Honestly, the problem is that microsoft built a search engine like google, which needed to reach feature parity and until parity is reached consumers have no reason to use it. If feature parity is used, consumers have no reason to switch as the cost of switching does not outweigh the benefits of it, therefore you have an unnecessary product that you have to pump a shit load of advertising on, which creates more costs and no revenue.
The correct way, I believe, is to compete on non-consumption and capture those users, therefore you start small and execute well and scale up as users grow. You avoid the comparison to Google and can sneak in the back door without the crazy upfront costs. Imagine if microsoft focused on Knowledge graph before google did? It would be very interesting times, but every google competitor just competes head on. At the end of the day its about getting users and they don't care about the slight change in your algo, only in the way they feel when using your product i.e frustration, delight, anger, surprise, etc!
The advantage of being a startup is precisely that your mission need not cohere with the investments of a large corporation. You can do what you like.
From MS's perspective (again: I work here, but my opinions my own blah blah) the problem is this. People use computers to access the Internet. MS can't just be the OS and the browser used to access the Internet to maintain its lofty position as a field leader -- if MS's job is to supply the Internet as a service to people on MS devices, then it is mission-critical that it also be the landing page of the Internet. If MS gives up Bing, it might as well give up all consumer investments IMHO.
It is (IMHO) more important that Bing exists and is mostly functional than it is that Bing is equal or better to Google in every way.
Of course it is a huge priority to make Bing a viable threat in its own right, but what I'm saying is that this is not the only consideration.
That's an amazing insight, thanks, i hope potential entrepreneurs take note of this and realize the problems corporations face with innovation. It also makes sense as to why corporations are so quick to acquire a startup but also why most times the acquisition is not successful.
The correct way, I believe, is to compete on non-consumption and capture those users, therefore you start small and execute well and scale up as users grow. You avoid the comparison to Google and can sneak in the back door without the crazy upfront costs. Imagine if microsoft focused on Knowledge graph before google did? It would be very interesting times, but every google competitor just competes head on. At the end of the day its about getting users and they don't care about the slight change in your algo, only in the way they feel when using your product i.e frustration, delight, anger, surprise, etc!