Can Microsoft’s AI Ambitions Finally Challenge Google’s Dominance in Search and Ads?

Microsoft just posted its prospective view on its emerging AI technologies and how users might engage with them in the ordinary course of Bing Search, and so on. There’s a hopeful view out there that, hey, Microsoft might really start tearing it up in these consumer spaces like Search. If users are delighted, their ad revenue here might finally put a chill into the category leader, Google. Anyone familiar with Microsoft’s track record in doing anything of the sort will have a different view.

Competing in Google’s Core Territory: A History of Disappointment

As a tech leader, Microsoft is formidable. In Google’s core territory, it’s anything but, and I expect that pattern to continue. The history of disappointments is legendary. Gatineau, the challenger to Google Analytics, was shut before it even opened. What does that say about “giving Google direct competition” in the areas Google dominates? Microsoft often appears to have an advantage, a plan, or some momentum in Search… but once again, they’ll find a way to let it slip through their fingers. Google plays a bit of rope-a-dope at times, listening to wise media and pundit commentary explaining how they will lose to fantastic organizations like Bing, Facebook, Uber, etc., etc. But when it comes to Search and other owned-and-operated properties that are funded by advertising, Google remains second to none. It’s just so hard to win at this.

A Shell of Google’s “All In” Approach

Need proof? Well, try to give the current and past 3-4 years of Microsoft Advertising performance the most generous assessment you can—that is, if you run ad accounts, especially ten or twenty or more. We’ve been impressed that, in some cases, market share is holding its own. But… Microsoft has a bit of an easy time of it in the core Bing and ads arena, being able to copy most of Google’s best moves. They’re drafting on the big ship. The nub of where Google is seen to be facing threats—the AI piece? Or mere “machine learning” that powerfully (yet sometimes unassumingly) gets things done out here? Even just drafting along behind Google, Microsoft’s efforts in this area often fall short. Smart bidding campaigns—not as a rule, just far too often—won’t catch on properly so they can accurately deliver to target, and thus they underdeliver indefinitely until you throw them over to manual bidding and clamp down. So the advantages of the technologies that Microsoft is supposedly going to outduel Google with are just not today working well for advertisers—we who pay Microsoft’s bills in this particular realm.

The Acquisition Race

Some notable acquisitions by Microsoft over the past few years include Skype and LinkedIn (those are the ones with impact—others, in hindsight, are relatively lame). These aren’t bad, but the cool kids aren’t all a-quake about them. Google, notably, has acquired YouTube, Waze, Nest, Looker, Fitbit, and Android (in a manner of speaking). This non-exhaustive lineup doesn’t prove that Google is cooler than Microsoft or that they’re better at acquisitions, necessarily. But there is a certain tone to this list. And that last minor detail—that Google’s mobile OS is the only other mobile environment other than iOS worthy of mention—is a reminder that in that little game called mobile, Microsoft lost in spectacular fashion. And their browser, of course, was similarly trounced by Google’s and Apple’s offerings. Edge—which makes it into Microsoft’s press release—has a global market share of just under 5%. That’s right, folks, Opera has almost half the market share of Edge, the browser currently on offer from the company that once crushed Netscape with Internet Explorer. But don’t mind that! Look over here at the shiny objects (AI-powered, etc.) that are going to turn into winning revenue drivers for Microsoft!! Not gonna happen.