How can Microsoft overtake Google in search? Is search a winner-take-all business?

For my executive MBA we had to write short blog post, this is a adaptation of one such:

How can Microsoft overtake Google in search? Is search a winner-take-all business?

These are two interesting questions from a users perspective. It is in Google’s interest to keep Microsoft focused on them as well, because Google have an advantage in the search business. I believe that the questions are the incorrect question to ask both from Google and Microsoft’s perspective. The correct questions are (IMHO): How can Microsoft overtake Google in the advertisement market? Is the (online-)advertisement market a winner-take-all market?

Search is just a means to an end. The end goal is to tap into the revenue potential of advertisement. To capture revenue in this market Microsoft can try to capture a larger portion of the search and this is what they have tried for some time. They can conceivably compete with Google as long as they manage to deliver the same perceived quality and are able to also capture the advertisement revenues. In the straight forward “googeling” business Google has several advantages: They are the market leader, the are better able to capture advertisement revenue, “googelig” is their core business and they have significant resources they can use to defend their position, and finally they are good at innovation. 

An option for Microsoft is to try to redefine search in order to level the playing field, or maybe even capture the high ground. Or they could attempt to carve out a niche market in search that they are better able to serve than Google.

In the end both these alternatives boils down to how can Microsoft capture advertisement revenue from Google. It begs the question; is search the correct arena? Can Microsoft in the future redefine the advertisement market to something better suited to their core competencies? It will not be easy and some will say it is impossible. Predicting what will happen in the technology arena has countless examples that some people have done what most people thought impossible. The question that remains to see if Microsoft is some people or if they are just like most people.