Reuters Breakingviews columnist Robert Cyran wrote an article this week that has received due attention from industry observers – Cyran argues that Microsoft should consider selling its search engine product Bing, because it continues to generate a large loss for the company every year, and it may do better with a different company.
Microsoft believes that Bing strengthens its customer base in a wide range of its offerings, including mobile phones and business software, but Cyran does not give much weight to this argument, saying there is little evidence so far that this is true. Google still controls over 60 percent of the U.S. search market, and while comScore and Experian Hitwise have been reporting that Bing has registered consistent growth, it still accounts for just 27 percent of the U.S. search market. Further, Bing again recorded a loss this fiscal year – $2.6 billion, higher than last year’s loss.
Cyran estimates that if sold, Bing could bring in about $11 billion, since, Microsoft’s online services unit generated $2.5 billion in sales for the year ended June 30th, and Bing is a very large component of this unit. Google generated about six times as much in sales over the past year, so Cyran assumes a 25 percent discount to arrive at his $11 billion figure.
Facebook already has a strong relationship with Bing – it integrates Bing search results, so it may benefit from buying it in order to keep more traffic on its website, and use Bing’s substantial data to refine search results. And this would help it compete with search engine giant Google, which just launched its social networking offering Google +.