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Microsoft’s online business lost $2.6 billion for its fiscal year, mainly due to its investment in search. Yet even with Yahoo’s outsourced search business, Microsoft barely cracks 30 percent in market share, according to comScore.
Last week, a Reuters Breakingviews piece that was picked up by the New York Times generated controversy and counter-commentary over Microsoft’s struggling efforts in search. Breakingviews suggested Microsoft abandon its money-losing search business and sell the Bing search engine to Facebook. That’s a bad idea.
Microsoft needs search for several reasons. For one, Microsoft must have a credible search engine business to defend its core platforms and APIs, as well as keep its biggest rival, Google, honest by forcing Google to create sustainable business models in competitive markets like applications and mobile. And a somewhat more successful search engine would solidify Microsoft’s own ad business and open emerging revenue streams. To read more about why search is essential for Microsoft, see my latest weekly update at GigaOM Pro (subscription required).