From leaks last evening, it is sounding like the Microsoft/Yahoo search deal is done, as I’d suggested in an earlier post. Combined, the Yahoo and Microsoft search business will command 30% market share of search – a credible number 2. There is still, what I would term, a lack of clarity around core product focus at both MSFT and YHOO. Yahoo, as the world’s largest portal is really a media company. So jettisoning the search technology, to focus on ad sales makes sense. And Microsoft, at heart, is a technology company. Yet, Wallpaper, Microsoft’s Lloyd Braun led entertainment initiative, and the MSN portal, competes with Yahoo’s core strengths, and doesn’t really fit in with Microsoft’s culture. I believe aligning certain portal properties, along with merging Hotmail and Yahoo Mail’s resources, is the next step in the consummation of this merger/Yahoo acquisition. Perhaps both MSFT and YHOO’s antitrust counsel have suggested taking iterative approaches to an overall alignment is the most efficient means of completing to an inevitable partnership. This would allow allow the respective businesses to move forward without being tied up in procedural hearings that only serve to strengthen competitors. We will see what’s next!