Wouldn’t a Microsoft/Yahoo melding in the end be good for Google? As things stand now, Yahoo is a valid alternative to Google at least partially based on the company’s hip origins and faintly Google-like approach to customer service. Yahoo is overcommercialized, of course, and is somewhat annoying to use, but it does have the most fun IM program. [BUZZ!] And, of course, it isn’t Microsoft.

Once Yahoo is Microsoft, however, Google will have one major competitor—and an easy-to-dislike one. So why is Google helping Yahoo out in its squirming maneuverings to stay out of Redmond’s clutches?

The latest NY Times story on the negotiations is here; WSJ’s ($) is here. Basically, two Microsoft -imposed deadlines—one last weekend, and another Wednesday—have passed, leading to Hamlet references in the press, like this WSJ blog item:

The Microsoft-Yahoo saga is taking on a Shakespearean feel—to buy, or not to buy.

Microsoft’s board met Wednesday […] and failed to come to a decision. The big question weighing on what Microsoft’s next move will be is how badly does its CEO Steve Ballmer want Yahoo.

As of this writing, Ballmer’s options seemed to be either launching a full-on hostile takeover bid, which would alienate some Yahoo staffers whose goodwill the company would surely need in a takeover, or undertaking a longer-range plan to try to suborn the company from within by nominating and electing new boardmembers.

This far, in response, Yahoo has been dutifully noting that it was not opposed to a sale to Microsoft, though at a significant premium over the $29 a share price now on the table. In the meantime, it has been trying to work with AOL and Google to come up with some sort of alternative arrangement.

Yahoo is a public company and has to live life as a public company, and if Microsoft can convince Yahoo’s stockholders to sell, well, it gets to buy it. But on an entirely extra-economic level it’s worth noting how surpassingly lame an operation Microsoft is at this point. It tried to start its own search engine—and failed. It tried to go up against the iPod—and failed. Through the brute-force moves of bundling its services with most computers sold in the U.S. it managed to make MSN and MSN Messenger factors, but neither has a raison d’etre. The company’s solution? Buy the competition.
That would leave Google; couldn’t the company then just watch, as the customer experience of Microsoft’s online services heightened the contradictions, so to speak? Or is the potential amassed advertising power combined with its inherent advantage as the producer of Windows too much to contemplate even for Google?