Microsoft: We Are a Startup in the Search Market

Chief Executive Officer Steve Ballmer considers Microsoft the equivalent of a startup on the search engine market compared to Google. While at the Stanford University on May 6, 2009, Ballmer indicated that both Microsoft and Yahoo are dwarfed by Google in search. And fact is that the Redmond-based company's CEO wasn't far from the truth. The software giant seems to have settled in the third position on the search engine market, although in 2008, it appeared that it was going to move in the number two spot with the acquisition of Yahoo.

“We're not just sort of a No.2 or 3 player. The No. 1 player is a lot bigger than us, and they're a lot bigger actually than Yahoo! Google is a very big company in search,” Ballmer stated. “And therefore we are more like a startup than we are like a big guy in the search market. We can't invest in everything the market leader can. We're not going to be able to just outdo and outspend somebody whose revenue is many times bigger than ours.”

Microsoft's CEO underlined that competing with Google means for the Redmond-based company doing things differently than its Mountain View rival. He noted that this is precisely what Microsoft is doing. But at the same time, being just a startup confers the software giant certain advantages over Google. Microsoft has greater flexibility than its Mountain View-based rival when it comes to applying research and development projects into search engine.

“There are some things you've got to do to be competitive, and then there are some things I think we have an opportunity to do precisely because we're not the market leader. Because we're not the market leader, we can experiment with new business models like Cashback. Because we're not the market leader, we don't have to stay locked into the current user interface for search over time. The user interface drives click-through rate on ads, which drives revenue. So, we have the luxury, the flexibility like a startup does to try more new things, in fact,” he explained.

Ballmer revealed that Microsoft needs to step up its search game and become more disruptive. Such a tactic would reverberate over both the user and the business models of its search engine.