Yahoo–which has stuck to its guns by staying in the search business, even though many think it is a losing game and should be sold off to Microsoft–has lost a key engineer in that arena to, uh-oh, Microsoft.

Sean Suchter, the VP of Search Technology at Yahoo, was also deeply involved in Yahoo’s efforts to open up its search platform, initiatives the company has touted aggressively as a bright spot in its not-so-lustrous landscape.

The departure of Suchter–who came to Yahoo (YHOO) almost six years ago after it acquired Inktomi (the company that got Yahoo into the search business) in early 2003–has been in the works for a while and was not linked to this week’s announcement that Yahoo CEO Jerry Yang will be stepping down.

Yahoo confirmed Suchter’s departure, but Microsoft (MSFT) has not yet announced his arrival there.

[UPDATED: Microsoft has now officially announced that Suchter is coming to the company.]

But sources said it will be in late December, with Suchter will be working in search for Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group.

Sources at Microsoft had told me of that they were close to locking down this impressive get several weeks ago. “If we can get someone like Sean, it says a lot,” said one source.

Indeed, Suchter has been an important tech leader at Yahoo, much as Qi Lu–the well-regarded Search and Advertising Technology group EVP, who left earlier this year–was.

In his LinkedIn profile, Suchter noted about his duties at Yahoo:

“I run Yahoo’s Web search engine, with overall responsibility for its success. This includes engineering, product responsibility, operational stability, results quality, capex spending and revenue (from the paid inclusion program).”

There are big questions, now that Yang is stepping down, whether Yahoo will stay in the search business or sell it off. Yang has been a big proponent of doubling down in search, considering it integral to the entire Yahoo ecosystem.

But others make the very persuasive argument that Yahoo will be increasingly outspent by both Google (GOOG) and Microsoft, in what is turning into a very vicious and expensive arms race.

If it sold off its No. 2 search business to Microsoft–ironically, Yahoo used to deliver Microsoft’s search results–many think it could have huge costs savings and garner guaranteed revenues.

News of Suchter’s departure, including the internal Yahoo memo announcing it, appeared in Valleywag this morning, which speculated that Suchter was headed to Microsoft.

In the memo, Tuoc Luong, Yahoo’s SVP of Search, stated the very obvious about Suchter’s departure:

“Unfortunately, I have to give some bad news to you. Sean Suchter has resigned. Sean’s last day will be December 19th.

Some of you will find this news shocking given that Sean has been a Gibraltar rock at Yahoo and in particular for the Search team. I understand this.”

Interestingly, Yahoo has recently nabbed several of former Microsoft execs, including U.S. ad head Joanne Bradford and U.S. Audience SVP Jeff Dossett.

Please see this disclosure related to me and Google.

[Photo from Flickr stream of WebProNews.]