Is Microsoft a search company now?

I recently chastised Microsoft for suddenly pulling the plug on two of its web projects, but now I'm starting to see the method in Microsoft's madness. Don't get me wrong -- Microsoft still deserves to be chastised. It's just that I think I have a better idea of what the company is planning regarding its web business. Microsoft seems to be realigning its web strategy...towards search! This move definitely bucks traditional wisdom according to which the search market is already pretty well locked up by Google. Evidently Microsoft sees an opportunity that others have missed.

Still skeptical? To me, this realignment towards search is the only way I can explain Microsoft's recent moves. Let's begin with last year's launch of the Live Search Club, the site that rewards people for playing games that just happen to force searches. This was a roundabout way of getting more searches conducted and more people using Live Search. This project is still going strong -- I regret that I missed the opportunity to write up the double tickets promotion that took place yesterday. I participated even though I'm still unhappy about the Live Search Books and Live Expo closings. On to 2008. The biggest Microsoft story of the year of course has been its attempted acquisition of Yahoo which just happens to operate the Internet's second most popular search engine. Soon after that failed, Microsoft started talking to Yahoo about another possible deal, which might include an acquisition of Yahoo Search and other selected properties but not the rest of Yahoo. I'm sure Microsoft had more in mind than just increasing its search share when it started bidding for Yahoo, but had an acquisition of Yahoo's search business happened it would have left Microsoft in control of the second and third most popular search engines. If Microsoft had just wanted eyeballs, it probably could have acquired AOL more easily and more cheaply; search was definitely a motivating factor in all this. In May, Microsoft announced its Live Search cashback program which allows users to get some money back on their purchases. Similar to the Live Search Club, Live Search CashBack gives people incentives to search, but like any rebate program it only works when purchases are made. Why just reward people for searching when you can reward them for doing what you really want them to do? Advertisers should love a search engine whose users like to buy stuff. This is not a surefire success by any means -- cashback might spoil people to the point that they will come to expect to get money back off every online purchase (and it does cost Microsoft potential revenue if nothing else), and the whole thing could end up just attracting bargain shoppers instead of the wide base of people Microsoft is probably hoping to draw to its search engine. Perhaps the real genius of this move lies in the timing: rough economic times have turned many former shopaholics into bargain shoppers so any and all cashback programs will be welcomed by many. At any rate, cashback should increase Microsoft's search share and encourage a lot more spending...good for the economy, good for Microsoft. If really successful, cashback could have a disruptive effect on search advertising and perhaps force other search engines to offer similar programs. I don't expect to see that happen; rebates have been around for an awful long time, after all. It's not like Microsoft is trying something people never dreamed was possible, but the concept of combining rebates with search is a little bit new. Most recently, Microsoft made a deal with HP which will put a Live Search toolbar on new PCs starting next year. Nothing really special about that -- all the search engines make deals with PC manufacturers. It shows Microsoft is serious about search, though, and every such move is going to increase its search share.

All this leads me to believe that we haven't seen the last of the search wars. Still, I still don't necessarily think it is wise for Microsoft to scale back its other web projects just to focus on search. How many people use Google Docs more than they use Google's search engine? I would bet a fair number do now. How many people use Flickr or Delicious more than Yahoo's search engine? Lots. In fact, plenty of people who use those services don't search on Yahoo at all. Microsoft will be at a disadvantage if its competitors have hundreds of destinations that each attract users while it places all of its eggs in just a few baskets. The closings of Live Expo and Live Search Books just give users reasons to go elsewhere. Still, I predict Microsoft's search engine share will increase in the coming months. I could see them overtaking Yahoo, perhaps by next year, if they continue to be creative and aggressive. At the moment, though, I think the search share rankings accurately reflect the qualify of each search engine: Google is better than Yahoo which is better than Live Search. Live Search is decent now, but there's still too much crap that rises to the top there and too much of the Web it doesn't index. All it takes is one search that doesn't guide you to what you're looking for to cause you to think about changing search engines. As long as Google does search better, it will be hard for people to abandon it no matter how many carrots the other search engines dangle.