If Microsoft offed a system like Adsense I bet it would be the end of Google. Microsoft is one of the most powerful companies in the world and of course the one that makes the most money too.
They could pay insane amounts to people when somebody clicks on their ads, where Google pays only $0.05, Microsoft could pay up to $0.50 per single click!
I bet Adsense publisher would quickly migrate to Microsoft. The only problem is that Microsoft expertise is making operating systems and the search for them is just an extra. Google business is search and is Microsoft strikes with more employee research a better search system, I think Google would employ insane number of engineers to keep their current search share and to maintain their advertising share.
However Google forgets that Microsoft us an "old" company that has more know how about computers than any other company on earth so if Microsoft really wants to beat Google I bet they will do. I think Microsoft problem so far is the risk the are not willing to take. They should invest a lot more money in research and development of a new search engine. They can make big money here so I can't see why are they so afraid, after all it's Microsoft!
I bet they will release their own Adsense too.
I put Google ad-sense on my blog (http://originalwavelength.blogspot.com/) last month. Don't know yet how it works.
Do you have any experience of how lucrative ad-sense is in real life?