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Thursday, July 01, 2004

M$: Microsoft to reveal online search changes

FT.com / Business

By Scott Morrison in San Francisco
Published: July 1 2004 2:59 | Last Updated: July 1 2004 2:59

Microsoft will on Thursday unveil several changes to its MSN internet search service as part of its strategy to thwart the ambitions of online rivals Yahoo! and Google.

The software giant will announce its MSN unit will no longer intersperse paid advertisements with free internet search results, a move the software giant claimed would put the quality of its search results on a par with those from Google.

The decision to strip out paid ads from free search results is one of several improvements introduced by Microsoft in hopes of attracting more customers to its search service.

Microsoft said it would also unveil a stripped-down search page that is easy to use and quick to load, not unlike Google's main page. It also said it would today start live testing of a new search engine algorithm that is expected to power the company's next generation search service. Microsoft's current MSN search service is powered by third-party technologies.

The moves underscore the intensifying battle among US internet giants to dominate online commerce and advertising. Groups such as Microsoft, Google and Yahoo! are all vying for the upper hand in search technology, which has proved to be a powerful magnet for advertising revenues.

Microsoft is also bolstering its search technology to keep Windows users from straying to Google, which some observers suggest could pose a threat to the software maker's core desktop business.

A recent S&P survey found Google continues to hold a significant lead in the search engine segment, with Yahoo! a distant second. Google, which handles hundreds of millions of queries a day and generated $105.6m in profit last year, is preparing for its initial public offering later this year.

Microsoft said stripping out paid ads from free listings would increase the relevance of MSN's search results by almost 50 per cent. "The results are much cleaner and more relevant," said Larry Grothaus, product manager at MSN. "From a relevancy standpoint the algorithmic results are on par with Google's results."

Critics contend that commercial listings that appear mixed in with general results blur the lines between editorial content and advertising.

Google rose quickly to the top of the search engine heap in part because it does not have a paid-inclusion programme. The company has said that placing ads among free listings can skew search results. Ask Jeeves, another internet search group, said last week it would phase out paid-inclusion listings.

Microsoft said stripping out paid-inclusion listings would force it to forego "tens of millions of dollars" in revenues.

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