John Battelle is hoping Yahoo and MSN combine forces to provide a legitimate answer to Google.  I've also been among those who believe Microsoft should buy Yahoo and then face Google (after developing some additional products/platforms).

"… I no longer think Microsoft should spin out LiveSoft, nor do I think it should buy Yahoo. Instead, it should roll out a new company that focuses on one thing: Search monetization. But it shouldn't do it alone. Instead, it should be a joint venture with Yahoo. "

"…..both companies bring a lot to the table. Yahoo did a great job combining several engines into one solid organic search performer, and early reports on Panama are also solid. Microsoft has an innovative approach in its demographically-driven AdCenter. Both companies have significant traffic of good intent. For building search companies, Yahoo is in the right location. Microsoft has huge market cap and cash. Both need to do something, quickly, to prove to Wall St. that they can compete with King Google. "

"…

The new company, let's call it Soverture, is owned 50% by each party. Each party also throws in - and this is very important - a long term (ten years?) contract binding it to using Soverture's services in both direct search monetization (AdWords) and across its properties where it has a syndication play (Facebook, eBay international, etc.). Top talent is assigned into the company, and it's located in the Valley, so recruitment is easier. "

I'm not seeing John's idea as doable - it would take too long to set up a joint venture and make it workable - maybe 9 months to a year to release it's first line of code. 

I like the idea of a viable alternative to Google though…