Personally, I think it means they’re positioning themselves to be able to do battle against Google effectively. Even Microsoft was quoted around the release of Bing as saying they weren’t competing against Google, but rather trying to steal the #2 spot from Yahoo. Neither was in a great spot to try and carve out market against Google before, but together they stand a better chance. In business terms, this should make it easier for them to build a better search engine collaboratively, by sharing parts of their search and database algorithms and using the best of each. It also streamlines advertising revenue now that it’s a revenue stream that will need to be combined (at least in part). It could be taken as Yahoo caving to Bing on the search engine front, but more likely I think that they’ve just decided to focus on other markets. Finally, in consumer terms, it may be a signal that more collaboration is on the way. Think Live Messenger + Yahoo IM (sort of like AIM+ICQ awhile back). Think Hotmail + Yahoo mail (where tools on one side can see users on the other). Any web apps that are unique to Yahoo may make their way over to Windows Live as well.