Microsoft Subsidizing Google

While Microsoft is one of the most successful companies in the history of technology,  many question its strategy in search.  Microsoft made an impressive $27b in profit in its last fiscal year, but its search business is losing nearly $1b a quarter.  

We use Google for search, although many smart people praise the quality of Microsoft’s search product, Bing.  For example, a search on Google for ‘Microsoft Bing losses’ yields 10.5b results.  On Bing, the same search yields an impressive 15b results.  But even if Bing has a marginally better product, at this point the Google brand seems so strong that it will  continue to dominate search until a competitor unleashes a product that is better by an order of magnitude.   It seems like Bing’s attempt at beating Google in search is futile.  That is why so many question its strategy. 

We have an additional concern.  Many think Google’s biggest threat in search is actually the federal government, which has shown interest in exploring if Google has monopoly power.  It seems that Google’s best antitrust defense in search is that it does not have a monopoly.  Exhibit A?  Microsoft’s Bing, which has 16% of the search market.  So Microsoft is spending nearly $1b a quarter to essentially subsidize Google's antitrust defense.  We don't expect Microsoft to change its search strategy any time soon, but we agree with those that question it.