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Why Cashback Won't Displace Google

Silicon Alley Insider talks with Microsoft about its new Live Search cashback scheme, a strategy that blogger Henry Blodget deemed impressively savvy on the day of its announcement, but one that would ultimately fail. After going over the new plan with the software king, his opinion doesn't change much.

Microsoft thinks that search is "klugy", or clunky, awkward, and imminently improvable, and that it's Microsoft's manifest destiny to change it. The company also its assets give it some kind of unique leverage to capitalize on that change, declaring that Microsoft will usher in a new era of search on the back of its wonderful new commerce-based business model.

Blodget said the only thing Microsoft is right about in its assumption is that everyone is rooting for it to succeed. Nobody likes a monopoly, but "what makes Google so powerful, however, is its vast share of search queries, and this is a function of both quality and consumer habit." Cashback may give Microsoft a bump in query share, but will offering nickels and dimes to people really change their search habits? No, the only thing that would do that is if Microsoft had markedly better search results, which it does not have. And even if Microsoft manages a breakthrough search innovation, there's nothing to prevent Google from matching it.

Read the whole story at Silicon Alley Insider »

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