Is Qi Lu Microsoft's Search Engine Savior?

The former Yahoo tech whiz believes Google will be vulnerable to the new Bing search engine. The stakes are high

Qi Lu believes he has a "duty" to make search "more competitive and healthy" Brian Smale

By Peter Burrows

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Ballmer: Lu is simply "the best guy on the planet to run a search business" Koichi Kamoshida/Getty Images

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Qi Lu has had more than his fill of losing to Google. For a decade, the technologist led development of Yahoo!'s Internet search technology and watched Google eclipse his company to become the Internet's brightest star. He left Yahoo in August with vague plans to start a company or return to his native China. Then Microsoft CEO Steve Ballmer came calling. He wanted Lu to consider taking over Microsoft's online operations and lead the charge against Google one more time. Ballmer promised the company was willing to invest vast resources to compete, even if it took years to pay off. "The more I thought about it, the more it seemed like a duty," says Lu, during an interview at the software giant's Redmond (Wash.) headquarters on a balmy May day. "There's a chance—a genuine chance—that we can make the search landscape a whole lot more competitive and healthy."

He may be one of the few people who believe that. But Microsoft is giving Lu more backup than he's ever had before. On May 28, the company was set to unveil an ambitious new search offering called Bing. Instead of just finding promising Web links, the site is designed to help consumers more easily make complex decisions—like what car to buy or where to go on vacation. The goal is to create a loyal base of fans who routinely use Bing for certain types of queries, rather than default to Google. To support the launch, Microsoft is gearing up its biggest search marketing blitz ever, one that could run as much as $100 million. "We're going [to show] consumers that the two guys that really care about helping you navigate the Internet are us and Google," says Ballmer "This will be the first time we will step out and say, 'We're not just sort of a general online player. We're really a player in search.' "

The stakes are high. Microsoft was slow to recognize the importance of search, only starting to build its own technology in 2003. Since then, the effort has contributed to barrels of red ink in the company's Internet business, including more than $3.5 billion in losses in the past three years. Yet Microsoft has only lost ground with its Live Search, dropping to just 8% of U.S. searches, while Google has grown to 64%. Microsoft has missed out on billions in potential revenues that might have goosed its stock, which is stuck at the same level it hit in 1998. Worse, Google is using its dominance in search to attack Microsoft's most lucrative businesses—including its Windows operating system and Office suite of business software.

Most search experts believe Lu (whose name is pronounced CHEE-loo) will struggle to do much better against Google this time. The search kingpin is refining its own technology all the time, and the data it gathers from handling almost two-thirds of people's queries give it deep insight into how they react to various search alternatives. "Microsoft is making some nice changes, but [there are] no game changers," says Danny Sullivan, editor in chief of the blog Search Engine Land who has been briefed on Microsoft's new site. "I still don't think Microsoft fully realizes how far behind Google they are."

Lu and other Microsoft executives argue they have an opening few experts see. The company's extensive research has turned up a surprising vulnerability at Google: While Web surfers may say they're happy with search technology, the data show they don't find what they're after almost half the time. Microsoft has designed the new search offering to remove the roadblocks. One example: Microsoft researchers found that 25% of clicks on search pages involve going back to the previous page, suggesting a frustrated search. So Microsoft developed a feature to avoid the wasted effort: When users hover over a Web link without clicking, Microsoft's computers generate a pop-up summary of the link.

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