Microsoft CEO Satya Nadella has made a smart move to settle an internal battle between two of his most powerful executives: Terry Myerson, the guy in charge of Windows, and Qi Lu, who leads the Applications and Services Group, responsible for online properties like Bing and MSN.
On Friday, CEO Satya Nadella informed employees that the MSN division was being moved out of Lu's group and into the Windows group led by Myerson, Microsoft confirmed to Business Insider. The news was first reported by Geekwire's Todd Bishop.
The man who was running MSN, Brian MacDonald, is now taking on a different job, working on productivity software in the Applications & Services Group, according to his LinkedIn profile (as spotted by Bishop). So he'll remain under Lu.
As Business Insider reported last fall, these high-ranking execs in Nadella's administration had been in a showdown for months over MSN and the default setting on Internet Explorer.
While this may look like Myerson won at Lu's expense, the situation is far more nuanced than that.
To explain: The world buys between 300 and 400 million new Windows PCs each year, each equipped with Internet Explorer. Often, MSN is set as the default home page on IE and lots of people never change that.
In September, about 80 million people visited MSN, according to Compete.com. Those numbers have been steadily declining since the summer, and in September, Lu made a big change to MSN to allow it to show off more stories, particularly from Microsoft's news content partners.
This change had an unintended consequence. Microsoft had been using MSN to help drive traffic to Bing, a source told us. When you clicked on a headline, instead of taking you to the article, it would actually perform a Bing search on the headline and take you to Bing.
As we reported at the time, the redesign wasn't an immediate success and traffic for both MSN and Bing fell.
Then Microsoft asked comScore to change how it reported results, bundling all its web products — Bing, Skype, Outlook and so on — under one "MSN" banner, comScore confirmed to Business Insider. Sources told us that this change helped hide MSN and Bing's traffic problems.
Microsoft denied there were problems, and said that traffic to both those sites was growing, not shrinking. Compete.com, however, showed MSN's unique monthly visitors declining dramatically after last September:
In any case, these traffic problems opened up a ancient fight. All the department heads have always lusted after the default home page on Internet Explorer and want it to point to their own offerings, not just MSN.
Derrick Connell, who runs Bing, wanted IE to default to Bing.com. But Lu knew doing that would hurt MSN.
Myerson wanted it to point to something that plays up Windows 10. If that happened, that could potentially hurt both MSN and Bing.
And naturally, MacDonald, the guy who used to run MSN, wanted to keep IE pointing to MSN.
Sources told us Myerson's power is rising in the company, and that he has a sort of in-your-face style compared to Lu, who is known as more of a peacemaker. We were told that Lu's teams were watching Lu to see if he would fight for them and win.
But this decision was more of a chess move than a slugfest. With MSN now under Myerson's wing, he could very well use IE to promote Windows 10, although a source close to the company tells us that MSN will likely continue to be the default home page for the time being.
Regardless, Myerson is now responsible for MSN and if it tanks completely, it does so under him, not Lu.
Here is Microsoft's statement confirming the changes:
MSN has long been an important part of the Windows experience via Internet Explorer so expanding the Operating System Group (OSG) group to include the MSN team is very much in line with our goal to deliver the best and most relevant content to our customers. We recently redesigned the MSN user experience to include a vast array of content from the world’s leading media outlets and we’re excited about the possibility of bringing this content into the Windows experience in even better ways.
