Is this fair? Is this ethical? Is this even legal?
Oh please. At worst, Microsoft's customers are sharing results of their browsing activities, based on information you gave them. How in the world could that be illegal?
Your team is really coming across as whiny on this issue, which seems to me precisely the wrong tactic to take in response to Bing's increasing market share. It makes your team look defensive, as if your advantage is slipping away and this sort of theatrical display is all you've got in response.