Microsoft Corp. is expected to release a new Internet search website today that borrows heavily from the two big rivals it's designed to compete against.
The new MSN site will employ Yahoo Inc.'s search technology and echo the simple design pioneered by Google Inc.
Search engines such as Google have become a launching pad for consumers on the Internet, and advertisers eager to reach those consumers have made the sites big moneymakers. With its search engine revamp, Microsoft is trying to cash in on search-related ad sales and protect its lucrative Windows and Office franchises before Google leverages its powerful network of computers to attack Microsoft's core businesses.
Microsoft executives had acknowledged that by some measures, their previous search service was a distant third behind Google and Yahoo because it was clunky and cluttered with advertisements. This upgrade is aimed at keeping MSN users -- and their revenue-generating clicks -- from straying to rival sites every time they want to search.
"We really have an opportunity to get back in the game and establish our position -- if we do this right," said Yusuf Mehdi, the Microsoft vice president who runs MSN.
For now, Microsoft will continue to license Web-searching technology from Yahoo, but Mehdi said he expected to replace it with a homegrown search engine within a year. An early version of that search technology will be shared with Web developers today so that they can start tinkering and offer feedback, he said.
Microsoft is also building advanced search features into Longhorn, the next version of its Windows operating system, to let users search the Web and the contents of their computers at the same time. That's why it's important for Microsoft to improve its reputation in the search arena before Longhorn arrives in late 2006, said Brendan Barnicle, a senior analyst with Pacific Crest Securities.
"They want to build their credibility in search, then leverage the search technology" on the operating system, he said.
The cost of overhauling MSN's search site will total at least $100 million, including money spent on research and development efforts and ads to promote the service, Mehdi said. To simplify its new site, at search.msn.com, MSN will display fewer advertisements and forgo some ad revenue in the short term in hopes of drawing more visitors, he said.
In one significant departure, Microsoft asked Yahoo to remove search results derived using the search engine's controversial "Content Acquisition" program, which allows website operators to pay to have their sites indexed more frequently.
Mehdi said some consumers worried that such a practice, known as paid inclusion, tainted search results by giving sites a way to pay for better placement. A Yahoo spokeswoman defended the program as improving relevancy of results but said Yahoo would comply with Microsoft's wishes.