Fresh out of the news this morning:

The AP reports that: “The chief executives of Microsoft Corp. (MSFT) and Yahoo met recently to discuss possible business deals, news reports said Friday. Under one possible scenario, Microsoft would sell Yahoo's search ads while Yahoo would manage Microsoft's display ads.”

Here we go again. The last few times around we thought great things would come from a possible merger or acquisition between the number 2 and number 3 player in search marketing. But alas, Yahoo and Microsoft could not get it together and no deal was formed.

Since then, I've been watching the market share statistics and Google has climbed from 85% market share to 90% of all search volume. If that's not approaching a monopoly, I'm not sure what is. Furthermore, if this is not a signal to Yahoo and Microsoft that something drastic needs to be done to boost their positions, they need to be hit on the head.

My take is that Microsoft and Yahoo should merge. While most normal markets operate efficiently with three big leaders (McDonalds / Burger King / Wendy's, GM / Ford / Chrysler), the Internet is still the Wild West. For some reason the "Law of three" has not taken hold. So for now, I'm thinking that two is better than one - and that they should join forces to mount some type of significant challenge to Google.

Don't get me wrong. I think Google is the best company I've seen in a long time. I love what their software can do and am continually amazed by their innovations. But my business sense tells me that monopolies are never good, even if your corporate motto is "do no evil" (or whatever it really is). The fact remains that Google is a for-profit corporation that is accountable to it's share holders. Period. There is no better regulator than competition in an efficient market.