To be fair, I think Microsoft would have also fumbled Yahoo at the time.

This was the era of Vista and IE and windows live/hotmail. My maybe-controversial(?) opinion is they just would have MSNd Yahoo in some directionless brand “synergy” at a time where Microsoft still seemed to be figuring out what its own future identity/company vision would be.

I think Yahoo knew that. And while Yahoo had many of the same challenges internally at the time (which it eventually succumbed too, whereas there was no clear consensus that Microsoft would successfully reinvent itself), at least it was in control of its own destiny