Microsoft Overtakes Yahoo in Search, Says Nielsen

Yahoo has been unseated as the #2 search provider in the U.S. by Microsoft’s search properties, according to Nielsen’s August data.

During the month, Microsoft’s Bing/MSN/Windows Live sites achieved market share of 13.9 percent, a rise of 2 percentage points compared to July and a leap of 30 percentage points compared to August 2009.

But the report represents a bittersweet victory for Microsoft, since it has come largely at the expense of key partner Yahoo rather than market leader – and prime adversary – Google. According to Nielsen, Yahoo’s share has steadily declined over the past year from 16 percent to 13.1 percent of user search queries. Google meanwhile has maintained consistent search market share over the past year, gaining 1 percentage point.

Yahoo’s and Microsoft’s combined search share now equals approximately 27 percent of total U.S. search queries, while Google commands 65.1 percent – 67.1 percent if distribution partner AOL is included.

In late August, Yahoo announced that Bing is now officially powering all its organic search results in the U.S. and Canada. Paid ads are migrating on a slower schedule, but Yahoo has said it plans to supplant that platform with Microsoft’s by the end of October.

Nielsen reports on search queries made deliberately by users, and not contextual searches or other search queries automatically triggered by user behaviors or in-page elements (on MSN article pages for instance).

Nielsen’s numbers can’t be considered conclusive. The most recent data from two other researchers, Hitwise and comScore, both still rank Yahoo as #2 in search. According to comScore’s core search estimates, Yahoo represented 17.1 percent of search activity in July, while Microsoft commanded 11 percent (Core search figures exclude searches for mapping, local directory, and user-generated video sites.)