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Microsoft's search engine - Bing - has been a source of headaches for the Seattle based company. Despite its Herculean efforts, Google's market share in the US has been steady at about 66%. Microsoft's market share has been consistently less than 30%. In international markets and in the mobile market, the market share picture is even worse.
Microsoft is believed to have lost $15 billion dollars on its search engine business in the last five years. Much of that money is spent on deals that provide Bing with access to users. These deals result in revenue sharing agreements for the searches that originated at the partner site. Similar to the Google - AOL deal that we discussed in class, Microsoft is giving its partners 90% of the search engine revenue that originates at the partner site. For example, Bing is powering Yahoo!'s search engine. Each dollar in search engine revenue that is generated on Yahoo!, Microsoft is keeping only 10 cents. Despite all these efforts, Microsoft appears to be generating about half the revenue per search compared to Google.
-Based on our case discussion, discuss why Bing's revenue per search query is less than half of Google's revenue per search query?
-If you were to consult Microsoft, what strategies can Microsoft employ to make Bing more profitable? Be specific in your recommendations.
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