Is Microsoft about to dump Bing?
A piece out of Business Insider today, by Matt Rosoff argues that maybe Microsoft is giving up on Bing. It’s a quirky question, businesses of this size don’t usually give up on products that are growing like Bing is. But nontheless Matt has some decent points, as below.
Earlier today, Google and Mozilla renewed their deal to make Google the default search engine in the Firefoxbrowser for another three years.
This seems like Microsoft passed up a great opportunity to get more traffic to Bing. Right now, Firefox has about 25% market share and is used by more than 400 million people. According to Comscore, about 75% of the searches conducted from Firefox go to Google. (Users can manually select Bing or another search engine, but most don’t.)
Last year, Google paid Mozilla about $103 million for the right to be the default search engine. (That’s 84% of the Mozilla Foundation’s total $123 million, as per its 2010 financial statement, which were released in October — PDF here.)
That’s chump change for Microsoft. Even if the deal was much more expensive this time around as both companies bid up the price, Microsoft blinked first. Why?
Microsoft had no comment, but here’s one possibility: Microsoft has already reached its market share goal with Bing and is tightening the wallet to bring expenses under control.
The evidence:
- Microsoft said 30% market share was its goal. Back in 2007, the leader of the Online business, Kevin Johnson, talked several times about the company’s “10-20-30-40″ plan for Online. The “30″ stood for 30% market share for Bing. At the time, this seemed outlandish, but the following year Microsoft tried to buy Yahoo, and after that failed, it eventually managed to strike a search deal with the company. Combined, Bing and Yahoo have been at more than 30% share in the U.S. since spring. Mission accomplished!
- Microsoft decreased Bing’s marketing spend last quarter. The Online group’s operating loss decreased for the first time in ages last quarter. That’s partly because sales and marketing expenses for the Online group dropped 25% last quarter (compared with the year-ago quarter). That’s a big shift from the previous four quarters, where sales and marketing expenses for Online rose 5% from the previous year.
- It’s letting Bing talent migrate. Back in April, a former Bing engineer wrote that Microsoft was no longer spending big bucks to retain the best talent — instead, it was paying “far below market rates.” This year, two top Bing leaders — Satya Nadella and Yusuf Mehdi — took jobs elsewhere at Microsoft, suggesting that they saw more opportunity elsewhere (or that Steve Ballmer wanted to shift top talent away from Bing).
While Matt’s points are well argued he fails to address the fundamentals about why destop oriented browser based search may not be as appealing now, for Bing’s future. Businesses don’t make decisions like the size and scale of this one based on today’s conditions, they make them based on at least a 5 to 10 year window.
I’m not entirely convinced Microsoft is giving up on Bing at all. It could be that they’re recognising that desktop based browsers aren’t going as important in the future as it’s going to be – with the rise of mobile and tablet devices and growing search volumes, and it is because of Firefox that more people are willing to check out other browsers like Chrome, Opera etc.
It’s also worth considering that Google gave up it’s Twitter access a few years ago now, but no one seriously suggested that Google wasn’t taking search seriously. I wonder if they’re regetting that decision now?
Finally, it’s worth considering which search engine picked up exclusive access to Twitter, and also has exclusive access to Facebook – yep, that’d be Bing. Social Search – the seamless integration of arguably the world’s two largest Social media platforms and search data will be invaluable for both customer experience and algorithmic learning.
Perhaps it’s not that Microsoft didn’t want Firefox, perhaps it’s that they just think they don’t need it as much – because in the next few years social media sites are going to become even more important desinations than they are today and less people will use Search to get there.
