I'm not a business analyst and am barely even conversant in the mysterious ways of the "markets", but I do know that if I were a Yahoo! share-holder that I'd be voting to approve the proxy-bid for YAHO stock by MSFT. The reason is simple: Yahoo! and MSN have focused on DEVELOPING content while Google has focused on DELIVERING content. The "War of the Web" boils down to who can drive the most traffic through their site(s). Despite the fact that developing content will draw people, it cannot necessarily beat the delivery mechanism which allows content developed by anyone to be distributed to everyone -- its a marketing problem, at its most fundamental level.
Developing content is a complicated and costly business. I won't even try to act like I know what it takes when you're talking about the scale that Yahoo! and MSN do it, but even from my layman's perspective its rife with pitfalls: targeting the right audience, maintaining relevancy, factual accuracy, staffing, multi-media, etc... its a staggering number of hurdles, all of which have to come together in just the right way to make any real significant impact on an already crowded space.
Conversely, Google is simply a platform upon which others develop content (think here search rankings, news aggregation, etc.) and then the masses decide which of it is really worth having. Its very probably just as complex as developing content, but in a different, more achievable way, and it is proving to be dramatically less costly (compare the head-count of a combined MSFT & YAHO vs. GOOG... staggering!)
Google, in effect, has an army of content developers who are all eager to get their content out through the Google Machine, to generate their own revenue. YaMSN can't compete with that. Its like ants against grass-hoppers: sure grass-hoppers are bigger, but there are a billion ants to every grasshopper.
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