'Bing just shows Microsoft still needs Yahoo'

LONDON, UK: Microsoft Corp's new Web search service Bing is a far cry from the general-purpose tool the company must build or buy to compete effectively with rival Google Inc.

Microsoft would do far better helping users find the emails, documents and Web pages that users of Outlook, Office and Internet Explorer rely on every day.

But competitive restrictions appear to prevent the desktop software giant from doing what it knows best. Microsoft operates its business under oversight from U.S. regulators after it settled antitrust charges in 2002 that it abused its market dominance in personal computer operating systems.

Barring that, Microsoft needs to come to terms with Yahoo over Web search. A deal has eluded them for 16 months but Yahoo remains Microsoft's best chance for competing with Google on the consumer Internet.

Microsoft offered to pay up to $47.5 billion for Yahoo early last year but was rebuffed by Yahoo's former leadership. They have been in talks in recent months but no deal has emerged.

Rather than trying to be all things to all people, Microsoft's latest reboot of its Internet strategy helps consumer dig deeply and find what they are after quicker, but only in a selected set of categories.

Type in the name of an automobile and Bing assumes the user is thinking about buying or repairing a car. For example, the left frame of the search results page for "hyundai sonata" links to reviews, repairs, used cars, dealers, videos, images and reference manuals. A search for "diabetes" turns up health-related categories.

Many of the features Bing incorporates have been tried by smaller Web search providers and failed to make a dent in Google's share of the audience for Web search: Ask.com or specialist sites like Spock.com for people search or StumbleUpon for videos, to name a few.

Microsoft needed to restart its search strategy somewhere, and had to focus. Offering a search service that works well in some categories, not others, is no option.

Changing consumer habits is hard enough when you are competing with Google, the generic verb for Web search. No one is going to switch willingly from Google unless Microsoft can demonstrate clear improvements in how Bing works.

The demonstration a Microsoft executive gave me showed Bing can help Web users make decisions quicker by anticipating what kind of information they are searching for when they look for travel terms or autos, sports, health, retail or event names. The service goes lives for U.S. users starting on June 1.

It offers a great way to comparison shop for airline tickets that I'll certainly use when I travel. Many of the improvements Bing offers are designed to help Web shoppers. That's a lucrative area that will help Microsoft sell advertising, but is only one of the reasons that people use Web search tools.

Microsoft needs to make headway on the consumer Internet because its ability to expand in areas it already dominates is subject to regulatory challenges from competitors small and large that stand in its way.

It is not voguish to say so in hip technology circles -- I may lose some Twitter fans here -- but resurrecting competition in the desktop computer market has resulted in unfortunate consequences for consumers.

In dozens of little ways, Microsoft seems reluctant or prevented from adopting widely accepted technologies that make the Web easier to use elsewhere.

In recent years, Microsoft has acquired a string of companies that can help it improve search for business users. Chief Executive Steve Ballmer he's prepared to take years and invest billions to make headway in the consumer Internet market.

What Microsoft has shown with its initial release of Bing is that it needs Yahoo search more than ever.

Eric Auchard is a Reuters columnist. The opinions expressed are his own