Social Search with Bing-Facebook Combo a Threat to Google’s Stock

Microsoft (NASDAQ:MSFT) recently announced that Facebook users would be able to see recommendations and relevant links from their friends in search results on Microsoft’s Bing search engine. We believe this is a good move by Microsoft as it leverages the large community of more than 500 million Facebook users ^[1] to drive its search market share.

Although Microsoft’s stock will not benefit much from this move as Bing contributes very little to its stock value, it could potentially hurt Google’s stock as Google’s search business accounts for 75% of the $643 Trefis price estimate for Google’s stock.

Microsoft-Facebook partnership to drive Bing searches

The partnership will help users receive more personalized search results, which may turn out to be better for certain types of searches.  For example, when a user is searching for a movie on Bing, he sees results that include how many Facebook friends “liked” the movie.  Such results can extend to news articles, books, restaurants, music and a variety of other products.  This partnership can provide Bing with an advantage over Google if the feature is well received by users and leads to greater use of Bing at the expense of Google.

Potential downside to Google’s stock

[trefis_forecast ticker=”GOOG” driver=”0565″]

We currently project that Google will continue to increase its market share in search, from about 65% in 2009 to 73% by the end of the Trefis forecast period.  However, there could be a downside of more than 20% to Google’s stock if the company’s market share were to decrease to 50% by 2016, as a result of the increased competition from the Microsoft-Facebook partnership.

You can see the complete $28 Trefis Price estimate for Microsoft’s stock here.

You can see the complete $643 Trefis Price estimate for Google’s stock here.

1. Facebook Statistics [↩]