Your analysis is very good. I just want to add that dynamics of "more searches -> more revenue per search" also holds for every individual niche. In order to make good money, one can build substantial market share either in certain geographies (e.g. Indonesia, India, China, Russia...) or verticals (shoppings, deals, travel, cars...).
Are Microsoft actually seeking to obtain market dominance in a particular vertical or region? I'd have thought this would go against their grain. I haven't seen any particular evidence of this, but I'd be interested to know if I've missed something.
Also dominance in verticals/regions won't necessarily net them the £10bn/year that they'd like - of course it might be a good stepping stone to broader dominance.
