Microsoft Corporation (MSFT) Ropes In Apple, Amazon And AOL In Bing’s Licensing Agreements
Microsoft Corporation (NASDAQ:MSFT) once thought it could be another Google Inc (NASDAQ:GOOGL) by fronting Bing as a rival search and advertising platform. The company’s efforts achieved little on that front, but all has not been lost. In the latest move, Microsoft has roped Apple Inc. (NASDAQ:AAPL) into Bing’s third-party licensing agreement. Other significant Bing partners include Amazon.com, Inc. (NASDAQ:AMZN) and AOL, Inc. (NYSE:AOL).
Microsoft Corporation (NASDAQ:MSFT) has started its fiscal year 2016 belt-tightening at Bing. The company’s CEO, Satya Nadella, had earlier warned about coming reforms as the company enters fiscal year 2016.Nobody knew where exactly Microsoft would start its reforms, but the company seems to have chosen to start with Bing. When it comes to Bing, the company isn’t just talking about the search engine, but the broader Bing that includes the advertising platform.
To make money from Bing outside of search and advertising, Microsoft finds third-party licensing deals viable. The company has tapped Apple, Amazon and AOL in the latest third-party deals.
Analysts believe that the real value for Microsoft in Bing lies in back-end integration of the technology. Microsoft is already driving on this front and the latest third-party deals are expected to bolster that strategy.
The company has integrated Bing into many of its products, including Skype, Outlook, Office 365 and Windows. The massive integration of Bing into many Microsoft products itself is an indication that the company is unlikely to drop Bing.
Earlier on, Microsoft Corporation (NASDAQ:MSFT) offloaded its display advertising business to AOL, moving nearly 1000 employees in the process. In another move, the company transferred its map-data collection operation to Uber, moving about 100 employees and some other assets through the transaction.
Microsoft Corporation (NASDAQ:MSFT) is clearly keen to streamline its Applications and Services division where Bing belongs. Refocusing Bing is expected to unlock more growth opportunities. The company’s new strategy is about displaying mapping data from other companies.
Bing’s profitability target
Currently, Bing isn’t profitable, but has hit break-even. Microsoft Corporation (NASDAQ:MSFT) officials have been cautious in their comments about Bing’s profitability, failing to say exactly when they expect the business to turn a profit. According to Microsoft, Bing business would likely be profitable after it reaches 20% to 25% of the search market share. ComScore estimates that target was reached in the U.S. this April.
Microsoft’s partnership with Yahoo! Inc. (NASDAQ:YHOO) has been very helpful for Bing in expanding its search market share.
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