Carl Icahn, the famous activist investor, resigned from the Yahoo! (NASDAQ: YHOO) board of directors Friday.

This comes just over a year after he scored the position, following the seemingly endless talks the company had with Microsoft (NASDAQ: MSFT) over the possibility of a takeover. Icahn told Yahoo that he was resigning effective immediately because Yahoo! didn't need an activist investor on the board at this time.

Microsoft (NASDAQ: MSFT) isn't planning to acquire its way into the search engine market. The company's CEO, Steve Ballmer, told Reuters that the company would invest in marketing and hopefully complete a partnership with Yahoo! (NASDAQ: YHOO) that is currently involved in a regulatory review. The goal, of course, is to provide at least meaningful competition to search giant and dominant market player Google (NASDAQ: GOOG).

Expect growth to slow a bit for Microsoft, Ballmer says, as a result of global economic developments. In order to cope with this -- and gear up for a potential battle with Google -- the company has frozen its R&D budget of $9.5 billion, the largest in the industry. With that and a $31.4 billion cash and cash equivalent position, Microsoft certainly has the resources to do battle.

Microsoft's (NASDAQ: MSFT) Bing picked up another percentage point of the U.S. search market share in July, bringing the combined Microsoft-Yahoo! hold on the market to 20.36%. StatCounter, which measures and reports internet statistics, puts Bing's search engine market share at 9.41% of the U.S. market, up from 8.23% in June.

The up-tick in Microsoft's performance comes at the expense of Google's. The search engine giant saw its search market share fall from 78.48% to 77.54% in July, according to StatCounter.

Though time is on Microsoft Corp. (NASDAQ: MSFT)'s side in its $44.6 billion unsolicited takeover battle for Yahoo! Inc., (NASDAQ: YHOO), that doesn't necessarily mean it will win the war.

The world's largest software company late Monday said -- predictably -- it was disappointed that Yahoo "has not embraced our full and fair proposal to combine our companies" and that it was "confident that moving forward promptly to consummate a transaction is in the best interests of all parties.''

You didn't have to be psychic to see that coming.

But Yahoo co-founder and chief executive Jerry Yang isn't stupid. Microsoft, like News Corp (NYSE: NWS) in its pursuit of Dow Jones & Co. is an uneconomic buyer of Yahoo. Steve Ballmer wants to make sure that Yahoo doesn't fall into the hands of the either Google Inc. (NASDAQ: GOOG) or a media conglomerate such as Time Warner Inc. (NYSE: TWX), parent company of AOL. He has already pledged to pay a 62% premium for a company that many on Wall Street believe has seen its best days.