Microsoft $100m search push

So we already know that Microsoft wants to be a big deal in search. The key piece of this that I believe is more significant is the part about Yahoo's paid inclusion. Not only is it not going away... I believe we are still just scratching the surface of it.

Anyway, would greatly appreciate your thoughts.

This is the entire article so there is no link.


Microsoft makes $100 million search push

By Richard Karpinski

In a move that echoes back to its aggressive takeover of the Web browser market, Microsoft Corp. in late June began testing a significantly enhanced version of its own search service and pledged to invest $100 million to push it to the top of the search industry heap.

The question for currently dominant search engines—especially market leaders Google and Yahoo!—is whether Microsoft can overtake their lead in much the same way as it gobbled up Netscape’s lead in the browser market in just a few short years.

Analysts note Microsoft has a significant, but not insurmountable, hill to climb. As of February of this year, 30% t of Web searches were performed on Google, 28% on Yahoo! and just 15% on Microsoft’s MSN. Unlike the browser market—where standardization actually helped push the Web to the next plateau—advertisers like having multiple search vendors. So while market share fortunes may change, it is unlikely any of the big three search companies will disappear as did Netscape.

The upgrades to MSN include a new MSN Search home page (search.msn.com) that among other enhancements better integrates MSN services such as Expedia (travel) and Encarta (online encyclopedia).

Perhaps the most notable change from a b-to-b perspective was the decision to more clearly separate algorithmic search results (still delivered by Yahoo!) from paid results links. Microsoft also chose to do away altogether with Yahoo!-enabled paid inclusion, wherein advertisers pay to be in the main search results. Analysts estimate the decision could, at least in the short term, cost Microsoft $50 million or more annually in search revenue.

Microsoft said it hasn’t made a final decision on paid inclusion and will continue to evaluate consumer response. The move may have less to do with Microsoft’s aversion to paid inclusion in the long term than in the phasing out of its dependence on third-parties such as Yahoo! for crucial search tools, according to Jupiter Research analyst Gary Stein. In a blog posting, Stein characterized Microsoft’s move on paid inclusion as "a recapture of control, and a moving away from partner-reliance," adding that industrywide, "I don't think paid inclusion will go away."

Microsoft said it would invest more than $100 million to upgrade its search capabilities over the next year, including rolling out its own algorithmic search technology. It has already delivered a test version of the technology, which will eventually compete head to head with search technology from Google and Yahoo!