I believe that Google and Microsoft evaluate their search engines by entirely different measures. Google primarily by advertising revenue, Microsoft primarily measures by preventing searches using Google. Sure the ad money is nice for Microsoft, but they don't need it for their business to be profitable and they would be doing major research into search anyway because of its importance to businesses - they sell databases after all.
This whole episode points to the sort of counter-espionage operations the two companies are engaged in. Look how important a propaganda victory is for Google? It strains credulity to believe that the release of this information on the day of the panel discussion is pure coincidence.
Microsoft, historically, have been kings of the desktop. With the rise of the web (which post-dated MS's rise), the desktop has become less and less relevant. Google is fast replacing them - my email, documents, search, advertising, analytics is all handled by Google. I don't use Microsoft for anything in my day-to-day life. Even on my main windows machine, my files are in my dropbox, outside of MS's control.
MS are desperate to regain control. Google will soon launch their own web-centric OS properly, and bam, MS will have no business apart from selling to an ever-dwindling number of companies who can't believe MS don't rule the roost any more. In 20 years they will simply cease to exist if they can't come up with a world-beating online product and win back control of people's computing lives.
Notice how they're diversifying into games and search in order to prepare for the worst case; that their core OS and 'boxed software' business fails.
I think you may misunderstand my position. Bing is basically a research project for Microsoft. The ad revenues don't really matter, the data they collect does - it's learning v. earning. It makes sense for Microsoft to spend a billion dollars because better search algorithms have application for their B2B products and services. If they recover some of their R&D costs directly through advertising revenue, that's a windfall to the overall bottom line.
This whole episode points to the sort of counter-espionage operations the two companies are engaged in. Look how important a propaganda victory is for Google? It strains credulity to believe that the release of this information on the day of the panel discussion is pure coincidence.