Speculation based in part on an interview with Yahoo!'s Scott Moore (included in the article)
Here's my theory.
Search is a great business, but the fascination with it is starting to fade. Search is becoming a utility we take for granted; content is where the Web's sizzling now.
No wonder Google bought YouTube. Google's also creating content in the form of online productivity applications.
Meanwhile, Microsoft has cut back on content initiatives and focused on building its search business.
Content has always been Yahoo!'s strength, but it doesn't have applications to respond to Google's new thrust. A partnership could fill these gaps, without sacrificing their franchises.
Source: Business & Technology | MSN, Yahoo! partnership envisioned | Seattle Times Newspaper
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