In the News

Microsoft Looks to Expand Bing

By Nick Wingfield and Jessica Vascellaro

Microsoft Corp., which rebooted its Internet search business a year ago with its Bing search engine, is broadening its search push by putting a major partnership with Yahoo Inc. into action and discussing a search deal with AOL Inc.

More than two dozen senior employees each from Microsoft and Yahoo are now working on the complex task of swapping out Yahoo's search engine in favor of Bing and migrating tens of thousands of Yahoo advertisers to Microsoft's search-advertising system, part of a deal the two companies announced last summer. Bing is expected to begin handling all searches conducted on Yahoo late this year.

Microsoft also is in talks with AOL about making Bing the search engine on the Internet portal. A spokeswoman for AOL, which accounts for just over 2% of all U.S. searches, confirmed the company is in talks with Microsoft and Google Inc. A current search AOL deal with Google expires in December.

The dual efforts are a potential boost to Microsoft's search business and will test whether the Redmond, Wash., software behemoth can become a viable search rival to Google.

When Bing begins handling all searches conducted on Yahoo, Microsoft share of U.S. Internet searches is expected to rise to nearly 30% from its current level of about 12%, according to comScore Inc. data. That could make Bing a compelling venue for advertisers that have been reluctant to spend much money on Bing because of its comparatively small audience.

"The challenge for them is, between Bing and Yahoo, to really ramp up enough volume to be a viable advertising competitor to Google," said Bryan Wiener, chief executive of 360i LLC, a digital marketing agency based in New York.

Since it launched last June, Microsoft has fashioned Bing as a colorful alternative to Google that helps consumers find answers more easily online. For instance, Bing presents consumers with predictions about ticket prices when they search for airline flights to help them speed up travel purchases. Its Bing Maps program has been praised as a strong alternative to Google Maps.

Microsoft believes Google has started to emulate some Bing features. Google recently starting letting consumers customize their view of the normally austere Google home page with a background image, which resembles the vivid photos of the day that adorn the Bing home page.

Microsoft has increased its share of Internet searches by 3.4 percentage points since it launched Bing, but most gains came at the expense of partner Yahoo. Microsoft is far behind Google, which accounts for about 64% of U.S. Internet searches, according to comScore.

At a search engine conference in Seattle on Wednesday, Yusuf Mehdi, a senior vice president at Microsoft, said Google's position was underscored for him after his eight-year-old daughter brought home a list of classmates who used Bing and Google, with the vast majority using Google. "Daddy, we have a lot of work to do," he said she told him, as he held up the list his daughter made.

Microsoft is far from turning a profit in Internet search even as it spends heavily to hire engineers and advertise Bing, including a television ad campaign and quirky product placement deals. It cut a deal to pay $2,500 to a charity fund for victims of the oil spill in the Gulf of Mexico every time comedian Stephen Colbert said the word "Bing" on his television show, "The Colbert Report." Mr. Colbert raised $100,000 earlier this week as part of the agreement.

"When you're the number two, you have to think outside of the box," Mr. Mehdi said.

Microsoft's investment in Bing will swell the operating losses in its online services division, to $2.1 billion in the fiscal year ending June 30 from about $1.6 billion a year earlier, according to internet analyst Sandeep Aggarwal at Caris & Co.

A top priority for Microsoft is ensuring the plan to take over searches on Yahoo goes smoothly. The integration of Bing into Yahoo is being overseen by a joint Yahoo and Microsoft taskforce, the leadership of which meets weekly in Bellevue, Wash., said Mark Morrissey, a Yahoo senior vice president. Microsoft veteran Greg Nelson leads the Microsoft side. About 60 Yahoo employees have already joined Microsoft, most of them engineers in Bangalore, India, with 400 expected to make the shift. Microsoft has opened a new campus in Bangalore to house them.

Yahoo and Microsoft said their trickiest task is securely moving all of the advertiser accounts - including keyword buying histories and other customer records - to Microsoft's ad system from Yahoo's. On Monday, the companies held their first forum to talk through the transition with advertisers, with more than 120 advertisers attending the Bellevue-based event.

- Emily Steel contributed to this article.