Obviously Microsoft must be crying in their soup over this. Angry incompetent people crying in their soup. Paul Kedrosky is right when he says this will probably push Microsoft to try and buy Yahoo. That's their brand of flailing.
Yahoo, on the other hand, could be a more solid #2 option if they had more inventory. They already lead in brand ads, display ads and behavioural targeting. I hope Yahoo rebuffs Microsoft somehow, yet manages to convince Gates that Yahoo should run Microsoft's online business.
If Yahoo had Microsoft search inventory back, and they got some good chunk of MSN properties, they'd be a place to spend a good chunk of money no matter what Google did.
The advertising world craves an alternative to Google. Microsoft cannot fulfill an anti-monopolistic craving. Yahoo could be it, but Yahoo and Microsoft alone are not going to beat Google standing separately, and as I said years ago, the only winner when their inventory is split up is Google.
Since Microsoft is incompetent at all things internet and ad related, it would be a DISASTER if they bought Yahoo. However, there's no reason for them not to let Yahoo run their online ad world. (Save for the ego aspect - which hopefully goes away when Ballmer is fired.)
Therefore, the ONLY HOPE for Microsoft is:
That's my optimistic hope - somehow Yahoo emerges with Microsoft's inventory. And NOT as a subsidiary of Microsoft.
The blogs and internet journalists haven't really broken down DoubleClick and detailed exactly what Google is getting here. The most important thing that people aren't talking about is the DoubleClick Advertising Exchange (adx).
Buyers / sellers don't have to worry about payment from the other side of the transaction (DoubleClick guarantees payments for inventory sold through the system.) This is a huge advantage, and fits great with Google's ability to get AdWords users to participate by offering free imperial credits (a la Google Checkout) to AdWords customers.
Along with the overall display advertising market share, it's the exchange which dovetails so nicely with Google. It's something they need, and Google's eco-system and technology will enhance it. (BTW, someone's now got to buy RightMedia - though Yahoo owns a chunk (~10%) already...)
PS. Another point that few people seem to have remarked on:
Google and DoubleClick are in
essentially the same building in NYC. Good for integration until the closing in December (!), n'est ce pas?