Speaking last week with Microsoft CEO Steve Ballmer, the New York Times' Saul Hansell asked: Given all the other options, why does Microsoft keep throwing billions at its struggling Internet search business?
“There are only three things on the Internet that have made money: Amazon, eBay and Google,” Ballmer said. “If we’re going to make a lot of money on the Internet, we’ll have to challenge Google in search.”
People will no doubt quibble with Ballmer's enumeration of money-making "things" on the Internet. But the broader subject is timely, considering the recent data showing Microsoft's U.S. search market share hitting a new low. Of course, a big part of the reason Microsoft isn't giving up is that it's so far along at this point that its pride would prevent it from reversing direction.
But Ballmer makes the case that there will be value for Microsoft, in the long run, in its efforts to build its Internet search business.
The next logical question is whether the company can, on its own, seriously challenge Google in Internet search. Microsoft has been trying to do that since 2005, when it launched its homegrown MSN Search engine. To get a sense for how things have gone, see our tongue-in-cheek timeline of the Top 10 Greatest Moments in Microsoft Internet Search History.
That history makes it more clear why Microsoft is still interested in a Yahoo search partnership, which would give the combined entity about 30 percent of the U.S. search market. A Yahoo deal appears to be the only sure-fire method of gaining ground in the short run. In fact, Microsoft executives have made it so clear that they need Yahoo that you have to wonder if they've put themselves in a weaker position when it comes time to negotiate.
Finally, ponder this: Of the three businesses Ballmer cites as making money on the Internet, how many of them got there by following in the footsteps of a dominant competitor?
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