Y! is a publicly traded company. the Y! board will have to convince its shareholders that the offer is against the company's best interests. the directors are unlikely to succeed in the current economic climate, and will likely face a lawsuit from at least some their shareholders if they try. Y! will probably accept a sweetened offer, as they have no other options.
MS is publicly held as well, and i am certain that some of their shareholders will want to sue to block the deal, as it will add very little to what MS already does; will cost a huge sum (which the shareholders will likely want distributed as a dividend instead); will be subject to extensive antitrust review, which will likely fail in EU, and maybe in the US as well (though MS owns many politicians here); and will present an ugly integration and migration challenge, for a modest return.
i have yet to see a single compelling argument in favor of this deal, so my conclusion is that The Ballmer really pushed out a cockatrice' egg this time: the worst that can happen to MS is that the deal goes through. move on, people, BillG is gone, nothing further to see here...