While all eyes are still focused on Microsoft's proposed purchase of Yahoo!, Yahoo! has already made its first (real) acquisition of 2008 by picking up Israeli-based FoxyTunes, a Firefox plugin that allows you to control a variety of music players from your browser. This was a great purchase for Yahoo!; as I said yesterday, the new search engine battle is going to be for nearly everything but search itself—and music certainly falls into that category.
Yahoo! has a checkered history with music, despite music.yahoo.com drawing in a whopping 25 million uniques a month. Lovers of MusicMatch still can't forgive Yahoo! for what they did when they acquired the formerly-great player. Yahoo! seems to have since learned its lesson—as evidenced by their hands-off policy with Flickr—and I expect FoxyTunes to remain a great product and even improve under Yahoo! (especially if they add support for FineTune and Deezer). On a whole, especially with this acquisition, Yahoo! dominates the online music space, which makes them an even more attractive target for Microsoft.
On a side note, congratulations to the team behind FoxyTunes, many of whom I've met around Israel.