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In just 7 months, Microsoft CEO Satya Nadella "refreshed" his own cognition:

What can really bring about a "new day in search" is not the integration ofChatGPTIt is not the launch of the New Bing, but the result of a US judge's trial on Google's search engine monopoly.

According to what Nadella said during the trial, with Google around, Internet search has always been Silicon Valley's "biggest no-fly zone."

Microsoft Bing, which was previously born as a "challenger", has been fighting with Google for more than ten years and has invested nearly $100 billion, but it has always been suppressed by Google and its market share has hovered around 3% for many years.

As an important creator of Bing, Nadella is naturally unwilling to give up. The emergence of ChatGPT once made him passionate. On February 7, 2023, the day when the new Bing was launched, he announced to the world that this was "a new day in the field of search" and that artificial intelligence would reshape the current search market.

Nadella said he has been waiting for such a moment for 20 years in the industry.

Unfortunately, the effect of AI has not lived up to expectations. Eighteen months later, the new Bing is even losing its perennial second place position.

The harder he worked, the more frustrated he became. Nadella's frustration seemed to have reached its peak.

At this time, the conclusion of an antitrust case brought new variables to Microsoft and the search industry.

01

ChatGPT failed to be a panacea for Bing

November 30, 2022, is a day that excites technology enthusiasts all over the world.

On this day,OpenAIOfficially announced the launch of a chatbot, ChatGPT. Two months later, its monthly active users exceeded 100 million, making it the fastest growing consumer application in history at the time.

At the same time, a dormant dream is awakening: Microsoft's search engine dream.

As an important sponsor of OpenAI, Microsoft announced the launch of a new Bing integrated with ChatGPT on February 7, 2023. In the brand new search box, there is an ambitious prompt - "Ask me anything".

In Microsoft's introduction, the new Bing can display traditional search results side by side with artificial intelligence annotations and chat interfaces. Microsoft emphasized that it runs the next-generation large-scale language model customized by OpenAI specifically for search services, which is more powerful than ChatGPT. This model, called "Prometheus", can improve the relevance of answers, further annotate answers, update search results, etc., making the search results more useful.

The first batch of melons are often the sweetest. After the launch of the new Bing, the market demand exploded. Analysis from third-party data.ai showed that overnight, Bing's global downloads soared 10 times, and it jumped to the second most popular free productivity app on Apple's App Store, second only to Gmail.

▲Data as of March 20, 2023 shows that since Microsoft launched its AI version of Bing Search on February 7, Bing's page visits have risen by 15.8%, while Google's page visits have fallen by nearly 1%. Source: Similarweb

Data released by Microsoft showed that once the new Bing was launched, it attracted 1 million users to apply to join within 48 hours. In the month after the launch of the new Bing, the number of daily active users of Bing exceeded 100 million, of which "millions of active users" were attracted by the AI ​​integrated version.

Microsoft CEO Satya Nadella told the media, "The AI ​​version of Bing represents a new search paradigm. Microsoft 'made Google dance' by integrating OpenAI's artificial intelligence into the Bing search engine. Today, it is Microsoft that has brought more intense search competition."

Microsoft sounded the battle drum loudly. After more than ten years of humiliation, the software giant finally regained its dream of a search engine.

People in Silicon Valley and Seattle know that Bing has had a rough time. For years, the talk around Bing has been about stagnant market share and rumors of its closure or sale.

Can Bing make a comeback this time with the help of A? Judging from how nervous Google was at the time, Bing seemed to have a chance.

The day after the launch of the new Bing, Google hastily held a "show-off" press conference in Paris. Because Bard, a chatbot that competes with ChatGPT, failed during the demonstration, Google's stock price dropped by $100 billion in one day. CEO Sundar Pichai sounded the "red alert" representing an urgent crisis internally, and even Sergey Brin, the founder of Google who had been in hiding for many years, was pulled back.

Just when Google was in a panic, Microsoft came up with a killer move - integrating GPT-4 into the entire Office family, liberating 1 billion workers around the world. The situation mentioned by Microsoft founder Gates in "The Road Ahead" seems to be happening: "Companies in a positive spiral have an atmosphere of being born lucky, while companies in a negative spiral have a feeling of being doomed to fail."

Microsoft's CFO optimistically told analysts that for every one percentage point increase in Bing's market share, Microsoft will earn about $2 billion in advertising revenue.

But after a year and a half, the harsh reality is that Bing has barely managed to snatch any new market share from Google.

In 2023, Bing's global market share was 2.97%. According to StatCounter data, in July 2024, Bing's latest share was 3.86%, still less than 4%. Dramatically, the new Bing that integrated ChatGPT experienced a continuous decline for several months after February 2023 - the global market share fell below 3%, and did not rise to more than 3% until August.

For comparison, in the summer of 2009, when Microsoft renamed Live Search to Bing, its global share was 3.5%. In other words, 15 years later, even with the support of ChatGPT, Bing still remains at the same level.

Google's market share dropped by only 1 percentage point from 92% in July 2023 to 91% in July 2024.

▲Image source: statcounter

Perhaps even more embarrassing for Microsoft is that star startupsPerplexity Founder Aravind Srinivas unilaterally sounded the "death knell" of Google Search on social platform X at the end of 2023. He ambitiously stated, "Perplexity is a replacement for traditional search engines."

If you want to vote for a rival to Google Search in Silicon Valley, people are more likely to vote for Perplexity than Bing. Behind Perplexity are Huang Renxun, Bezos, Son Zhengyi and other influential figures.

Only two years after its founding, Perplexity has easily surpassed the 10 million monthly active users threshold. In July 2024, Perplexity answered about 250 million questions, half of the total number of search responses in 2023, which means that the app is in an exponential growth phase.

Nadella could not have imagined that when he shouted "a new day in search" and ambitiously wanted to wage war against Google, a new generation was writing the "new day" in the search industry elsewhere.

ChatGPT failed to become a panacea for Bing. Bing seems to have been misplaced by Microsoft again.

02

Bing is defeated again and again, and Google is unbeatable

Nadella's disappointment was clearly evident in his testimony in the Google antitrust case.

He acknowledged that there were limits to how much artificial intelligence could reshape today’s search market, and he worried that it was making Google more powerful and making it harder for challengers.

Of course, such "humility" may also be related to the occasion. If Google's search market position can be shaken through legal means, Bing will have more room for survival.

Since its launch in 2009, Bing has been expected to challenge Google with technological innovation and better user experience.

Nadella claimed that Microsoft has invested about $100 billion in Bing, an amount that even exceeds Google's investment.

He himself had devoted all his efforts to the establishment of Bing. In March 2007, Steve Ballmer, then CEO of Microsoft, approached Nadella and hoped that he could lead the team to develop online search and advertising business (predecessor of Bing). Nadella was reminded, "This may be your last job at Microsoft. If you fail, there is no parachute, and you may crash with it."

▲Left: Nadella Middle: Bill Gates Right: Ballmer

Microsoft must build growth beyond Windows and Office, and Ballmer believes search is the future of the industry.

The following year, Microsoft invited Lu Qi from Yahoo and promised him to fully develop the online search business and compete with Google in the long term. Lu Qi was responsible for Yahoo's search and search advertising - at that time, Yahoo was seen as Google's only strong competitor.

▲ At that time, Lu Qi was an industry expert that the entire Silicon Valley wanted to recruit

In order to learn this unfamiliar to C business, Nadella was willing to work under Lu Qi. Unlike Ballmer's desperate bet, Nadella had other expectations for Bing - he believed that Bing would eventually become a great training ground for Microsoft's "cloud-first" services. This vision was undoubtedly more far-sighted at the time.

In 2009, Microsoft renamed Live Search to Bing and clearly defined it as a "decision engine." The so-called "decision engine" means that when users type in keyword information, such as weather, flights, etc., relevant information will be displayed directly or in a pop-up window, and content from Facebook friends will also be recommended to users through Bing.

The most obvious manifestation of Bing's ambition to challenge Google in the search field is that Microsoft and Yahoo have reached a historic agreement, whereby Yahoo gradually abandons its own search technology and uses Bing's data instead.

Unfortunately, Bing did not live up to its expectations. Two years after its launch, Microsoft had already lost $5.5 billion on Bing’s search business. In 2014, when Nadella became Microsoft’s CEO, he immediately had to respond to the question of whether Bing would be transferred.

At that time, Bing had not yet made a profit and Yahoo had already considered ending the cooperation.

Not only that. The two major systems of mobile Internet entrances, Android and Apple, have always been firmly controlled by Google. These two walls are so thick that they are despairing.

For Android manufacturers, Google's Google Play is an important distribution platform. With this as a bargaining chip, Google has firmly established itself as the default search engine for Android system browsers.

In the Apple ecosystem, Bing has never given up competing with Google. Nadella's "goodwill" even seems a bit humble. He said that during his tenure, he would focus his work every year on seeing if Apple is willing to use Bing as the default search engine. Microsoft also tried to deepen its cooperation with Apple in 2018 by selling Bing or establishing a joint venture. In order to make this deal, Microsoft is even willing to accept years of losses.

But the result is that Bing has never been able to replace Google as the default search engine in the Apple ecosystem. Eddy Cue, head of Apple services, explained that because Microsoft is inferior to Google in terms of search quality, technology investment and commercialization, the negotiations between the two sides have failed to make substantial progress.

In terms of commercialization alone, Google has left its competitors far behind. In 2022, Google paid Apple $20 billion in search advertising revenue, accounting for 17.5% of Apple's operating profit that year. In comparison, Microsoft's concessions can only be described as "meager."

In the Google monopoly case, Nadella stressed that search is a game that is difficult for Microsoft to make any breakthroughs, but Microsoft has persisted to this day. According to his statement, it is Google that blocked the opportunities of search competitors such as Bing through default search contracts and other means.

▲On September 13, 2023, Nadella attended the Google monopoly case court in Washington. Source: The Washington Post

But Google refused to be blamed. Google's lawyers argued that this was a direct result of Microsoft's mistakes in Internet search, not due to Google's control of the market.

Li Hu, an early Google employee who has worked in Silicon Valley for 20 years, told NoNoise that the search market is a winner-takes-all market, and there is a concept of brand power behind it. "No matter how well Yahoo did, no one cared, and users were still used to opening Google directly. Bing did well, but few people used it, and it could never get a market share."

Compared to Google Search, which was launched in 1998, Microsoft Bing came too late, at least 11 years later than Google.

Even worse is that Microsoft was slow to respond in the mobile Internet era and failed to pave the way for Bing to become a traffic portal. In 2005, Google founder Page spent $50 million to acquire Android, and Google Search gained an operating system portal to the mobile Internet era. However, Microsoft's boss Ballmer was not optimistic about the potential of Android and iOS, and even ridiculed Apple phones for being unattractive to business customers, "because it has no keyboard." But in the end, it was Microsoft's main Windows Phone system that lost.

As a last-ditch effort, Microsoft spent $7.2 billion to buy another ticket - Nokia.

I believe Baidu Search can empathize with how painful Bing is feeling.

The gap is getting bigger and bigger.

Of course, Bing is not the only one hurt in the search industry. For more than two decades, Google has been the most used Internet search engine in the world, with a market share of more than 90% year-round. In the past 20 years, both startups and technology giants have failed in the battle to challenge Google.

Among the many competitors, Microsoft is the only one that seems to have the strength and qualifications to compete at the same table - according to the UK antitrust agency Competition Markets Authority, it would cost at least $10 billion to $30 billion to build a company from scratch to compete with Google.

Despite the slim chance of success, Microsoft will not give up easily. In order to reverse the embarrassing situation of Bing, Nadella hiredDeepMindMustafa Suleiman, co-founder of Microsoft, was appointed executive vice president and CEO of Microsoft AI.

Things took a new turn in early August this year. Google lost a search engine monopoly case, and a crack may appear in the unbreakable wall.

However, in Microsoft's grand AI strategic layout, the expectations for Bing have long been reduced. At present, Azure cloud services, Microsoft 365 Copilot and the self-developed 500 billion parameter large model MAl-1 are the focus of Microsoft in the new round of AI competition.

03

Where is AI search going?

The search market at this time has also added a new variable - AI search is becoming increasingly popular.

In February this year, Gartner predicted in a report that by 2026, search volume on traditional search engines could drop by 25%.

When asked whether conversational AI would reshape search or enable competitors to replace Google, Google CEO Sundar told the media that the new technology could provide "opportunities for large and small companies to find new markets," but he also stressed that Google is not in the process ofGenerative AILeading the way in integrating with more traditional searches.

Both large and small companies are waiting for new market opportunities.

Perplexity, mentioned above, has seen its value soar in less than two years. According to a report by The Information at the end of May, Perplexity's latest valuation has reached $3 billion, which is approximately 1/10 of Baidu's.

Perplexity provides users with a search experience that is completely different from Google: after users ask questions, Perplexity will screen sources, summarize answers, attach source links, and allow users to search for information in specific fields according to their needs, and implement classified storage for users to efficiently trace back. Another point is that there are no ads - this is considered one of the mass bases to challenge Google.

However, Perplexity did not maintain its composure for long. Recently, the startup announced that by the end of September, its product business model would officially shift from subscription to advertising. Perplexity Chief Business Officer Shevilenko said, "Unlike OpenAI, we know that our main profit engine will be advertising."

This means that AI search companies will compete more fiercely with Google.

Interestingly, Perplexity's search engine was initially powered by a licensed version of Microsoft's Bing web index, but Shevelenko said Perplexity moved away from using Bing as its core system and instead used its own proprietary search index and ranking system.

This may be a new signal that Bing does not seem to have gained more benefits from the "wolf raising plan", but instead has supported a new potential competitor. More young coveters have come to the $300 billion advertising market.

From another perspective, after Perplexity clearly adopted the advertising model, Google only gained one more challenger but lost one disruptor. On the contrary, the hidden OpenAI search product SearchGPT has aroused great expectations in the industry.

As a fan of OpenAI, Li Hu believes that the biggest variable in the future search market will still come from ChatGPT. "No matter what the model is, it ultimately depends on what users need. Once ChatGPT reaches a cooperation with Apple iOS, it will then enter the search field and it will only be a matter of time before it replaces Google."

In China, the question of who will be the Chinese version of Perplexity is hotly debated, and the challenge has shifted from Google to Baidu. Baidu has tried to embed AI into its various businesses. In his 2024 OKR, Robin Li emphasized the need to complete the AI ​​native transformation and lead the generational change in search experience.

However, products that break user habits often rewrite logic rather than using AI to patch up the original product - this is also the power of marginal innovation. Although Baidu has reconstructed its search engine with the help of Wenxin Yiyan, AI search answers currently only account for 11%, and are still highly dependent on the inertia of traditional search. Baidu still needs to continue to explore and optimize product attractiveness.

Every prediction about the future of the search market will take time to verify. But there is no doubt that the changes that AI may bring and the emergence of challengers will inject new vitality into the search market that has remained unchanged for many years.

After all, when the tide of the times comes, no one wants to be the one left behind.