's 60+%.

For Yahoo, it has given up it's main reason for existence. It is letting someone else do it's work for them. The company (hopefully) will brig in a steady stream of revenue from Microsoft, and their day-to-day expenses will be lower. The shareholder's should get a steady, small, and boring dividend. But what about future growth?!? I'd say that is out the window. At least independently, Yahoo might've come up with something new, but now their search innovation is all in the hands of Microsoft.

So, Microsoft isn't gaining much, but it isn't costing much. Yahoo is retiring & collecting a steady pension check. Google probably is the real winner, by losing a potential innovation challenger, and not having to spend a dime.