Many are pooh-poohing Microsoft’s cash-back search scheme, but Michael Arrington of TechCrunch thinks it’s going to work—and be a major pain in Google’s side. With search-market share at a mere 9.1% (and falling), Microsoft has little to lose, Arrington argues, because search is a winner-takes-most proposition. If customers respond to bribery—and history suggests they will—Microsoft could widen its pie piece.
True, the system only works for e-commerce, “but frankly that is all that matters,” Arrington argues, because 80% of search revenue comes from e-commerce. Microsoft won’t make much money, since it’s giving that revenue back to customers, but it will swiftly hurt Google’s core business. “Sometimes, desperation is a good place to be,” Arrington concludes. “It forces you to try crazy stuff.” (Read more Microsoft Live Search stories.)