Tuesday, July 01, 2008

Microsoft confirmed an agreement to buy Powerset, one of the leaders in semantic search

As rumored last week, Microsoft, with the notion of a Yahoo deal receding quickly in the rear-view mirror, is taking another tack in its efforts to stem the dominance of Google search -- rather than playing catch up, it wants to try leapfrog. Today, Microsoft confirmed an agreement to buy Powerset, one of the leaders in semantic search, which attempts to glean the context and intent of a search rather than just matching keywords against the content of ranked pages. Details of the deal weren't revealed, but the price is rumored to be in the $100 million neighborhood. "We're buying Powerset first and foremost because we're impressed with the people there," Microsoft's Live Search blog said. "We came away impressed by their smarts, their experience, their passion for search, and a shared vision. That shared vision is to take Search to the next level by adding understanding of the intent and meaning behind the words in searches and webpages."

There are challenges aplenty in the strategy. Semantic search is a non-trivial exercise involving the honing of the technology and the re-indexing of the searchable Web, and semantic analysis of a page is much more computing-intensive than simply scanning text. On its own, Powerset had been limited to demonstrating its proof of concept in searches through the finite world of Wikipedia. Microsoft has the infrastructure and the war chest to expand that reach, first, perhaps, in vertical search categories where semantic search has done the best so far. It will be a while before the success of this approach can be judged, and there's always the chance that Google might innovate or buy its way into the same territory, but Microsoft needed to do something to try to pull its search share out of single digits, and this looks like as good a bet as any. "Microsoft's acquisition of Powerset makes perfect sense and is probably the best shot at a disruptive technology that might allow it to leapfrog Google," said Andrei Hagiu, assistant professor of strategy, focusing on technology, at Harvard Business School.