Google (GOOG) claimed 65.4 percent of the domestic search market in October, up from 64.9 percent in September, according to comScore. Meanwhile, Microsoft’s (MSFT) share rose to 9.9 percent from 9.4 percent in September. A modest bit of growth for the month, but quite impressive year over year. Search volume was up 30.8 percent from October 2008.

And Yahoo (YHOO)? Well, the company’s search market share slipped to 18 percent in October from 18.8 percent in September. Below, a table showing comScore’s (SCOR) search volume and market share data, via JP Morgan analyst Imran Khan (click to enlarge):

Good news for Microsoft (MSFT). Clearly, Bing’s traffic is not yet leveling out. That said, it should be noted that according to comScore (SCOR), whose search data are most highly regarded by Wall Street, Bing never lost search market share in the U.S.

“The big steps we’ve been out and after for the last several years in search [have] not been achieved and you’d have to say that the future is speculative. We’ve been asked a lot whether we’re open to consolidating transactions in the area of search. The answer is yes and it’s unlikely that we would be the consolidator.”

– IAC CEO Barry Diller

If Barry Diller is looking for somewhere to unload IAC’s Ask.com search engine, he’d be wise to consider Microsoft–if he doesn’t have that in mind already. Analysts reflecting on Diller’s recent remarks about Ask’s “speculative future” say Microsoft is the most likely buyer if IAC (IACI) is truly serious about dumping the little search engine that couldn’t.

Ask, analysts note, has about four percent of the domestic search market, which would give Microsoft (MSFT) a nice little bump up from the 9.4 percent market share it currently claims. And it certainly wouldn’t hurt that a Microsoft acquisition would undoubtedly mean the end of Ask’s relationship with Google (GOOG).

“Right now, Microsoft wants share so they could pick up those points from Ask,” Colin Gillis, an analyst at Brigantine Advisors, told Reuters. “Plus it has a double impact since Google powers Ask’s paid search.”

And speculative is an apt word for it. With just four percent share of the search market, according to comScore (SCOR), Ask has long been the inveterate fourth-place player in a contest increasingly dominated by Google (GOOG). And though it has certainly tried, Ask just can’t seem to make any headway. It isn’t fighting a losing battle, it’s fighting one that was lost long ago. No surprise then to hear that Diller is tiring of it.

Asked during an earnings call Tuesday if IAC (IACI) would consider selling the search engine, Diller said it most certainly would. “We’ve been asked a lot whether we’re open to consolidating transactions in the area of search. The answer is yes,” he said. “And, it is unlikely that we would be the consolidator.”

Obviously.

So Ask is for sale. The question now is who wants it?

“It appears that Amazon is gaining share the old-fashioned way,” ThinkEquity analyst Ed Weller noted last week, “by acquiring more and more customers…and selling more to each of them.” And judging from the nice gain in third-quarter earnings the company posted after Thursday’s closing bell, that would seem to be the case.

Net income for the period surged 69 percent thanks to a strong increase in sales. Analysts had been looking for earnings of 33 cents a share on revenue of $5.02 billion for the quarter. Amazon (AMZN) reported 45 cents a share, compared with 27 cents a share for the same period the previous year. Revenue rose 28 percent to $5.45 billion.

Once again, it seems Amazon has not broken out Kindle sales numbers in its report, though CEO Jeff Bezos did stress them in an earnings release. Said Bezos: “Kindle has become the #1 bestselling item by both unit sales and dollars–not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted. We are grateful for and energized by this customer response.”

Looking ahead to the key fourth quarter, Amazon is calling for revenue in the range of $8.125 billion to $9.125 billion. Analysts have been forecasting revenue of $8.13 billion. Given that the upcoming quarter includes the annual holiday shopping binge, Amazon may be looking at another blowout quarter.

Shares in the company are spiking on the news, up over nine percent to $101.90 as I write this.

New metrics from Web analytics firm StatCounter show Bing’s share of the U.S. search market in September falling to 8.5 percent from 9.6 percent in August. Its share of the global market declined as well, slipping to 3.25 percent from 3.58 percent.

Microsoft’s (MSFT) new search partner, Yahoo (YHOO), also suffered a decline. Its market share fell to 9.4 percent from 10.50 percent in the U.S. and to 4.37 percent from 4.84 abroad. Meanwhile, Google’s (GOOG) September share rose to 80 percent from 77.8 percent in the U.S. and to 90.54 percent from 90 percent globally. (See chart below; click to enlarge.)

“The trend has been downwards for Bing since mid August,” StatCounter CEO Aodhan Cullen said in a statement. “The wheels haven’t fallen off but the underlying trend must be a little worrying for Microsoft.”

Mmm, I doubt it. While a month of slight decline might herald the beginning of a trend, it certainly doesn’t guarantee one, especially in search, where surges and declines in market share are quite common. Furthermore, we haven’t yet seen search metrics from Nielsen, comScore (SCOR), and Hitwise. And all three showed Bing gaining share in August, a month that Statcounter claimed shows the beginning of a downward trend.

According to the research house, Palm Pre search activity, which more than doubled in late May thanks to Sprint’s “Now Network” advertising campaign, suffered a significant decline in mid-June, right around the debut of the new iPhone (click on chart below).

“The final two weeks in June saw the [number of weekly searchers on terms relating to the Palm Pre] fall to approximately half the number of the peak week of activity,” comScore noted in a release today. “Interestingly, this decline in Palm Pre search activity coincided with the launch of the Apple iPhone OS 3.0 on June 17 and launch of the iPhone 3GS two days later. Throughout May and the first week of June, the number of unique iPhone searchers remained fairly consistent at approximately one million people per week. In the week prior to the launch of the 3GS, however, the number of iPhone searchers more than doubled to 2.3 million people during the week of the launch.”

ComScore offers no correlating evidence beyond this, and the end of the Sprint campaign obviously played a role in the decline, but this is clearly not a simple coincidence. (Google Trends shows virtually the same thing. Click on chart below.) These are rival devices in a unique market we’re talking about. That said, comScore suggests that the Pre does resonate with an audience different from the one interested in the iPhone.

“Of the people who searched for Palm Pre-related terms during the eight weeks of the study,” comScore notes, “just 11 percent also searched on iPhone-related terms, suggesting that the majority of the people interested in the Pre have little interest in the iPhone.”

“It was clear that internationally, just as in the US, MySpace’s staffing had become too big and cumbersome to be sustainable in current market conditions,” said MySpace CEO Owen Van Natta. “Today’s proposed changes are designed to transform and refine our international growth strategy.” Operations in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden and Spain are “under review,” he added, and face possible closure.

The cuts follow a 30 percent reduction in headcount in the states last week and the hastening erosion of MySpace’s position in the social-networking market. MySpace lost the title of world’s most popular social network to rival Facebook last year and was overtaken by it in the U.S. last month as well.

J.P. Morgan’s Imran Khan offered an early look at market researcher comScore’s May 2009 core search volume and market share metrics for the U.S. this afternoon (to be publicly released tomorrow) and they show what search metrics always seem to show these days: Google’s share of the domestic market growing at the expense of its rivals (click on tables below to enlarge).

According to comScore (SCOR), Google’s (GOOG) share of the domestic search market rose to 65 percent in May, up from 64.2 percent in April. Its core search volume grew 42.5 percent, far exceeding the 40.6 growth in posted in the month prior. Meanwhile, Yahoo’s (YHOO) domestic core search market share slipped a bit, falling to 20.1 percent in May from 20.4 percent in April. Its core search volume for the month grew by 29.5 percent, down from 39.3 percent.

And what of Microsoft (MSFT)? It, too, suffered a decline. Its share of the domestic core search market fell to eight percent in May from 8.2 percent in April. Core search growth was also down at 24.9 percent from 25.7 percent in April. Clearly, Microsoft is still struggling to gain purchase in the search market. But, while these data don’t yet show it, Microsoft may have found some traction. As I noted last week, Bing has been generating a fair bit of interest, and that bodes well for some improvement in its position in the search market.

“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” CEO Owen Van Natta said in a statement. “I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product.”

“MySpace grew too big considering the realities of today’s marketplace,” said Jon Miller, News Corporation’s (NWS) CEO of Digital Media. “I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward.”

The news follows a report by market research outfit comScore (SCOR), indicating that Facebook has surpassed MySpace in the U.S. market as the top social-networking site.

Below, CEO Owen Van Natta’s all-hands memo breaking the ugly news.

Everyone,

Today we are making a number of changes to MySpace’s domestic organizational structure. For the long-term health of the company we are making some very tough, but unfortunately very necessary decisions.

We are reducing our workforce from 1,420 employees to 1,000 – all divisions within the company are affected by this restructure.

These decisions are difficult for everyone, but especially for our friends and colleagues who contributed to MySpace’s success and are directly affected by the changes. Through no fault of theirs our company’s size became unsustainable. The future success of MySpace is dependent upon us operating as a nimble and entrepreneurial company with the adaptive mentality of a start-up.

I believe this is the first difficult step toward a major turnaround – a step that will not only shore us up in the short term, but position us for long term success. We need to become a more innovative company. Becoming more innovative is an ongoing responsibility for all of us, not a one-time effort. We are developing a process that will empower anyone in the company to contribute ideas and enable us to integrate your thoughts into our plans for the future. We will follow-up with details on this process in the coming weeks.

This week we will communicate the foundation for our company strategy. In the days ahead, I will visit a number of U.S. offices, starting tomorrow at HQ, MySpace Music, and El Segundo. On Thursday I look forward to seeing everyone in Seattle and San Francisco, and on Friday, I’ll be spending time with the team based in New York.

I’m honored to be working with you on the next phase of MySpace and I’m grateful for your patience during this difficult process.

Thank you,
Owen

Early gains do not guarantee a long-term increase in search market share, and thanks to its experience with Live Search and Live Search Cashback, Microsoft (MSFT) knows this better than anyone. That said, Redmond’s new search engine, Bing, does seem to be making some solid progress.

For example, a comScore (SCOR) report said earlier this week that Microsoft’s share of the search market has risen to 11.1 percent from 9.1 percent since Bing’s debut.

And now market researcher Hitwise reports that Bing is among the top 20 most popular Web sites in the U.S. and among the top 10 in Canada (click on chart below).

“In the U.S., Bing ranked 17th among all Web sites out of over 450,000 Web sites, up from 5120 the week before the official launch when the Web site was merely a placeholder,” Heather Dougherty, Director of Research at Hitwise, wrote in a blog post. “Within the Search Engines category, Bing ranked 4th out of the search engines tracked by Hitwise…In Canada, Bing hit the top 10 among all Web sites during the first week of launch and captured 1% of all Canadian Internet visits last week. Bing also ranked 3rd last week in terms of the market share of visits within the Search Engines category behind Google Canada and Google.”

Not bad. Of course, early successes like these are driven as much by marketing as by technological prowess and positive user experience. And right now, Bing’s got some major marketing dollars behind it. But those will only last for so long.

And as Google (GOOG) CEO Eric Schmidt likes to point out, you really can’t expect to buy your way into the search market. “You don’t just buy it with ads,” Schmidt told Fox Business earlier this week. “You earn it, and you earn it customer by customer, search by search, answer by answer.”

Not so difficult, apparently. As I noted yesterday, early data from market researcher comScore (SCOR) show Bing boosting Microsoft’s share of the search market to 11.1 percent from 9.1 percent since May 26.

Anyway…

Schmidt’s remarks recall a CNN interview he did earlier this month in the aftermath of Bing’s debut. Then as now, the Google CEO went to great lengths to tar Microsoft and its search products. “Microsoft has announced a Google killer search product about once a year for the past six years,” Schmidt said at the time. “And they need to offer a better product than the one they did last year. I think it’s too early to say with Bing how well it will do. They have some advantages because of the Windows monopoly where they can encourage people–in our view unfairly–to use Bing, but let’s see what the end users choose. We always start from the premise ‘what do the end users want’ and we continue to find in our studies that what Google offers is what they want.”

According to early data from from market researcher comScore (SCOR), Microsoft’s new search engine boosted its share of the search market to 11.1 percent from 9.1 percent in the last week. And it bolstered the software giant’s search penetration to 15.5 percent from 13.8 percent.

“These initial data suggest that Microsoft Bing has generated early interest, resulting in a spike in search engagement and an immediate term improvement to Microsoft’s position in the search market,” comScore VP Mike Hurt said in a statement. “So far it appears that the lifts in search penetration and engagement have held relatively steady throughout the five-day period…It appears it is off to a good start.”

Indeed it does. Clearly, Bing has piqued our curiosity. Whether it is able to retain our attention is another matter. The engine’s market share and search penetration three to six months from now are the real metrics to watch here and they’ll tell a far more interesting tale about Bing’s prowess and brand loyalty in the search market.