Deal could turn up the heat on Google to do likewise

— -- A potential tag team of Yahoo-Microsoft, who have played second fiddle to Google in the search and online ads, will surely intensify pressure on Google, possibly forcing it to counter through an acquisition, says Allen Weiner, an analyst at Gartner.

AOL, for instance, would fit nicely into Google, says Shahid Khan, tech industry analyst at IBB Consulting. AOL could bring a herd of loyal e-mail and instant message users, supplementing Google's lightly used offerings. "This puts pressure on Google to make its online offerings, other than search, more appealing to the masses and not just to techies," Khan says.

Brad Smith, Microsoft's general counsel, issued a statement Sunday refuting Google's protests. A Microsoft-Yahoo tie up would "create a more competitive marketplace," says Smith. Scenarios that do not include the proposed merger "only lead to less competition on the Internet," he says.

Google's share of Internet searches is more than 60% in the USA — about twice the combined total of Yahoo and Microsoft, according to ComScore MediaMetrix. And Google commands 78% of worldwide search advertising revenue, worth $11.5 billion a year. Yahoo has 11%, worth $1.6 billion, says Jeffrey Lindsay, analyst at Sanford C. Bernstein.

Even where Yahoo-Microsoft enjoys a competitive advantage, it could be short-lived. Google has 1% of the U.S. online ad-display market, compared with more than 25% for Yahoo and Microsoft, according to ComScore. But Google's pending $3.1 billion acquisition of display-ad network DoubleClick could close the gap, analyst Lindsay says.