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07/07/2008  |  Microsoft Determined To Compete With Google

At first reading it appears to be every entrepreneur's dream come true. Get a revolutionary idea. Attract some venture capital funding. Sign up for a major contract that will give you worldwide exposure. Sell out to everybody's favourite monopolistic global enterprise. Pocket a hundred million bucks. Sorted.

This is precisely what has happened to Powerset's founders, Barney Pell and Gian Lorenzo Thione. Formed barely three years ago, Powerset has provided the semantic search tool for Wikipedia, the online encyclopaedia. Semantic search focuses on the related meanings of words as opposed to straightforward exact word or phrase matches.

Powerset has recently been acquired by Microsoft for a rumoured $100m. The acquisition closely follows Microsoft's failed bid for the world's second largest search engine, Yahoo. In a market totally dominated by Google, Microsoft appears to be desperate to compete with the market leader. Industry observers are speculating as to what exactly is behind the takeover. Semantic search is a hugely complex process that requires enormous computing power. With Microsoft's billions behind it, Powerset now has the resources required to further develop semantic search. Tellingly, Google has not really shown any interest in semantics; after all, if they were really interested, surely Google themselves would have mounted a bid for Powerset.

Microsoft's own Live Search has performed woefully compared with Yahoo and Google. Some even question its third place ranking in the search engine popularity stakes. Microsoft is eager to monetise the lucrative paid ads market dominated by Google. Having failed to buy Yahoo, some observers suspect that by acquiring Powerset, Microsoft are planning to undermine Yahoo's own Search Monkey semantic search engine. This would probably allow Microsoft to vigorously pursue Yahoo and even succeed with a cheaper bid.

The consensus is that the savings made by Microsoft would be far in excess of the $100m spent on Powerset. So where does this leave those of us who just wish to search the web. Less competition generally means lower quality of service. Given Google's total domination of both natural and paid search, will it really make any difference?