I'm neither pro-Microsoft nor anti-Microsoft, but I must say that your take on this piece seems painfully, almost illogically slanted in favor of Microsoft.
>"For Microsoft, having a full featured reliable non-core product with measurable market share is a success because it allows Microsoft to offer vertical integration without the specter of anti-trust allegations"
One might rephrase at least part of this as, "For Microsoft, being a small fish in a large pond is a technicality that can be used as a distraction from what some view as its monopolistic goals."
>"Bing's robustness helps Microsoft sell software and services, while it's modest market share keeps infrastructure costs lower and Microsoft's core revenue stream coming from areas other than search reduces the pressure to game search algorithms towards their advertisers in order to increase revenue in the way that Google does."
Again rephrasing, "Bing was never meant to be a search engine, but rather a cheap, tame excuse for putting up a billboard about whatever Microsoft wants to sell."
>"What the article shows is not that Microsoft is inept, but rather that they are able to create an internal unit with many elements of a startup, scale that unit massively, and then transition it into a solid corporate structure capable of surviving over the long term"
That may in fact be the case, but it seems a rather forced spin on what the article's author seemed to be saying. To me, the narrative was about how Microsoft was large enough for a relatively small, startup-like project to remain below the radar until it began to develop some degree of success. At that half-baked point, it was noticed by the upper power bureaucracy, seized, and frozen before it could develop into a fully successful product. In an agile environment, this would have been fine (because the product wouldn't have been frozen), but since Microsoft is anything but agile, Bing became more of a legacy product than a living, growing project.
Of course, according to your earlier interpretation, this was all part of the Microsoft plan -- a pivot from "search engine" to "multiple distractions in the guise of a search engine."