Interesting piece from the Times:
As the overwhelming search leader, Google has advantages that tend to reinforce one another. It has the most people typing in searches — billions a day — and that generates more data for Google’s algorithms to mine to improve its search results. All those users attract advertisers. And there is the huge behavioral advantage: “Google” is synonymous with search, the habitual choice.
Once it starts, this cycle of prosperity snowballs — more users, more data, and more ad dollars. Economists call the phenomenon “network effects”; business executives just call it momentum. In search, Google has it in spades, and Microsoft, against the odds, wants to reverse it.
Microsoft has gained some ground. Its Bing search site has steadily picked up traffic sinceits introduction two years ago, accounting for more than 14 percent of searches in the American market, according to comScore. Add the searches that Microsoft handles for Yahoo, in a partnership begun last year, and Microsoft’s search technology fields 30 percent of the total.
Yet those gains have not come at the expense of Google. Its two-thirds share of the market in the United States — Google claims an even higher share in many foreign markets — has remained unchanged in the last two years. The share losers have been Yahoo and smaller search players.
The costs for Microsoft, meanwhile, keep mounting. In the latest fiscal year, ended in June, the online services division — mainly the search business — lost $2.56 billion. The unit’s revenue rose 15 percent, to $2.53 billion, but the losses still exceeded the revenue.