Google is right to be scared of Bing - remember Netscape?

Reports in the New York Post that Google is taking Bing seriously:

..Co-founder Sergey Brin is so rattled by the launch of Microsoft's rival search engine that he has assembled a team of top engineers to work on urgent upgrades to his Web service, The Post has learned.

Brin, according to sources inside the tech behemoth, is himself leading the team of search-engine specialists in an effort to determine how Bing's crucial search algorithm differs from that used by the company he founded in 1998 with Stanford University classmate Larry Page.

"New search engines have come and gone in the past 10 years, but Bing seems to be of particular interest to Sergey," said one insider, who spoke on the condition of anonymity.

As we wrote at the time Bing was launched this is a serious play compared to previous search engines, Google could be the next Netscape:

The issue for Bing is that while it is – in my view anyway – pretty close to Google in output quality, the question is why would anyone switch over to use it? Ah – it could of course be the default search engine in the IE browser of course. Also, Google is no longer as "cool" as it once was, there has been a bit too much evil leaking out the system for that, so I suspect many will try out the Bing system for a while.....and I suspect that many people - especially regulators etc - will be quote glad to promote a Google competitor.

In fact, the parallels between this and the Browser wars are quite pertinent – by attacking access to search, Microsoft is striking at the heart of Google’s revenue model – no Google search, no Ad revenue. No Ad revenue, no ability to support all these other expensive adventures. Declining revenue also impacts margins, as does competition for Adword style advertising. And Microsoft can load Bing as default on every new Windows machine sold…..

Interesting that its taken 2 weeks or so for the story to come out that Google was seriously worried. We suspect this is because they were waiting to see what its usage settled down to after the launch razmatazz - and the Post records that:

Early statistics show Bing increasing Microsoft's market share by two percentage points, to about 11 percent -- but that the gains largely didn't come from Google or Yahoo!

This is strategically interesting for another reason too - up till now, the Google/Microsoft fight has been one of Google attacking Microsoft's high margin areas - but this is a major push by Microsoft into the heart of Google's economics (as it takes away Ad revenues while also pushing up Google's costs to compete). It implies a change of strategic policy/thought from Microsoft, so the next few years will be fascinating.

(Hat tip CNet for link)