Search engines will have to offer financial incentives, says Bill Gates

Microsoft's chairman trains his sights on Google, in an exclusive interview with Computing

Microsoft chairman Bill Gates says internet search engines will have to start paying customers to use their service as the market becomes increasingly competitive.

And in an exclusive interview with Computing, Gates hints that MSN is about to test ways of offering financial incentives for users, to help the portal site compete with Google.

‘Google is getting about $50 per year for your searching. Yet, because it does not think it has any competition, it is not giving any of that back to you,’ he said.

‘As search becomes competitive and people realise that other offerings are as good, or are even significantly better, there will be price competition.

‘You will get some free content or a cheque, or some incentive to use a different search engine. Competition for users has not even kicked in. I can assure you it will not stay that way.’

And he added: ‘We are going to run some experiments on that in the next year.’

Gates says the move reflects the unique nature of the web search market.

‘There has never been a product in the world where the switching costs are lower,’ he told Computing. ‘If you use Google at 9am, you can use MSN at one minute past nine, and if you do not like it, you can use Google again at two minutes past nine. That little empty text box is not some huge barrier to entry.’

But Forrester Research analyst Hellen Omwando says the quality of the search results will still be the major factor.

‘What is relevant is whether the site is good enough to give people what they want from a search,’ she said. ‘Financial incentives alone will not be enough.’

Click here to see the first part of Computing’s exclusive interview with Bill Gates.