Microsoft and Yahoo! have reached and accord. This accord will benefit both in some interesting ways. Yahoo will use Microsoft servers for their search functions and Yahoo! will handle the display ads.
This combination should have some excellent benefits for both of these companies as they try to catch up with Google.
Originally the idea was for Yahoo to be purchased by Microsoft. However, due to some bad management decisions by the CEO at the time the acquisition never took place. Instead there is just the agreement to work closely together.
Of course, there is always the possibility that someone will try to claim that MS and Yahoo are anti-competitive after all; it is only Apple and Google that are allowed to behave like that.