Search Gamble May Just Work for Microsoft

'Desperate,' 'brilliant' cash-back plan will sap Google's base
By Kevin Spak,  Newser Staff
Posted May 22, 2008 1:38 PM CDT
Microsoft Chairman Bill Gates speaks during the Microsoft advance08 Advertising Leadership Forum at the company's campus in Redmond, Wash., Wednesday May 21, 2008.   (AP Photo/Stephen Brashear)
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(Newser) – Many are pooh-poohing Microsoft’s cash-back search scheme, but Michael Arrington of TechCrunch thinks it’s going to work—and be a major pain in Google’s side. With search-market share at a mere 9.1% (and falling), Microsoft has little to lose, Arrington argues, because search is a winner-takes-most proposition. If customers respond to bribery—and history suggests they will—Microsoft could widen its pie piece.

True, the system only works for e-commerce, “but frankly that is all that matters,” Arrington argues, because 80% of search revenue comes from e-commerce. Microsoft won’t make much money, since it’s giving that revenue back to customers, but it will swiftly hurt Google’s core business. “Sometimes, desperation is a good place to be,” Arrington concludes. “It forces you to try crazy stuff.”