Cantor Fitzgerald analyst Derek Brown echoed that view, warning that a combined Microsoft-Yahoo runs the risk of falling even further behind Google, thanks to the sheer size, length, and complexity of the deal.

"We think the combined company could actually lose market share to Google and others over time," Brown said, "as product, infrastructure, and cultural integration challenges divert attention and resources from the critical areas of innovation and customer service."

Brown added that the "red tape, size, and bureaucracy" associated with the merger could "increase time-to-market for new products and services," and that he holds "little hope that a merged Microsoft-Yahoo entity would radically alter the current competitive landscape."

William Blair analyst Troy Mastin agreed that Google might secretly welcome the merger, or at least a protracted takeover battle, followed by a long regulatory review and an even lengthier integration process.

"It's a sound theory," Mastin said, adding that Google will be looking to cherry-pick discontented top Microsoft and Yahoo engineers, "who might be uncertain about what the merger will mean for them."

Even before the Microsoft offer, many Yahoo employees had been preparing their résumés after the company announced its intention to lay off about 1,000 people in job cuts that began today.

Publicly, Google has responded to Microsoft's offer by trying to delay the process, raising antitrust concerns and seeking to distract both Microsoft and Yahoo by floating Yahoo exit strategies. One idea: a potential search partnership with Google.

One day after Microsoft announced its offer, Google senior vice president David Drummond warned that Micosoft seeks "to establish proprietary monopolies" and urged regulators to "thoroughly" scrutinize the deal.