"Expect a full-court press with all of Microsoft's new government resources focused on this deal," he said. "Because Google is so large, they are vulnerable. This could be a tipping point for Google where the DOJ or FCC could be worried enough about them to start investigating them and clearly the announcement anticipates that."
Despite the competition issues, Enderle believes the decision will be good for the company in the long term, but will hurt it in any future proxy fights.
"Ironically, this is likely what Yahoo should have done some time ago, but it showcases the failure of the current administration and this is a really bad time for that," he said.
TechCrunch editor Michael Arrington, who broke the story ahead of the official announcement today, believes the deal makes Yahoo less competitive, not more.
"Outsourcing their business in this way, even though it looks like it's going to start small and move up — it really gets them out of the search marketing game entirely and they'll never be able to move up in that world now," he said.
Arrington takes issue with the deal for a whole other reason: He believes it harms the Internet.
"Handing Google or any provider a search market monopoly is bad for the Internet because so much money flows through search," Arrington said, noting that many small businesses use Google ads on their site to stay in business.
"Without real competition Google will keep the monster share of that revenue and give out just enough to get people to agree to it. With Microsoft and Yahoo competing for those publishers, those margins tend to shrink. I think it's really, really bad for the no. 1 and 2 players to combine in this way."