Agreed. Something should be done to level the playing field a bit. Google's way too cozy up there. But Microsoft buying Yahoo is not the solution I think. Microsoft (like what everyone said) should invest its money more on improving their SE services.
It is not just about money, it is about coordination, development, deployment, so on and so forth and also the vision of their leaders, you can dump in 100 000 software engineers and nothing will come out of it.
i think the main factor why google is such a great success is it has a great start and was the main search engine when people need to do searches on the net. It is very difficult for any company, no matter how big to overtake google as everyone is just to used to google as a search engine.