updated 8/17/2009 10:17:59 PM ET 2009-08-18T02:17:59

Microsoft Corp.'s souped-up Internet search engine gained a little more ground on industry leaders Google Inc. and Yahoo Inc. in July, according to data released late Monday.

(Msnbc.com is a joint venture between Microsoft and NBC Universal.)

Despite the progress, Microsoft's search engine still remains a distant third in the United States — the main reason that the world's largest software maker plans to team up with Sunnyvale, Calif.-based Yahoo next year.

By working together in online search, Microsoft and Yahoo are betting that they can pose a more serious threat to Google in the most lucrative part of the Internet advertising market.

Microsoft's search engine — renamed Bing as part of a June overhaul — ended July with a 8.9 percent share in the United States, up from 8.4 percent in the previous month, according to comScore Inc. Just before Bing's debut, Microsoft's search market share stood at 8 percent.

Google retained a commanding U.S. lead at 64.7 percent through July, down from 65 percent in June, comScore said. Yahoo's market share dipped to 19.3 percent in July from 19.6 percent in June.

Expensive gains
Bing attracted 29 million more search requests in July than it did in June, a 2.4 percent increase to 1.21 billion, comScore said.

The relatively modest gains haven't come cheaply for Microsoft. The Redmond, Wash.-based company is spending $100 million to promote Bing, adding to the billions that it has already invested in a mostly fruitless pursuit of Google.

In its last two fiscal years, Microsoft's online division lost a total of $3.5 billion. Meanwhile, Mountain View, Calif.-based Google has emerged as a bigger threat to Microsoft by mining ever bigger profits from its dominant search engine.

Google is on pace to sell more than $20 million in online ads for the second straight year, with most of the revenue coming from short marketing messages placed alongside search results. The recession, though, has been pinching Google, like most companies.

Total U.S. requests at Google declined by 352 million, or nearly 4 percent, from June to 8.78 billion in July, according to comScore. Yahoo's month-to-month query volume dropped nearly 5 percent, or 130 million, to 2.63 billion requests in July.

It's not unusual for search requests to taper off in the summer as more people go on vacation and spend time outside away from their computers.

Total search requests processed by the Internet's five most popular search engines fell from 14.06 billion in June to 13.58 billion in July. The July volume was 15.5 percent higher than at the same time last year.

InterActiveCorp's Ask.com remained the fourth-largest U.S. search engine with a 3.9 percent in July, unchanged from June. AOL, which is supposed to be spun off from Time Warner Inc. later this year, held a 3.1 percent U.S. share, also unchanged from July.

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