After all, maybe Bing is not trying to compete with Google

At the beginning of 2023, many experts were full of praise for Microsoft’s new Bing search engine, equipped with a powerful artificial intelligence (AI) engine.

“Bing Chat could change the game” were the headlines of some. “We may be witnessing the beginning of a new era, a renaissance, which could even be described as “Bing-a-“, wrote the others, apparently without batting an eye. “Bing is the king” was a headline on a website that was not The Gorafi.

And then, six months later, the Wall Street Journal deflates all this by publishing an article that calls the new Bing Chat “cute, but not a game changer”. At ZDNET, Lance Whitney concluded that “Bing’s new features have failed to revive Microsoft’s share of the search engine market”. As proof, he cites the same figures as those used by the WSJ:

Statcounter statistics show that Bing’s market share is 2.99% in July, a slight decrease compared to January’s 3.03% and a slight increase compared to April’s 2.76%. Similarweb data show that Bing’s share was 3.23% in June, a relatively stable figure since the beginning of the year.

So what do these numbers mean? StatCounter does an admirable job of identifying major trends, such as the shift from desktop to mobile devices and the relative position of web browsers. But the StatCounter figures tell us absolutely nothing about the search engine market shares. And don’t take my word for it. Read this disclaimer on the StatCounter FAQ:

Is Bing Chat included in the search engine market shares?

We have no way to measure the number of requests made in Bing Chat. However, we also do not measure the number of requests sent to classic search engines such as Bing or Google. Instead, we track references to search engines.

For example, if you go to bing.com if you are looking for something and you click on the result of a website, we will register this click as a referral to a search engine if the statcounter code has been installed on that website. It is the click to a website that we are measuring, and not the actual search queries that have been made.

That changes everything, doesn’t it? StatCounter measures the last click – the one that took you away from the search engine – and does not count any activity on the page itself. What the StatCounter data tells us is that among the sites that use the StatCounter tracking service, the impact of Bing referrals worldwide, on all platforms, has not changed dramatically in the last six months.

Bing Chat only works in Edge or with the Bing app on mobile devices

But even this statement must be qualified. Bing Chat only works in the Microsoft Edge browser or with the Bing app on mobile devices. It is therefore not possible to use it with the most popular browser in the world, Google Chrome, or with Safari, the default browser for Apple’s mobile devices. Given these obstacles, it is unlikely that the global figures for all platforms combined will change much.

You can play around with some of StatCounter’s charting tools to see the different segments at work. For example, if we exclude mobile platforms and tablets, and if we look only at desktop search statistics in North America since the launch of Bing Chat in February 2023, Bing referrals are up 2.2%, while Google’s are down 2.8%.

However, I do not advise taking these figures too seriously.

The WSJ also cites SimilarWeb. On its FAQ page, “How We Measure the Digital World”, the company says it generates more than 10,000 reports per day.

If you dig deep enough, you will eventually arrive at the “Search Engines Market Share” page, which offers the same type of customization tools as StatCounter. According to these figures, in June 2023, Bing had a global market share of 3.23%. This figure climbs to 8.79% if we consider only desktop platforms. Similarweb offers a line graph, but none of the data points are labeled, so it is difficult to know if there has been any movement in the past year.

There is so much noise in all these numbers that it is really difficult to find the signal, which is why the graph on the search engine market share contains this warning:

This traffic and engagement data is based on aggregated and anonymized analytics shared with Similarweb by millions of websites and applications and represents more than 500 billion page views. These data concern a subset of sites and therefore constitute an estimate of the market share.

A third analysis company cited by the Newspaper is YipitData, which does not offer any information on how its figures are collected. Three of the six most recent posts on the company’s blog are about bathroom renovation, and nothing else on the page indicates that the company has special knowledge in AI or research.

For Microsoft, a gain of half a percentage point
of the worldwide use of its research products would be enormous

For Microsoft, a gain of even half a percentage point in the global use of its search products would be enormous. But without knowing the margin of error, it is difficult to trust the figures that the WSJ considers gospel word. Plus, I think they’re probably missing out on reality.

Again, don’t take my word for it. In a confidential strategic document dating from 2022 that was accidentally leaked during a lawsuit, Microsoft CEO Satya Nadella spoke about Microsoft’s Search, Advertising, News, and Edge (“SANE”) segment in these words:

We capture ~2% of the $560 billion total addressable market (TAM) in the SANE segment. With a turnover of 10 billion dollars, we are a large digital advertising company and our products are competitive. …

More and more, we are managing to bridge the gap that separates us from our big competitors in terms of product experience, as objective user feedback shows. In some cases, our products are considered the best. However, our market share does not reflect this state of affairs, as there are a series of structural obstacles, each of which is difficult to overcome. However, we are seeing steady improvements over time.

“Radically changing the scale of our advertising business”

The real goal, continues Nadella’s memo, is to “radically change the scale of our advertising activity”. This is a high-impact lever for us, given the size of our installation base, and even small gains from refining the funnel can translate into significant gains in terms of operating margin.

In other words, Microsoft may not be trying to compete with its competitors: Maybe Microsoft is not trying to compete head-on with Google Search after all.

Microsoft’s revenues from search and advertising would be a rounding error for Google, which pays twice this amount every year to Apple only as a bonus for sending Google search traffic on iPhones, iPads and Macs. But this is a secondary activity for Redmond, with a lot of room to develop, in particular by encouraging these customers to switch to Edge from their Windows PC (a billion people). Annoying? Absolutely. But it is also a sure source of additional income.

Microsoft’s goal with Bing and Edge is not to take Google’s place as the world’s leading search engine. The goal is to develop an advertising business that is already proving itself as an additional segment that brings at least $10 billion in revenue to Microsoft every year.