So all it requires is the MSN search improve it's algorithms so the results are roughly equivalent to Google. So far competing with Google circa 2000 appears to be too difficult for MS. Search has long been integrated with IE and people still use Google. Your problem is that Google isn't in the search business. Google is in the knowledge business. People make that mistake all the time. As far as Google goes, the game is theirs to lose. MS is competing on too many fronts to be effective at any one of them. And many of the fronts they now compete in their monopolies in Office and the OS do them no good as they cannot link access to the OS to the success in the marketplace.(See XBOX, Internet Search etc)
The Gathering Storm: Waiting For the Microsoft Beat Down