"My take is that of course the Big 3 (I think we can discount AOL from this level of competition) have a very similar product line - because they're all building 'portals'. It may not be currently fashionable to call them portals, but basically Google, Yahoo! and Microsoft are all trying to integrate products and services into one-stop shops for their millions of users."
I have to agree - they are all building portals in an effort to lure eyeballs. Google has the best advertising mechanisms in place (and great search), Yahoo has the best media tie ins. I have not played much with MSN, but with my knowledge of Microsoft they are probably pretty good at acting as glue between existing services.
If I had to pick one that is in the best position, I would say Yahoo. They are willing to partner with people (something Google is not), not viewed as an evil empire (like Microsoft, and slowly Google), and have been working on the whole portal thing for a long time. There is nothing saying the Yahoo will not go down the roads of either of these companies in the future, but right now that is my take.