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NEW YORK (CNNMoney.com) – Few remember who won the bronze medal in a race.

So for Microsoft (Research) and its MSN Internet unit, playing third fiddle to Google (Research) and Yahoo! (Research) in Internet search is an uncomfortable position to be in, especially for a company accustomed to domination.

And now that AOL has spurned a deal to use MSN's search technology in favor of expanding its relationship with Google, many analysts wonder what, if anything, MSN can do to close the gap.

If MSN had been able to seal a partnership with Time Warner's AOL, many thought that would have made MSN a much stronger presence in search while also dealing a blow to Google. AOL accounts for 10 percent of Google's revenues. (Time Warner (Research) also owns CNNMoney.com.)

Without AOL, some think Microsoft may be forced to make an acquisition to remain competitive.

"Microsoft, with the amount of cash they have, is certainly not going to concede search to Google and Yahoo! They can certainly go after other companies," said Roger Aguinaldo, editor of The M&A Advisor, a newsletter focused on mergers and acquisitions.

With more than $40 billion in cash as of the end of September, Microsoft could pretty much afford anything it wants. But what should Microsoft buy?

There aren't many publicly traded search-related companies left, save for Miva (Research), formerly known as FindWhat.com, Answers Corp. (Research) and LookSmart (Research), which MSN used to have a partnership with.

And none of these firms are big enough to make a difference for Microsoft. Analysts say an MSN-Ask Jeeves combination could have been interesting, but Ask Jeeves has been scooped up by Barry Diller's IAC/InterActive (Research).

Some analysts said that MSN might be better off looking at newer, more innovative areas of search, such as audio and video search.

To that end, some say that one of the main reasons that AOL has enjoyed a comeback is due to the video and audio content it has been able to make available for users following its acquisition two years ago of multimedia search firm Singingfish. Google and Yahoo! have already introduced their own video search tools as well.

"The big gap is in rich media search -- Microsoft will need to acquire there," said Allen Weiner, research director with Gartner. "Microsoft needs a Singingfish. That's where all the money is going to be."

Weiner added that private video search firms such as blinkx and TVEyes could be a good fit for MSN.

But not everyone is convinced that Microsoft should make an acquisition. Scott Kessler, an Internet analyst with Standard & Poor's, said that MSN might want to strike a partnership with Time Warner media rival, News Corp. (Research)

News Corp. has rapidly built up its Fox Interactive Media division through a series of acquisitions, most notably its purchase of Intermix, which owns the popular social networking site MySpace. News Corp. CEO Rupert Murdoch has hinted however that he might want to buy his own search company.

"The wildcard in this process is Fox. AOL was so coveted by MSN because of the traffic it generates," said Kessler. "MySpace accounts for a huge amount of online traffic and page views and that's largely what contributes to demand for advertising."

David Garrity, director of research with Investec US, said that Microsoft might be best off expanding its current partnership with Yahoo!, which provides search listings to MSN in a deal that ends in June 2006.

Microsoft has already agreed to make its instant messenger product compatible with Yahoo!'s IM service to more effectively compete with AOL and Google. So an even closer alliance with Yahoo! would not be out of the question.

And Garrity said that if MSN aligned itself with Yahoo!, it might be able to get more people to use the Windows Live service that it is currently testing.

Windows Live, an online extension of the company's operating system and office suite of software, will largely be free and supported by advertising revenue and is expected to be a key area of new growth for Microsoft. Garrity argues that Windows Live would benefit from Yahoo!'s promotion.

One influential search analyst thinks that those who doubt Microsoft's ability to become a bigger player in search are underestimating the company.

Danny Sullivan, editor of SearchEngineWatch.com, said Microsoft doesn't have to change anything that it is doing since it clearly has taken steps to improve its search functions already.

MSN is currently testing a program called adCenter, which will allow advertisers to bid for keyword searches based on specific customer data such as age, gender and geographic location. And since the online ad market is booming, Sullivan thinks it's a mistake to think that only two companies will benefit from the growth.

"Microsoft didn't need the AOL deal to be successful, so I think that's being overplayed. When MSN opens up adCenter, I think advertisers will buy it," said Sullivan. "Search marketers can't get enough ad inventory. The money is there."

Why will Google falter in 2006? Click here.

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Analysts quoted in this story do not own shares of the companies mentioned and their firms have no investment banking relationships with the companies.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan.