Will Bing Be the Death of Google?

Microsoft (Nasdaq: MSFT) is doing the seemingly impossible: Mr. Softy is beating Google (Nasdaq: GOOG) at its own game.

Analytical firm Experian Hitwise is reporting that Bing-powered searches gained a good chunk of market share at Google's expense last month. It's also revealing a telltale metric that implies that queries are being better served on Bing than Google.

Let's cover the market share jockeying first.

The tortoise and the share

Now that Bing has been fully integrated in Yahoo! (Nasdaq: YHOO), the nascent engine is accounting for more than 27% of the country's search market.

Let's go over the most recent market share data.

Source: Experian Hitwise.

Google's share of the market suffered a 2% sequential decline. Discovering if Bing's the beneficiary is some simple math away. We need to add up Yahoo! and Bing for the complete snapshot.

Yahoo!'s share of search is sliding, but that's not a surprise. The moment it handed its search to Bing, it had to know that folks would stop visiting Yahoo! and bookmark Bing. However, the Hitwise data show that Bing's gains were far greater than Yahoo!'s losses. Combine the two dot-com giants and Microsoft's collective share of the lucrative search market went from 25.77% in December to 27.44% in January.

It's a meaty monthly leap. It's also a slightly bigger gain on basis points than Google is surrendering. Hitwise didn't break down the performance of AOL (NYSE: AOL), IAC's (Nasdaq: IACI) Ask.com, or the dozens of even smaller engines in this particular press release. They combine for just a 4.61% sliver of the market these days, anyway. Bing is gaining on both Google and the little guys collectively.

If Bing didn't have Google's attention before, it has it now.

Wake up, Google
Market share will fluctuate from month to month, but you have to like Bing's chances.

Microsoft executive Kevin Johnson was targeting roughly 40% market share as a three-to-five-year goal back in 2007. His target was ambitious, coming before Microsoft had even approached Yahoo! publicly with its original buyout offer. Microsoft's unlikely to get there by the end of next year when his five-year timer goes off. However, it wouldn't surprise anyone these days if he's close.

Bing has been riding a good wave since its launch. It may get even better. Experian Hitwise's traffic report indicates that just 66% of Google searches result in a visit to one of the listed websites. Put another way, a third of Google users apparently aren't getting what they're searching for.

Bing's data is more encouraging. More than 81% of Bing-powered searchers wind up clicking on one of the sites that the engine spits up.

Isn't this what Bing should be shouting from the Redmond rooftops? Instead of all of those annoying ads that accomplish little in differentiating Bing from its competition, we now have proof that Bing is worthy of its "decision engine" self-billing.

Google will hopefully be readying its defense before then.

Baidu (Nasdaq: BIDU) gained share in China at Google's expense, but at least Big G had an excuse. It all but pulled out of the world's most populous nation early last year on principle. It's an active player domestically. It can't afford to let Bing nibble away at its share so publicly.

Wake up, Microsoft
This is also an opportunity that Microsoft shouldn't squander. Now that it seems as if it's making a difference, why stop with Yahoo!'s prime real estate? Now's the time to strike deals or look for outright acquisitions of AOL and IAC's Ask.com. AOL recently inked a new five-year deal with Google, and it remains to be seen if Microsoft could break up that arrangement if it were to snap up AOL. It certainly doesn't hurt to find out.

The deal with Yahoo! has more than doubled Bing's stateside exposure, but it also let the market know that it's serious about stepping up as the anti-Google. It can't just phone it in at this point. It needs to be hungrier than ever, because momentum swings both ways.

This battle is heating up. Both parties better come prepared to fight.

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