Microsoft is trying hard to fight Google in the web search market. The market is very lucrative with massive revenues generated by Google's online ads and other products. Microsoft wants part of this lucrative search market and Google is fighting at the same time to pry some other markets from Microsoft's grasp like operating systems for computers, mobile phones, and productivity software.
Microsoft CEO Steve Ballmer told Reuters that that Microsoft is not likely to make acquisitions to improve its standing in the search market. He said, "No, I wouldn't expect it [search acquisitions]. You'll continue to see us work hard and invest in the marketing and the like, and of course we're trying to get the Yahoo deal through regulatory."
Microsoft had previously stated that it felt Bing still had lots of growing to do and had not been pushed with strong marketing campaigns anywhere other than in America. Ballmer also commented on the state of the economy saying that he expected things to grow slowly and return at lower levels than before the crash.
Ballmer did say that he believes technology will play a key role in efficiency and productivity gains to pull the world out of the recession. Microsoft will also be freezing its massive research and development budget at $9.5 billion in part to preserve resources to fight Google for the search market. Microsoft has the world's largest R&D budget reports Reuters.
Microsoft is also freezing the budget on the heels of the company’s first ever revenue decline with a 3% decline in revenues at the end of June and a 17% drop in its Q4 term. "It was like a cultural reformation for us," he said. "We said: 'First, let's lock the R&D budget. Let's not necessarily grow it the way we might have.' Let's make sure we keep the money we need to continue to establish us in new businesses. We're trying to give Google a little competition in the search business. They've been trying to give us a little competition in some other ways."
Microsoft certainly has the cash on hand to make acquisitions in search and to market its Bing search engine. Reuters reports that it has $31.4 billion in cash and short-term investments. Microsoft plans to work hard to get the Yahoo search deal through the approvals process.