Bing just shows Microsoft still needs Yahoo: Eric Auchard

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

By Eric Auchard

LONDON (Reuters) - Microsoft Corp's (MSFT.O: Quote, Profile, Research) new Web search service Bing is a far cry from the general-purpose tool the company must build or buy to compete effectively with rival Google Inc. (GOOG.O: Quote, Profile, Research).

Microsoft would do far better helping users find the emails, documents and Web pages that users of Outlook, Office and Internet Explorer rely on every day.

But competitive restrictions appear to prevent the desktop software giant from doing what it knows best. Microsoft operates its business under oversight from U.S. regulators after it settled antitrust charges in 2002 that it abused its market dominance in personal computer operating systems.

Barring that, Microsoft needs to come to terms with Yahoo (YHOO.O: Quote, Profile, Research) over Web search. A deal has eluded them for 16 months but Yahoo remains Microsoft's best chance for competing with Google on the consumer Internet.

Microsoft offered to pay up to $47.5 billion for Yahoo early last year but was rebuffed by Yahoo's former leadership. They have been in talks in recent months but no deal has emerged.

Rather than trying to be all things to all people, Microsoft's latest reboot of its Internet strategy helps consumer dig deeply and find what they are after quicker, but only in a selected set of categories.

Type in the name of an automobile and Bing assumes the user is thinking about buying or repairing a car. For example, the left frame of the search results page for "hyundai sonata" links to reviews, repairs, used cars, dealers, videos, images and reference manuals. A search for "diabetes" turns up health-related categories.