Google, Bing Gain in U.S. Search While Yahoo's Slide Continues

By Clint Boulton  |  Posted 2010-01-15

Researcher comScore Jan. 15 said Google and Microsoft grabbed more U.S. search market share from Yahoo in December, with Bing ascending to its greatest search share since August 2007.

Google, which earlier this week threatened to close its search operations in China, rose to 65.7 percent from 65.6 percent in November 2009.

But Bing, which started at around 8 percent in June, grew search share month-over-month to 10.7 percent from 10.3 percent. Bing's growth was likely buoyed by a strong holiday shopping season as it lured consumers in with its Bing Cashback offering.

At 17.3 percent of U.S. share, Yahoo continued its inexorable slide, down from 17.5 percent in November, from 18 percent in October and 20.4 percent in November 2008.

BroadPoint AmTech analyst Ben Schachter said Yahoo may point to the lingering effect of the loss of toolbar distribution deals with HP and Acer. However, Schacter wrote in a Jan. 15 research note:

"There is no getting around the fact that the market share trend for Yahoo is awful and will impact search revenue. Our biggest concern is trying to find a bottom for Yahoo search share. Although the deceleration in share loss this month may indicate that we are closer to a bottoming, it is unclear how low it will go. Additionally, with Yahoo's share of total online time and page views dropping meaningfully over the past few months, the company's underlying fundamental usage trends are a growing concern for us."

Jefferies and Co. analyst Youssef Squali said that while Yahoo's rate of loss seems to be moderating, the continuing roll-over of tool bar partnerships is likely to further depress its market share short-term. Squali added:

"That said, management has reiterated its resolve to stem the decline and reinvigorate query growth in 2010 through the launch of product upgrades and better user experience. Our expectations for flat to slightly up single digit growth search revenue (gross) in 2010 may prove to be too optimistic if Yahoo keeps losing market share even if we see improvement in pricing."

If Yahoo continues to lose search share, the U.S. search market will be a two-horse race, with Google leading Microsoft by multiple lengths. This will be made somewhat moot with Microsoft and Yahoo's search deal, which is being scrutinized by the Department of Justice.

In this deal, Bing would power Yahoo's search results. If the two combined search today, they would hold 28 percent of the U.S. market, less than half of Google's share. Google reports fourth quarter 2009 fiscal results on Thursday, Jan. 21 after the close of the stock market.

Squali said he expects Google to provide Q4 results ahead of expectations. He sees net revenues, excluding traffic acquisition costs at $4.94 billion, with EBITDA at $3.05 billion and earnings per share of $6.60, versus the analyst consensus for those figures of $4.87 billion, $3.03 billion and $6.43, respectively.

ComScore's figures varied from that of market researcher Nielsen, which found that while Google gained and Yahoo fell, Bing fell as well.

The researcher said Google's December search share tallied 67.3 percent. Nielsen said Yahoo dropped, to 14.4 percent from 15.3 percent. Bing dipped to 9.9 percent from 10.7 percent in November.

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