Microsoft's big Bing theory targets Google

Computerworld - With Microsoft and Yahoo officially teaming up in the search market this week, it's time to wait and see if this move could eat into Google's hearty lead over its top opponents.

Microsoft and Yahoo announced Tuesday that Bing is totally fueling Yahoo search results in the U.S. and Canada. The search integration comes more than a year after both companies announced that they were joining forces to better take on Google, the goliath of the search industry.

It will be a while before there are any numbers to show how the pair is fairing against Google, said Hadley Reynolds, an analyst at market research firm IDC. However he said the launch was a positive start.

"It's important for Microsoft and Yahoo that the shift from Yahoo search to Bing for organic results took place smoothly this week -- apparently without any technical breakdowns," Reynolds said. "These transitions are dicey in any software environment, and the fact that Yahoo and Bing pulled off the project successfully should build confidence among search marketers and advertisers."

With the 10-year deal, Yahoo gave up its own longstanding search technology and is now using Microsoft's fairly new Bing search engine to power all searches on the various Yahoo sites.

Both the U.S. Department of Justice and the European Commission approved the search agreement earlier this year.

This week's announcement marks a first step in putting the agreement into action. Satya Nadella, a senior vice president at Microsoft, noted in a blog post that at this point, Bing is only powering results in English in the U.S. and Canada. The setup is expected to expand into other languages and regions in coming months.

Yahoo users should expect to see few, if any, differences in their searches. What could change is the level of competition that Google faces.

"With Yahoo's moving their volume of search users to Bing, it makes it a much more level playing field for Bing vs. Google," said Dan Olds, an analyst at Gabriel Consulting Group. "While the combined Microsoft and Yahoo search traffic is still significantly lower than what Google drives, it's much larger than the two had on their own. This gives Bing better numbers to show advertisers and a chance to cut into Google's lead."

Neither Bing nor Yahoo separately has had any luck cutting into Google's lead in the search market. Google captured 65.8% of the search market in July, according to market research company ComScore. Yahoo had 17.1% and Bing had 11%, ComScore reported.

The plan, then was for Bing and Yahoo to hitch their teams together and to make a reinforced assault on Google's gates.

"This probably saved Yahoo, who, without the removal of the cost related to search and the influx of Microsoft revenue, would likely be gone by now," said Rob Enderle, principal analyst at Enderle Group. "For Microsoft, it puts them in the search game but by creating a stronger competitor.... The onslaught against Google began when Microsoft basically wrote a blank check to Yahoo to fund the battle. But this [week's integration] will represent the biggest win Microsoft ever got in one move."

Olds said Google should look over its shoulder and pick up the pace on search innovation if it wants to maintain its expansive lead.

"Now that Microsoft and Yahoo's teaming up on search has become a reality, it's definitely something that Google will take notice of and react to," he added. "Both Microsoft and Yahoo have moved from also-ran status to a credible threat in terms of their traffic and technology."

Olds also noted that Microsoft has deep pockets and probably can afford to invest in the search competition for years.

"For Google, search is the cash cow that supports everything else they do," Olds noted. "Microsoft's situation and perspective is different. They have their existing software franchises to generate money. This will put more pressure on Google's profitability over time."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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