How Microsoft's search engine strategy with Bing can beat Google with Yahoo Search merger and Google's biggest mistake

How Microsoft's search engine strategy with Bing can beat Google with the Yahoo search merger and Google's biggest mistake

Microsoft's new strategy with Bing (compared to MSN search and Live search) has come with Microsoft's realization that they do not have the resources  to take Google head-on. Bing i snow labeled as a "decision engine" delivering search results differently from Google, focusing on social networking, and improving areas Microsoft believes users are most interested in when they are searching.

Microsoft Bing plans to better integrate with Web services providers and also improve its coverage in search verticals, reaching out to different Web services in order to bring that information and those services back into the page. Since its June 2009 launch, Bing has grown from 8 percent market share to 11.5 percent, according to comScore. Adding more Web services could help Bing increase their growth.

The Microsoft strategy is to quickly and accurately connect consumers to popular Web services and applications. An example is the integration with Twitter for real-time search. Bing's focus is centralized around  understanding intent and what task that user is trying to accomplish and then building that experience that is specific to that task, which goes beyond page indexing. Bing's plan is less about finding answers to questions or common queries and more about helping users conduct transactions.

Microsoft objective is obvious. While Google has dominated the search market for the last decade with  keyword search queries, Bing's goal is to push users to adopt a new behavioral pattern and a new search paradigm.

For Microsoft, the search experience does not end at merely returning search results. The goal is to have users subscribe to services, find goods, discover alternatives or learn new information upon arrival at their destination. For Bing to be successful, search and the transaction should be more closely aligned than ever before. Instead of search and stop, Bing is tries to become search and buy, making Bing a powerful destination for not only for finding information, but making commercial transactions and conducting e-commerce.

Search used to operate in a static, text-based Web. User engagements and real-time information was not the case as it is today. Whereas Google organized the world's information, Bing is trying to move beyond links and multimedia on a page to services that provide data that is more dynamic and interactive.

Microsoft chief Steve Ballmer claims that Bing could surpass Google, but it would take time and a lot of work.

“The number one thing that Google benefits from in search is that they did it right, first,” said Ballmer, speaking at the Search Marketing Expo Conference in California.

“We’re very focused on our long-term goals. There is opportunity for a number of game changers and one of the things we have decided is really important is to be in the game and having a positive momentum and making real progress with a differentiated point of view. We’ll get there.”

When asked if Bing could one day overtake Google, Ballmer replied: “I think a fair degree of realism is required about where the current state of affairs is. We got a lot of work to do. Can we do it? Yes we can.”

Ballmer also highlighted several areas where Bing was looking to expand upon, including mobile and social networking. “We think there’s a lot of innovation possible on the business side,” he added.

Recently we’ve seen the fruits of this labor. In February 2010, the European Commission declared that it was launching an inquiry into whether Google was using its massive search market share to damage three of its smaller competitors. It is a preliminary inquiry to focus on whether internet giant penalises competitors in search rankings. Google handles 80% of European web searches, according to research firm ComScore, compared to 65% in the US.

Google sees the issue as an attack partly orchestrated by Microsoft, which recently merged its search business with Yahoo in an effort to challenge Google's dominating market lead. Google contends that it never deliberately discriminates but that its search engine produces results based on quality, with websites that merely "scrape" content from other sources faring poorly.

European complaints are merely the latest in a series of critiques of Google's position. Thousands of authors have been battling plans by Google to digitise the contents of millions of books. In Italy, prosecutors are challenging Google's YouTube video website on the grounds of invasion of privacy. And newspapers in countries including Germany have attacked the free use of their content on Google News.

The chief executive of Vodafone, Vittorio Colao, last week added his voice, calling for a European investigation into Google's 80% share of the mobile phone search market: "The fact that 80% of the advertising online goes down one funnel is something that should be looked at in the future debate on net neutrality."

Microsoft Microsoft made an unsolicited bid to buy Yahoo in February 2008 and become the second-largest search engine. Combining Microsoft and Yahoo would account for almost 30 percent of the search advertising market, but Microsoft would have paid a $44.6 billion in cash and stock for it. However, the combination of Google’s lobbying and Yahoo founder Yerry Yang’s ego was not what Microsoft bargained for and ultimately walked away from one of the biggest deals ever.

Fast forward to the first quarter of 2010. Microsoft cut a sweeter deal with Yahoo, in which Microsoft’s search engine Bing would power Yahoo searches, but Yahoo would collect 80 percent of the search ad revenue it sold for the next 10 years. Bing would suddenly account for 28.3 percent of the search market. Furthermore, Bing could use Yahoo’s brand to advance its own. Microsoft not have to be consumed with dealing with redundant content or conflicting portals. Yahoo’s brand and search market-share were the only things Microsoft wanted in the first place, and under this deal, that’s what it got. Removing Yahoo’s share of future ad revenue, Microsoft got everything it wanted from Yahoo for nothing without the added headache of integrating conflicting Yahoo properties. Microsoft got the crown jewel from Yahoo: search.

Only time will tell if the Microsoft strategy will work. Will Bing capitalize on Google's mistakes?