If by "good business" you mean "good for the business that attains monopoly status," then yes, it is.  It's not good for the consumer, though.  It leads to stagnation through the lack of competition, and to exploitation.  That's why the government made it illegal.  Capitalism is supposed to be about the betterment of both individuals and society as a whole through competition and the consumer's freedom of choice, not about a few powerful individuals forcing their wishes upon the public.  (The United States fought a war to be free of that way of life, and quickly learned that businessmen could be almost as bad as kings, if we weren't careful...)

Why should I be worried about Microsoft in the first place? Admittedly I really don't know their history or anything but uh, I really don't think they're a threat to anything other than their business rivals.

Hoo boy.  Where to begin?  If you study their history a bit, a different pattern will emerge.  And right now they're at the forefront of the development of one of the most dangerous technological "advances" of our age, called "trusted computing."  It's being advertised as a way to make your computer more secure by using hardware-based strong encryption, but analysts who look at it say its most obvious uses are creating a truly secure DRM system that can't be cracked, promoting vendor lock-in, allowing programmers to remote-control their programs on your computer, and using a "trust certification" system to stifle the growth of open-source software.

The remote-control ability is particularly frightening.  You won't be in charge of your own computer anymore.  If someone writes a Word document containing stuff that Microsoft (or some government or rich individual that Microsoft's friendly with) doesn't like, they'll be able to remotely command Word over the Internet to not open that document anymore, and nobody will ever be able to read it again.  And if a virus ever makes it through the trust certification process somehow, and gains more trusted access to your system than your anti-virus software... use your imagination.  (Which isn't as impossible as it sounds.  All it would take is one person planted in the right job by a business rival or foreign government.  Imagine this: 10 years from now, the President of Iran could well have two metaphorical "big red buttons on his desk."  One of them launches the missiles at the USA, the other activates the command to break all of our "trusted" computers.  Which one would end up doing more damage?  It's a toss-up, when you think about it...)

Far-fetched, perhaps, but possible.  Ten years ago, the idea of using a commercial airliner as a flying bomb to blow up a building was the stuff of fiction, straight out of a Tom Clancy novel.  Then someone actually did it.  We live in "far-fetched" times...

I mean, what does even TC have to do with the issue of Microsoft buying Yahoo!

Nothing, really.  That got off-topic.  Someone said Microsoft isn't a threat to anyone but their own business rivals, and I explained why that's not true.  But anyone who thinks that my statement regarding the potential that TC has to endanger us is a "crazy exaggeration" needs to spend a bit of time examining computer security reports.  Look at what people are already starting to accomplish with ordinary, non-trusted viruses and worms that the user is still able to deal with relatively easily.  Then just imagine the computer trusting the virus more than it trusts the user.  That's what "trusted computing" does.  It obeys the program instead of the owner.  Once you let local control out of your hands, it's impossible to know whose hands it will end up in.

Is it unlikely that something that bad will end up happening?  Yeah, probably.  Will it ever happen?  I certainly hope not.  Impossible? Wild? Crazy?  Not in the slightest, unfortunately.