Battle of the Toolbars
Yahoo!'s widely acclaimed toolbar, has been used as a medium to promote itself. No doubt, Google has done the same thing. But, what makes the Yahoo! toolbar different? Sometimes, installing the Yahoo! toolbar doesn't mean you are only installing the toolbar itself. It will make itself feel at home (by changing numerous settings, since by installing the toolbar, the toolbar assumes you have given it a right to modify certain settings). Sometimes, before it changes something, it will give a rather ambiguous message prompt that sounds rather urgent, prompting you to click on the most favorable button (usually the "yes" button). The toolbar may attempt to change your homepage (a very common tactic, Yahoo! [does this sneakily], Google [prompts you if you want to change it], and Norton [in an attempt to "protect" you] does this). Did I mention that it is kind of difficult to disable the Yahoo! toolbar?
You are much better off having Google toolbar installed, since it provides whatever Yahoo! toolbar provides, with the exception of the massive configuration done to your browser. A bonus the Google toolbar has is the "page rank" tool. By the way, if you are thinking of installing the Yahoo! and Google toolbars together, please don't, since those two toolbars react strangely to one another.
"Upgrade to Internet Explorer 7" campaign
Yahoo! actively promotes Microsoft's Internet Explorer 7 (but they don't do the install for you), which is evident here. Google on the other hand, promotes both Firefox (there is a special toolbar made to support it) and Internet Explorer (they have an "optimized" version of Internet Explorer 7). Yahoo! states that Internet Explorer is "safe". Tell me, if it is "safe", would it allow another plugin to change its homepage actively? Firefox don't do that, but Internet Explorer do. Ever wondered why the Yahoo! toolbar doesn't work well on Firefox?
There are also theoretical reasons as to why Yahoo! feels that Google is becoming a larger threat to its popularity.
Most visited sites
Years ago, Yahoo! remained as one of the top 10 most visited sites in the internet. Now, with Google in the picture, Yahoo!'s status of being the most visited website in the world is going to be the thing of the past. There are several reasons as to why more people are preferring Google to Yahoo!.
Google's easier to load
Users using a slow internet connection speed may want to view pages that load quickly (just like Google's homepage). Thus, Google is at an advantage here.
Google supports open-source projects
Most major companies may not even bother in indulging into open-source projects (this includes homebrew). Google is not one of them. Hence, Google actively supports developers and the like, by giving support to them, providing service APIs to them, etc. That is why you can see Google sometimes promoting Firefox, and Firefox promoting Google (Firefox's default browser homepage is an affiliate of Google). Though, Yahoo! would soon follow suit.
Google's services are just better
A known example is the Google Mail (GMail) versus Yahoo! mail. There are more people using GMail, in preference to Yahoo! mail. Why?
GMail has 2.8GB and counting (and it increases every day) of storage, while Yahoo! mail has 1GB of storage space (2GB if you pay). GMail has about almost every other feature Yahoo! mail has, except more. GMail has an inactivity period of 9 months (the account is labeled as dormant after 6 months, and is deleted after 3 months after the account is labeled as dormant), while Yahoo! has an inactivity period of 4 months.
Another service worth mentioning is the Yahoo! search versus Google search. Google search covers the most updated sites, and those sites not updated in months are pushed down by other sites that are more frequently updated. Yahoo! on the other hand, still show (blank) pages that are even not updated in a year, and still can show it on the top search results. Google also brings in most of a site's traffic, while Yahoo! brings in a much smaller amount.
Well, after all, the internet wars are still not over yet."