Well, it’s finally happened. After a big dip in the markets, and Yahoo ready to layoff 1,000 employees, Microsoft made its move and offered $44.6 billion for Yahoo. That’s Microsoft biggest bet yet, that the Internet advertising business is a large part of their future. Remember they spent $6 billion not long ago to buy Aquantive. So just those two now represent a $50 billion investment in online ads, search engine marketing, and online marketing by MS.

You’re probably thinking that this is a bid, not a done deal, which it is. I’m talking like it’s a done deal because it will be – there is no way that the shareholders will turn this premium done, and there is no one else out there (save Google), who can beat this bid. And the anti-trust hurdles aren’t there because it’s Google that needs to worry about that nowadays, rather than MS.

So what does this mean? Well for one, MS has finally admitted that they can’t build a significant enough search and online ad business because they are a band of techies who build software. And Yahoo, who is floundering because they depend more on display ads and portal content (like a media company), needs more Goog-like technical savvy. Does this mean it will work to catch Google? Only time will tell for sure, but I for one don’t think so. The culture and mentality is too different. Googles need to be built by tech guys who ALL know they are in the advertising and media business.

Certainly, Microsoft and Yahoo will both continue to do reasonably well, given the growth in online ads, search engine marketing and online media. But as for knocking down the big dog in this space – no.

I am hopeful that the combination will make the industry more competitive. Online ad pricing is starting to get expensive, and less effective. More competition will keep innovation up and costs down.