A Microsoft acquisition looked attractive, but I would argue that a Google acquisition would be far better for both.
Google would foster a culture totally different from Yahoo's, and at the same time thrill the existing Yahoo employees - which means they would stick around. So much opportunity for both.
Microsoft is a great company, but their online businesses are losing money like crazy, and I suspect that many Yahooers would not be super excited about joining Microsoft.
What would Google gain from acquiring Yahoo? Yahoo has little search technology of its own and many services that overlap with existing Google services.
I think Yahoo's properties (and users) might be a better fit with Facebook.
Why would Google buy Yahoo so that Yahoo could obtain Google's talent? There is no way Google would water down its engineering pool with Yahoo's engineering staff.
You are right. The FCC does also approve some mergers, but those are mostly for telecoms. I think Google-Yahoo would fall under FTC jurisdiction (as well as the department of justice).
Google would foster a culture totally different from Yahoo's, and at the same time thrill the existing Yahoo employees - which means they would stick around. So much opportunity for both.
Microsoft is a great company, but their online businesses are losing money like crazy, and I suspect that many Yahooers would not be super excited about joining Microsoft.