Microsoft is losing ground in the internet search wars, according to recent statistics from Nielsen/NetRatings. The company’s share of US internet searches was just 8.2 percent in November 2006, a year-on-year decline of 12 percent. A study of UK searches for August 2006 showed a similar pattern, with Google increasing its market share, Yahoo holding steady and Microsoft declining. This comes despite several years of high investment in search, starting with a $100m relaunch of MSN search in June 2004.

In theory, Microsoft’s search efforts should get a substantial boost from Internet Explorer 7, released in October last year, and Windows Vista, which will be generally available from next month. IE 7 has a built-in search box that defaults to MSN search, though a drop-down menu lets you switch to other search providers. If users stick to the default, MSN search will get many new customers.

That said, my own experience suggests that even inertia will not rescue MSN search. When I started a long-term test of Vista last year, I decided to go for the full Microsoft experience, which included leaving the default search at MSN.

My conclusion so far is that MSN search is simply not as good as its competitors. Often I find myself searching MSN and then repeating the search on Google to get the results I want.

There are solid technical reasons for my subjective impressions, according to search expert Aaron Wall. Microsoft is “not as good as the other major search engines at telling the difference between real organic citations and low-quality links”, he writes in a paper comparing Google, Yahoo and Microsoft. Google is also “heavily biased toward informational web sites and web pages”, as opposed to sites that want to sell you a product. These factors combine with others to give Google the advantage.

These search wars are notable because whoever wins in search has a substantia l advantage in other online services as well as immediate rewards from advertising. Search is the user interface for the internet. In the UK we conduct over 250 searches a second, according to Nielsen/NetRatings, and the figure can only increase. There are disturbing aspects to our growing reliance on search. Google’s search algorithms have the power to make or break online businesses, and users sometimes over-estimate the authority and reliability of internet sources.

Competition is healthy, so it is disappointing to witness Microsoft’s declining market share, though at least Yahoo is hanging on. At the same time, Google deserves its position. If I were rolling out IE 7 or Firefox across an enterprise, I would not hesitate to have the search default to Google.