Microsoft’s Bing Gained 1 Point of Market Share in July

Microsoft‘s share of the U.S. search market increased to 9.41 percent in July 2009, a rise of 1 percentage point, according to research firm StatCounter. At the same time, Google’s share of the U.S. market slipped during the same period to 77.54 percent, down by nearly a point, while Yahoo declined a fraction of a point, from 11.04 to 10.95.

StatCounter’s report came days after the July 29 announcement of a partnership deal between Microsoft and Yahoo: that 10-year agreement that will see Microsoft’s Bing power Yahoo’s search engine, while Yahoo assumes exclusive worldwide sales duties for the companies’ search advertisers. Microsoft will pay traffic acquisition costs (TACs) to Yahoo at an initial rate of 88 percent of search revenue generated on Yahoo’s sites.

The deal represents a recognition on both companies’ part that the only way to break Google’s lock on the search and online advertising market may be through working together. According to StatCounter’s report, a combined Microsoft and Yahoo search would have a 20.36 percent market share.

“Bing continues to make slow but steady progress but the combined Yahoo figures suggests that the deal announced last week will have to demonstrate major future synergies if it is to make any dent in Google’s dominance,” Aodhan Cullen, CEO and founder of StatCounter, said in a statement.

Microsoft and Yahoo, however, are publicly hopeful that the deal will allow them to chip away at Google’s substantial lead in the online space.

“This deal will combine Yahoo and Microsoft search marketplaces so that advertisers no longer have to rely on one company that dominates more than 70 percent of all search,” both companies said in a statement on July 29. “With the addition of Yahoo’s search volume, Microsoft will achieve the size and scale required to unleash competition and innovation in the market, for consumers as well as advertisers.”

After Bing started making incremental market-share gains in the wake of its June 3 launch, buoyed to a certain extent by Microsoft’s massive ad campaign, analysts debated whether the relative success of Redmond’s search engine would influence its dealings with Yahoo. Some argued that Bing would lead Microsoft to abandon any deals with Yahoo entirely, especially in context of its failed 2008 takeover bid, while others argued that Bing would compel Microsoft to approach Yahoo from a position of greater strength.

The deal between Microsoft and Yahoo could also help stop the erosion in Yahoo’s paid search spend, which according to a July report by SearchIgnite had declined year-over-year by 26 percent.