Microsoft Bing continued to gain market share, growing to 11.5 percent of the U.S. search market in February, up from 11.3 percent in January.
Bing's gains came from Yahoo, which dropped from 17 percent through January to 16.8 percent in February, according to research from comScore released March 9. Google grew slightly in February, notching 65.5 percent, up from 65.4 percent from the prior month.
The big story here is the rise of Bing and the corresponding plunge of Yahoo. Since its June 2009 launch, Bing has tacked on 350 basis points of growth, while Yahoo has lost roughly 330 basis points since May 2009, according to Jefferies & Co. analyst Youssef Squali.
"While the share losses have been exacerbated by the ongoing roll-over of tool bar partnerships (with HP and Adobe), we continue to believe that it is critical for Yahoo to stabilize its market share in 2010 to remain relevant in the search market," Squali wrote in a March 10 research note.
It is unlikely that Yahoo will recover to post any significant growth, given the commencement of its search deal to let Bing power its search results for the next decade.
The Justice Department and European Union blessed that deal one month ago, and the partners have begun the integration in earnest.
While Yahoo's search is greater than Bing's, it is clear Bing will be propping up Yahoo's search going forward. The combined companies' market share, which is now 28.3 percent to Google's 65.5 percent, will largely be viewed as owned by Microsoft. This sort of success is bound to produce more success, Squali argued.
"[Microsoft's] 350 [basis points] gain in search share post its launch is an indicator of sustainable traction. With Yahoo's traffic added to its own in late [second half of 2010], Bing should become a viable competitor to Google, with 28 percent market share-a duopoly most advertisers welcome."
Reasons for Bing's continued growth vary. Squali sees the $100 million advertising and marketing campaign as a big reason, along with the Bing Cashback program, unique user interface and focus on industry verticals, such as travel and shopping.
FBR Capital Markets, meanwhile, said much of Microsoft's share gains can be attributed to the addition of trending search queries on MSN and the company's aggressive ad campaign for Bing. The continuation of this campaign could translate well overseas.
"With Bing launching its ad campaign in some foreign markets, we would expect to see similar results in the international share figures in the coming months," FBR analysts noted in a March 10 research note.
Microsoft may one day be able to attribute other actions if Bing continues to grow. The company is waging a so-called proxy war against Google, urging companies that seek its advice about how to compete with Google to take their complaints to the Department of Justice and European Commission.
Indeed, Microsoft CEO Steve Ballmer recently said that Microsoft had been "expressing" its frustrations over Google with antitrust officials after a Microsoft attorney admitted Microsoft tried to convince regulators that Google tilted the mechanics of the search advertising business in its favor.