Microsoft's Lu on Bing: 'A First Step'

In his first interview since his arrival, online services chief Qi Lu weighs in on competition with Google, the need for innovation at Microsoft, and more

During a decade as head of development for Yahoo's Internet search division, Qi Lu almost never granted press interviews. But as head of Microsoft's Online Services Group, a job he took in December, the 47-year-old Lu has accepted one of the highest-profile challenges in all of business: trying to keep Google (GOOG) from increasing its dominance of Internet search.

On May 11, BusinessWeek senior writer Peter Burrows sat down with Lu in the first interview he's given since starting at Microsoft (MSFT) in January.

Recruited directly by Microsoft CEO Steve Ballmer, Lu certainly has the technical chops for the job. He helped Yahoo (YHOO) launch its search effort. He was instrumental in bringing to market Yahoo's oft-delayed Panama advertising platform. His legendary work habits include 20-hour days that start with a five-mile run at 4 a.m. Yahoo colleague Dave Karstadt says that during business travel from the Bay Area to Los Angeles, Lu routinely found a couple of empty seats and curled up to grab an hour of shut-eye. "He'd wake up and be ready to rock," Karstadt says.

In the interview, Lu was polite and professorial, often taking refuge from probing industry questions by moving to a whiteboard to explain the inner workings of the Web or the thinking behind Microsoft's new search offering, Bing. Through it all, he stressed that Bing was only the first step of an arduous journey. Edited excerpts follow:

Had you planned on going to Microsoft when you left Yahoo in August?
When I left my previous company, the [possibility] of working for Microsoft was completely unexpected. I was thinking of either joining an early-stage company, or potentially going back to China. But I had an opportunity to speak to Steve [Ballmer], and the opportunity of doing this job came up. And the more I thought about it, the harder it became for me to resist. That's because of Microsoft's commitment [to the search market]—not only in terms of the size and the longevity of the investment it plans to make, but also because of Steve's commitment to do it the right way.

Most consumers say they're happy with Google. What's missing?
When you have a large degree of [market-share] concentration, the pace of innovation can slow down. As a result, we won't be able to move at the pace that we ought to. And search occupies a special place in terms of its importance. On the consumer side, it pretty much [determines] how traffic flows on the Web, to a large extent. And on the business side, the amount of economic wealth that's being created is very, very substantial. So it's very important that we have credible competition, as this will create opportunities for many startups.

You've had a hand in the development of the search industry from the start. How has the industry changed, and where is it heading?
If you look backwards at the last 10 years, search engine technology has evolved and improved by and large, but collectively we haven't gone much beyond finding sites easily for the users. But if you try to go beyond finding Web sites to finding people, products, organizations, relationships—all the common day-to-day tasks a user has—then today's search does not offer a compelling experience.

That sounds like a much broader thing than most people think of as search today. Is search the right name for what you're trying to accomplish?
When you see a query box, you type in it. [The assumption is that] it will give you what you want. But [consumers'] expectations have increased. They are using that search box for all kinds of things: to purchase product, to plan a vacation, to research a particular organization, to study a particular concept.

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