Microsoft is in retreat mode.

Not too long ago Microsoft was on the verge of becoming a much bigger Internet company. It was about to acquire Yahoo, about to finally give Google some real competition...but the Yahoo deal never happened and Microsoft's web presence has been shrinking or at least narrowing ever since. I think it is likely that Microsoft is still intent on acquiring Yahoo somewhere down the line, but for now they seem to be too busy decimating their own web properties to worry about decimating Yahoo's. Maybe they're just streamlining or refocusing, but shutting down two major projects in two months is not what I expect to see from a company that allegedly wants to dominate the Internet.

The first victim was Live Search Books. I remember thinking what a gutsy move this launch was back in 2006 because Google Book Search already existed and already rocked. Microsoft was essentially saying they could go toe-to-toe with Google and perhaps even do book digitization and search better than Google. The abrupt closing of the site in May made it clear that Microsoft couldn't be competitive in this space. What puzzles me is that surely Microsoft couldn't have believed that such a project would ever be a lucrative moneymaker. They had to know going in that this needed to be about providing a useful service, creating good will, and showing their ability to compete with Google. At what point did Microsoft decide, "Well, it doesn't matter if we no longer provide a useful service, destroy the good will we've built hitherto, and show that we can't compete with Google." It's just strange to me...very strange.

June's abandoned child was Windows Live Expo, Microsoft's foray into the online classifieds business. Classifieds seems to be a tough business to break into -- even Yahoo's site wasn't able to survive. Still, someone has to challenge Craigslist sooner or later. Microsoft evidently decided it wasn't up to the task. Personally, I thought Live Expo was appealing visually and easy to use. Its weakness and probably the reason it was shut down is that it never became a huge site. Not being a huge site is a real disadvantage in the classifieds space; people want to be able to browse local listings no matter where they are, and that just isn't possible if people from all over aren't selling stuff. Perhaps the fact that Craigslist isn't a direct Microsoft competitor in other areas, unlike Google, influenced this move, though that type of thinking didn't save Live Search Books. Both sites probably had difficulty generating revenue, but Microsoft should have known from the start that neither site was likely to be profitable from the beginning...especially not a freaking book search site! At the end of the day, closing any site is a sign of weakness and a message to your user base saying, "Don't trust us!" Microsoft may have big pockets, but it needs to develop more staying power if its online projects are ever to reach their true potentials.