Will Microsoft's Social Strike Cause Google Grief?

When money isn't enough, resort to peer pressure. That's the message I get from fresh reports that Microsoft (Nasdaq: MSFT  ) and Facebook plan to combine on new social search capabilities in the Bing search engine. The goal? Topple, or at least better compete with, Google (Nasdaq: GOOG  ) .

Last week, Microsoft said it would expand upon existing efforts to use Facebook data to add richness to Bing results. The new system should, among other things, show users what Facebook friends think of items they're searching for.

Say you want to find reviews of the new Walt Disney hit, Marvel's The Avengers. Conducting a Bing search while logged in to Facebook should show you not only what the Web thinks, but also what friends who've seen the movie think -- pulling directly from their Facebook news feeds.

The timing's right for upping Bing's capabilities. Mr. Softy has seen steadily accelerating operating losses in the Online Services Division that develops and oversees Bing, including a smidge over $2.6 billion during the last fiscal year, according to data supplied by S&P Capital IQ. Those investments haven't meant much so far, and even less over the past six months:

Month

Google

Bing

March 2012 68.6% 25.9%
February 2012 68.6% 26.2%
January 2012 68.4% 26.5%
December 2011 68.1% 26.5%
November 2011 67.6% 26.7%
October 2011 67.7% 26.1%

Source: comScore.

See the pattern? The most significant threat to the continued rise of the company affectionately (and nervously) known as "The Big G" has made exactly zero progress over the past six months. No wonder Microsoft wants to get cozy with Facebook -- CEO Mark Zuckerberg knows more about competing effectively against Google than anyone else in the tech industry, save for perhaps Apple's top brass.

Bing needs the assist, and so does Microsoft. Sure, Mr. Softy has plenty of cash and cash flow, but it'll never continue to be one of the top American businesses -- franchises on track to dominate the world – so long as it has to spend billions to force its way into emerging opportunities. These three megafranchises our analysts at The Motley Fool have discovered are simply better positioned. Read out special report discussing who they are.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, and Walt Disney at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google, Microsoft, Apple, and Walt Disney. Motley Fool newsletter services have recommended buying shares of Google, Apple, Microsoft, and Walt Disney and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On May 16, 2012, at 5:38 AM, IyaJenkei wrote:

    They make to big a deal of this. Say there a guy name Al with a fb acnt. Al probably has around 4-5 hundred friends. And about 20 of those he actually talks to. Your telling me he's gonna care what the other 350 ppl think about something when he barely converses with them? Fb is a fad it'll be gone within 10 years. It's peaking now that why they're ipoing.

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