I have run ad campaigns on Adwords continuously for 7+ years. Throughout that time I have run ad campaigns on Yahoo, now Microsoft Adcenter, on and off. The last I checked their ad platform was about where Adwords was in 2005.
Yahoo had some very reprehensible things on their platform. I had to shut off all of my campaigns because someone at their company was changing what my ads said without my permission. Besides being a legal issue for Yahoo at the time, it put me in a position of unlimited liability. Fortunately, I never witnessed that behavior after Microsoft took over. Yet, Microsoft's platform was just too difficult to get working.
That was probably $5 million + in missed advertising revenue from me, just a tiny advertiser. I can only imagine the billions of dollars of revenue Microsoft and Yahoo lost for failing to take seriously the search advertising marketplace.
If you want search engine competition you have to take Google's Ad business away.
Its weird I know but Google's search ads pay $80 - $100 RPMs and other guys ads pay $30 RPMs. If Microsoft could use Google's ad network they would be a solid contributor to the bottom line of Microsoft (which is why they can't of course).
If you could magically peel that Ad network/agency into its own entity and require it to give non-discriminatory terms to everyone, I believe we would have a pretty vibrant search space. My reasoning there is that the money associated with search advertising would fall into buckets that were much more closely aligned with market share, as opposed to today where someone like Microsoft can have a large share of the search 'eyeballs' but only a fraction of the revenue because their Ads don't have the RPM numbers.