Hey Google! Is Bing for Real?
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Should the mighty Google be remotely afraid of Bing?
Google ) currently has about a 66.7% stranglehold on the US search market, conducting over 3 billion searches a day. Bing's share of the pie is sitting at around 12.2%. Bing also powers Yahoo! search. (These numbers are according to ComScore's latest report).
Bing rose a fair bit YoY from July 2011 to July 2012, but has fallen relatively sharply in the last 2 months, losing 0.6% market share in the last month alone. That is a actually a pretty big number in the search game.
Microsoft ), which owns Bing, also owns about a 1% stake in Facebook. (Here is a post I recently wrote about why I think Facebook is a good buy). Microsoft is currently trading at $27.98. Although the company's profit was down about 20% YOY according to their most recent earnings report, their earnings on an adjusted basis still topped most analyst's expectations. Their recent launch of Windows 8 is revolutionary for the company and it's what most savvy Microsoft investors are paying close attention to. It's an attempt to seamlessly integrate the desktop, tablet, and smartphone. Critics fear the company may end up alienating their core user base because the new platform is so drastically different from all previous versions of Windows. Windows 8 gives Microsoft both a lot of upside potential and downside risk depending on it's success. Investors would be wise to pay close attention to how consumers are viewing the new OS before the release of their next quarterly report.
Is there anything special about Bing search technology?
Bing has made use of the information Facebook has to make its search more "social." If you search Bing while logged into Facebook, your search results will be somewhat tailor made based on what your friends "like" on Facebook. Many believe this is relevant info and improves search results. If you're trying to find the best hotels or the best restaurants in a particular city, it's certainly plausible to believe you'd prefer to find out which hotels and restaurants your friends liked, rather than see a list of which hotels showed up first on Google.
"Non social" organic search results often display the webpages having done the better job at SEO (Search Engine Optimization) rather than displaying the actual best or most relevant results. SEO is a multi billion dollar a year industry; people are constantly trying to game the system and get to the top of Google, and all search engines for that matter. It's important to note that Google is using their own social network, Google +, to make their search results more social and customized for each user too, but Bing certainly has the advantage on this front because of their access to Facebook's massive wealth of personal data.
Bing is also claiming people choose it 2:1 over Google during a blind search test. This is major cause for concern, if it's true...
I see these Bing ads all the time while watching Hulu. The ads do a great job at forcing people to at least give Bing a consideration. Without this consideration, many of us just go into zombie mode and search Google. I can't find exact data on this, but it's certain that a lot of us use Google because it's synonymous with search and it's already a deeply ingrained habit. Many of us instinctively believe that Google is somehow just better, but we don't have incredibly well thought reasons as to why we think this way. This may not matter though. Behavior is what counts. Google's brand is very powerful and hypnotic.
That is all well and good for Google in the short run, but shareholders of Google need Google's search superiority, or at least equality, to be a fact rather than just a belief. IF Bing is truly "better," the wheels could come off quickly for Google. The switching costs of changing search engines are existent, but pretty small. There are really no financial or time switching costs. Changing from Google to Bing is much easier than even changing from Facebook to Google +, since you can switch on your own and you don't need to invite your friends. Also, you don't need to spend time learning a new interface. Typing a search query into a search bar is about the easiest thing you can do.
As a Google shareholder, I decided I should try my own version of the "Bing Challenge" for myself. I found both search engines quite good. I had a hard time deciding which was better. That scared me for a moment, but then I realized that's not even close to enough for Bing to eat away at Google.
Here's the thing: If both search engines are truly the same in quality, I really can't see Bing eroding Google's market share at all. They haven't eaten into it yet, and there is no reason I can think of as to why they will start now. They need to beat Google outright in order to win this game. Even a tie goes to Google. There is no point in switching search engines without getting a noticeable improvement. The switching costs are very low, but still existent.
I'll be continuing to use Google for search, but I'll be on news alerts for Bing. If I start seeing more positive news out of the Bing camp and clear cut reasons as to why Bing is BETTER, I'll strongly consider selling off some of my Google holdings. If I don't see any clear cut reason as to why Bing is simply better than Google, I don't see Bing posing any threat whatsoever to Google. I expect Bing's presence in the marketplace to continue forcing Google to innovate and improve it's search engine, but that's about it.
Bing has increased it's US market share over the past year or so, but so has Google. The big question to watch for is to see if Bing can start to eat into Google's market share, something it has thus far been unable to do. If for whatever reason, the tide starts to turn in Bing's favor over Google for even a few straight months, I'll be ready to sell. At this point, I'm not scared at all.
Conclusion: Bing has a long way to go to beat Google OUTRIGHT in search. Until this actually happens, Google has little to worry about with Bing, even if Bing is just as good as Google now, and that's still a big IF.
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Fool blogger Andrew Best owns shares in Google but not in Microsoft. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services recommend Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
