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August 13, 2009
By Stuart J. Johnston: More stories by this author:

Market share results for Microsoft Bing’s second full month of use show the new search engine gaining share with a bit of a growth surprise.

According to The Nielsen Company’s MegaView Search figures for July, released Wednesday, Microsoft’s (NASDAQ: MSFT) Bing grew by eight percent month-over-month from June, giving the fledgling search engine a nine percent overall share of U.S. searches.

In comparison, Yahoo Search grew by 11 percent month-over-month in July for a total share of 17.1 percent, while Google (NASDAQ: GOOG) easily maintained its dominance with three percent growth and a total share of 64.8 percent, Nielsen said.

Although Bing’s growth rate is not stunning, it appears to be consistently growing by small increments. CEO Steve Ballmer has said he is patient, and willing to spend between five percent and ten percent of Microsoft’s operating income over the next five years to make Bing a success.

If it were two years from now, when Microsoft’s recently-announced deal with Yahoo (NASDAQ: YHOO) is expected to be completed, the two companies would be wielding a combined total share of searches of 26.1 percent. That’s much better odds than Microsoft Bing alone could muster, at least at this point.

Microsoft launched its latest assault on the search engine market, introducing Bing at the end of May, and in early weeks of use made similar small, though meaningful, gains.

Nielsen’s latest figures show that, of a total of 10.5 billion searches in the U.S. in July, Google handled 6.8 billion, Yahoo got 1.8 billion, and Bing brought in 947 million searches.

August 18, 2009
By Stuart J. Johnston: More stories by this author:

Market share for Microsoft’s Bing search engine inched up a half a percent in July over its June performance. However, according to the latest figures from Web analytics firm comScore, that’s still flat from the performance of Microsoft’s pre-Bing search services of a year ago in July 2008.

The surprise is just who is being hurt by Bing’s progress.

In its second full month of public use, Microsoft (NASDAQ: MSFT) Bing pulled 8.9 percent of U.S. searches, up from 8.4 percent in June, according to comScore’s figures for July.

Google (NASDAQ: GOOG), meanwhile, was down 0.3 percent at 64.7 percent of searches compared to 65 percent in June. However, from July last year, Google’s share of searches was still up by 2.8 percent from 61.9 percent.

So who is really losing market share?

That would be Microsoft’s new partner in the search business. Yahoo’s (NASDAQ: YHOO) share of U.S. searches finished July at 19.3 percent, down from 19.6 percent in June, and even further down from 20.5 percent last July.

Although different Web tracking services’ figures are not directly comparable due to differences in sampling and measurement, the latest comScore (NASDAQ: SCOR) results are roughly in line with July search numbers released last week by The Nielsen Company.

According to Nielsen’s MegaView Search figures Bing had a nine percent share overall for U.S. searches in July. Yahoo Search had a total share of 17.1 percent, while Google’s share came in at 64.8 percent.

Under Nielsen’s criteria, the combined market share for searches performed using Bing and Yahoo came to 26.1 percent. In comparison, comScore’s combined number for the two search entities came in at 28.2 percent for July.
Microsoft, Yahoo team up

The two companies announced an agreement in late July, whereby Microsoft will take over searches for both sites, and pay Yahoo a majority of the income from Yahoo’s billing for doing so. That deal is not expected to go into effect for as much as two years, however.

Bing launched in late May, when it replaced the company’s existing search properties, Live Search and MSN Search.

Microsoft executives have said repeatedly that they do not expect to necessarily take the search market by storm, but rather by increments as users gain familiarity with Bing and as the search engine itself improves to better compete with Google.

CEO Steve Ballmer has said he is willing to spend between five and ten percent of Microsoft’s operating income over the next five years to make Bing a serious player in search.

Besides the July search figures, set to be officially unveiled today, comScore released an analysis of the search market last Friday. In it, the company recommended that Microsoft target users’ secondary searches — ones they don’t necessarily perform using their primary search engine.

August 6, 2009
By Stuart J. Johnston: More stories by this author:

A report this week claims that nearly 90 percent of Microsoft-sponsored search results for online pharmacies found by the Bing search engine lead to fraudulent sites.

Soaring health costs are driving more consumers to buy the drugs they need online. At the same time, finding legitimate online pharmacies that sell legitimate and safe drugs has become a much more risky venture.

The statistics from the new report, which examines only sponsored search results on Microsoft’s (NASDAQ: MSFT) Bing search engine, paint a bleak picture — potentially signaling that consumers may be placing themselves in danger by following Bing’s links to illegitimate sites.

“Of the prescription drug and online pharmacy advertisements sponsored by Microsoft that we reviewed, 89.7 percent led to ‘rogue’ Internet pharmacies that do not require a prescription for prescription drugs, or are otherwise acting unlawfully or fraudulently,” the report said. That included sites, in at least one test instance, that were caught selling counterfeit pharmaceuticals.

The report is a collaboration between online pharmacy verification firm LegitScript and Internet compliance tracking firm KnujOn. It is the first of a planned series on search issues, KnujOn CEO Garth Bruen told InternetNews.com.

The authors, including Bruen, said their companies funded the research without the backing of any third parties.

So why Bing and not Google (NASDAQ: GOOG) or Yahoo (NASDAQ: YHOO)?

“They’re on the list,” Bruen said, adding, “We’re going to cover the entire search engine space.”

Part of the reason why Microsoft got picked to be first is because its new Bing search engine, which it markets as a “decision engine,” aims to focus on five specific and lucrative areas of expertise, including health.

Microsoft launched Bing in late May to great fanfare. Since then, it has seen slight gains in Microsoft’s share of online U.S. searches.

Additionally, Microsoft CEO Steve Ballmer and Yahoo CEO Carol Bartz last week announced a joint agreement whereby Microsoft will provide search technology for Yahoo Search and Yahoo will get most of the revenue from those searches.

However, the new report focused only on Microsoft-sponsored Bing search results for pharmaceuticals.

“There are thousands and thousands of possible prescription drug searches,” Tom Horton, president of LegitScript, told InternetNews.com. “We looked at ten different prescription drug searches involving a total of 69 sponsored search results.”

Neither were the bogus ads just a flash in the pan. “One thing not directly mentioned in the report but that’s important is none of the illicit search results were just up for a day or two, and then taken down,” Horton said in a follow-up e-mail.

Besides sites that sell drugs without a prescription, other problems cited in the report are legitimate-seeming sites that, at the last minute, redirect users to sites in countries like Russia and China — in some cases linked to organized crime — as well as sites that sell counterfeit drugs.

Drug searches in the test included queries seeking erectile dysfunction drugs Cialis, Viagra, and Levitra, as well as anti-depressants like Wellbutrin and sleeping pills like Ambien and Soma. The authors ordered some of the drugs and in at least one case found that they were sent counterfeit drugs from a company in India, the report said.

“We take these claims very seriously and are currently investigating this issue,” a Microsoft spokesperson told InternetNews.com in an e-mail. “Microsoft’s guidelines clearly require online pharmacies who advertise on Bing to adhere to U.S. laws.”

Microsoft, overall, has a fairly good record of dealing with questionable material found by its search properties, including the newly launched Bing. When confronted in June with problems of Bing users getting unexpectedly easy access to porn, Microsoft moved quickly to fix the issue.

This week’s report also admits that Microsoft “has a policy in place to limit ads for pharmacies, or prescription drugs, to [verified] … pharmacies.”

One of the report’s complaints regarding Bing searches, however, is that Microsoft does not appear to actively police such advertisers — and that the company has a financial interest in users who click through to the false advertisers, generating a small bit of revenue as a result.

“Just because you find something on the Internet doesn’t mean it’s safe or legitimate,” Bruen added. “Anybody can set up a Web site and sell junk over the Internet.”

The report can be found on LegitScript’s site, and is available here in PDF format.

August 12, 2009
By Alex Goldman: More stories by this author:

Microsoft Word and Patents
A U.S. court yesterday slapped Microsoft with a $290 million fine and ordered it to cease selling versions of Microsoft Office Word, marking the latest fallout from a patent dispute with a smaller firm.

The U.S. District Court for the Eastern District of Texas, Tyler Division, ordered Microsoft (NASDAQ: MSFT) to pay a $200 million fine, plus $40 million for violating a previous injunction and $50,826,580 in accumulated interest on earlier unpaid fines.

The fines stem from a ruling in a patent lawsuit brought by Toronto-based i4i, which describes itself as a specialist in Extensible Markup Language (XML) content development and management.

In an earlier ruling, the court said that Microsoft had violated i4i’s 11-year-old U.S. Patent No. 5,787,499, which covers software designed to manipulate document architecture and content through metadata.

That decision prohibited Microsoft from selling software capable of manipulating XML files — including Microsoft Word 2003, Microsoft Word 2007, and “Microsoft Word products not more than colorably different from Microsoft Word 2003 or Microsoft Word 2007″ if those products can manipulate XML files.

“During the trial, attorneys from McKool Smith and Tyler, Texas-based Parker, Bunt & Ainsworth successfully argued that Microsoft infringed the i4i patent issued in 1998 … which covers software designed to manipulate ‘document architecture and content,’” i4i’s lawyers said in a statement. “The software covered by the patent removed the need for individual, manually embedded command codes to control text formatting in electronic documents.”

Spokespeople from Microsoft did not return requests for comment by press time.

The company is expected to appeal the ruling. While it’s not immediately clear what its chances might be for challenging the ruling, Microsoft may have several factors working in its favor.

For one thing, the patent in question is on a list of “withdrawn” patents at the U.S. Patent Office.

“The patent is being re-examined,” said i4i lawyer Douglas Cawley, a principal in the Dallas office of McKool Smith. “Microsoft asked the U.S. Patent Office to reconsider whether the patent is valid or not and that process is ongoing.”

Furthermore, XML is defined by Webopedia as a “pared-down version of SGML,” a previous metadata language. According to the patent, as represented in the complaint filed in court, XML improves upon SGML and Microsoft’s Rich Text Format document languages. Microsoft participated in the development of XML, and has released versions of XML as a standard, but the authors of the standard are generally acknowledged to be Tim Bray, Michael Sperberg-McQueen, and James Clark, none of whom are part of the company that filed the suit.

However, i4i’s lawyers said the firm has room to enforce its patent in specific areas.

“The lawsuit covers custom XML only,” Cawley said in an e-mail to InternetNews.com. “Although XML is an open standard, there can still be patents covering features of the standard. If the owners of those patents have not dedicated them to the standard, they can enforce them.”

The patent also extends another six years, i4i Chairman Loudon Owen told InternetNews.com — and he added that he does not believe that there’s a method of manipulating custom XML without infringing the i4i patent.

“We don’t believe there is, but … if there is, our solution is the most elegant,” Owen said. “There are so many brilliant people on the planet. People can find solutions to things that seem impossible.”

“It has been incorporated into Word,” he added. “If incorporated with our blessing, it would be incorporated even more seamlessly and effortlessly.”

In the meantime, the ruling marks another win for i4i, whose XML technology has won it a number of customers in the medical area. Other users include publishers, the military, manufacturers — and the U.S. Patent Office itself, Owen said.

August 13, 2009
By Stuart J. Johnston: More stories by this author:

Market share results for Microsoft Bing’s second full month of use show the new search engine gaining share with a bit of a growth surprise.

According to The Nielsen Company’s MegaView Search figures for July, released Wednesday, Microsoft’s (NASDAQ: MSFT) Bing grew by eight percent month-over-month from June, giving the fledgling search engine a nine percent overall share of U.S. searches.

In comparison, Yahoo Search grew by 11 percent month-over-month in July for a total share of 17.1 percent, while Google (NASDAQ: GOOG) easily maintained its dominance with three percent growth and a total share of 64.8 percent, Nielsen said.

Although Bing’s growth rate is not stunning, it appears to be consistently growing by small increments. CEO Steve Ballmer has said he is patient, and willing to spend between five percent and ten percent of Microsoft’s operating income over the next five years to make Bing a success.

If it were two years from now, when Microsoft’s recently-announced deal with Yahoo (NASDAQ: YHOO) is expected to be completed, the two companies would be wielding a combined total share of searches of 26.1 percent. That’s much better odds than Microsoft Bing alone could muster, at least at this point.

Microsoft launched its latest assault on the search engine market, introducing Bing at the end of May, and in early weeks of use made similar small, though meaningful, gains.

Nielsen’s latest figures show that, of a total of 10.5 billion searches in the U.S. in July, Google handled 6.8 billion, Yahoo got 1.8 billion, and Bing brought in 947 million searches.

August 5, 2009
By Kenneth Corbin: More stories by this author:

New details emerging from Microsoft and Yahoo’s ten-year search and advertising partnership suggest that Yahoo may be getting a better deal than it initially appeared — potentially upping its take as the agreement progresses.

The agreement will also see more than money changing hands. Microsoft (NASDAQ: MSFT) also plans to take on 400 employees from Yahoo (NASDAQ: YHOO) as part of the agreement, according to documents filed with the Securities and Exchange Commission (available here in PDF format).

Those same documents indicate that the deal may offer Yahoo more flexibility and a higher share of advertising revenue than had been previously thought.

The chance for a larger payoff could be important for the pioneering Web portal, considering that investors reacted coolly to the blockbuster announcement last week, in part because it didn’t bring a huge upfront payment to Yahoo many had been looking for.

Through the deal, which would see Microsoft take over the technology platform behind searches on Yahoo’s sites, the software giant also agreed to pay Yahoo $150 million over the first three years, meant partially to defray the transition costs associated with the arrangement.

That’s a far cry from the $1 billion-plus some had been expecting Microsoft to fork over for Yahoo’s search business.

Since then, executives from both companies tried to play down the significance of an initial cash payout, focusing instead on the generous revenue-sharing terms of the deal. Microsoft agreed to pay Yahoo 88 percent of the revenue gleaned from ads served on its search pages, known as traffic-acquisition costs, or TAC, for the first five years.
Heftier payout

In Yahoo’s Tuesday filing with the SEC, it revealed that the TAC rate will jump to 93 percent for the second half of the deal if Microsoft terminates the provision that gives Yahoo exclusive rights to the global sales operations for premium search ads.

If Microsoft tries to exercise that clause, but Yahoo exercises an option to retain its exclusive sales agreement, its TAC rate would drop to 83 percent. TAC paid to Yahoo would bump up to 90 percent if Microsoft declined to terminate the exclusive sales provision and the terms of the deal remained unchanged.

In addition to the 400 Yahoo employees Microsoft agreed to take on, the software giant also said it would fund a retention plan to keep them from jumping ship during the as the companies integrate their engineering platforms. It also agreed to subsidize the salaries of 150 Yahoo employees to help with its own transition.

The deal also preserves for Yahoo “full flexibility with respect to the user experience, content and look and feel on all of its Web pages,” according to the filing.

Yahoo has the option to incorporate Microsoft’s mapping and mobile search services through the deal, but would not be locked into them the way it would be with PC search.

Microsoft would also provide an unspecified minimum guarantee for revenue per search from Yahoo’s sites. If Microsoft’s payouts fail to meet the minimum, Yahoo would be entitled to terminate the deal.

Standard & Poor’s analyst Scott Kessler said the additional commitments from Microsoft were an “incremental positive” for Yahoo, reiterating his firm’s “buy” opinion on the company.

Yahoo and Microsoft will need to secure regulatory approval before the deal is put in place, a process they hope to accomplish in the first half of next year. At that point, they are hoping to have the integration of their sales and technology operations completed within two years.

In the near term, analysts are looking for Yahoo to continue its efforts to rein in costs as it repositions the business around display advertising and content.

“We believe Yahoo will become more of a margin expansion story as it focuses on execution and efficiency,” Barclays analyst Doug Anmuth said in a research note.

He sees Yahoo as well positioned for a rebound in the advertising economy, and looks ahead to the company’s investor day in late October for key details about its evolving strategy.

Shares of Yahoo were up more than 2 percent in morning trading.

August 6, 2009
By Stuart J. Johnston: More stories by this author:

A report this week claims that nearly 90 percent of Microsoft-sponsored search results for online pharmacies found by the Bing search engine lead to fraudulent sites.

Soaring health costs are driving more consumers to buy the drugs they need online. At the same time, finding legitimate online pharmacies that sell legitimate and safe drugs has become a much more risky venture.

The statistics from the new report, which examines only sponsored search results on Microsoft’s (NASDAQ: MSFT) Bing search engine, paint a bleak picture — potentially signaling that consumers may be placing themselves in danger by following Bing’s links to illegitimate sites.

“Of the prescription drug and online pharmacy advertisements sponsored by Microsoft that we reviewed, 89.7 percent led to ‘rogue’ Internet pharmacies that do not require a prescription for prescription drugs, or are otherwise acting unlawfully or fraudulently,” the report said. That included sites, in at least one test instance, that were caught selling counterfeit pharmaceuticals.

The report is a collaboration between online pharmacy verification firm LegitScript and Internet compliance tracking firm KnujOn. It is the first of a planned series on search issues, KnujOn CEO Garth Bruen told InternetNews.com.

The authors, including Bruen, said their companies funded the research without the backing of any third parties.

So why Bing and not Google (NASDAQ: GOOG) or Yahoo (NASDAQ: YHOO)?

“They’re on the list,” Bruen said, adding, “We’re going to cover the entire search engine space.”

Part of the reason why Microsoft got picked to be first is because its new Bing search engine, which it markets as a “decision engine,” aims to focus on five specific and lucrative areas of expertise, including health.

Microsoft launched Bing in late May to great fanfare. Since then, it has seen slight gains in Microsoft’s share of online U.S. searches.

Additionally, Microsoft CEO Steve Ballmer and Yahoo CEO Carol Bartz last week announced a joint agreement whereby Microsoft will provide search technology for Yahoo Search and Yahoo will get most of the revenue from those searches.

However, the new report focused only on Microsoft-sponsored Bing search results for pharmaceuticals.

“There are thousands and thousands of possible prescription drug searches,” Tom Horton, president of LegitScript, told InternetNews.com. “We looked at ten different prescription drug searches involving a total of 69 sponsored search results.”

Neither were the bogus ads just a flash in the pan. “One thing not directly mentioned in the report but that’s important is none of the illicit search results were just up for a day or two, and then taken down,” Horton said in a follow-up e-mail.

Besides sites that sell drugs without a prescription, other problems cited in the report are legitimate-seeming sites that, at the last minute, redirect users to sites in countries like Russia and China — in some cases linked to organized crime — as well as sites that sell counterfeit drugs.

Drug searches in the test included queries seeking erectile dysfunction drugs Cialis, Viagra, and Levitra, as well as anti-depressants like Wellbutrin and sleeping pills like Ambien and Soma. The authors ordered some of the drugs and in at least one case found that they were sent counterfeit drugs from a company in India, the report said.

“We take these claims very seriously and are currently investigating this issue,” a Microsoft spokesperson told InternetNews.com in an e-mail. “Microsoft’s guidelines clearly require online pharmacies who advertise on Bing to adhere to U.S. laws.”

Microsoft, overall, has a fairly good record of dealing with questionable material found by its search properties, including the newly launched Bing. When confronted in June with problems of Bing users getting unexpectedly easy access to porn, Microsoft moved quickly to fix the issue.

This week’s report also admits that Microsoft “has a policy in place to limit ads for pharmacies, or prescription drugs, to [verified] … pharmacies.”

One of the report’s complaints regarding Bing searches, however, is that Microsoft does not appear to actively police such advertisers — and that the company has a financial interest in users who click through to the false advertisers, generating a small bit of revenue as a result.

“Just because you find something on the Internet doesn’t mean it’s safe or legitimate,” Bruen added. “Anybody can set up a Web site and sell junk over the Internet.”

The report can be found on LegitScript’s site, and is available here in PDF format.