Microsoft Corp. plans today to make its much-anticipated foray into the high-stakes battle for computer users searching for information online, posing a new challenge to Google Inc. and Yahoo Inc., the two dominant search engine companies.
After investing an estimated $100 million to ramp up its prowess in search, the company is releasing -- in 28 markets and 11 languages -- the first pilot version of its own automated search technology for scanning the Internet. The company said it plans to have a final version to release within a year.
"We are going to deliver the best search service," declared Lisa Gurry, director of Microsoft's MSN division. "It is a momentous day."
Microsoft also is unveiling what it is billing as a faster, fresher and sleeker-looking search site, www.search.msn.com. Analysts cautioned, however, that Microsoft has much to prove to win over computer users, and formidable obstacles to overcome, given the widespread popularity of Google and Yahoo.
"This is a huge announcement for the search engine industry as a whole," said Andy Beal, vice president of WebSourced Inc.'s KeywordRanking.com, a search engine marketing firm. "Microsoft finally getting involved with search is going to send shock waves through the entire industry. Google has already seen the competition Yahoo is putting up. With Microsoft and their billions of dollars entering the arena, Google is going to be fighting attacks from two sides."
The moves by Microsoft come as search remains the Internet's hottest growth area for computer users and online advertisers. In addition to helping people search the Web, Microsoft Chairman Bill Gates has said the software giant is devising a substantially improved method for finding information stored on a personal computer.
"This massive investment kicks off a wave of innovation from MSN that will move search beyond its current, limited offering to delivering the next generation search experience," Yusuf Mehdi, Microsoft's corporate vice president of MSN, said in a statement.
Microsoft has had success in the past in entering some markets aggressively and prevailing, as it did by taking over the market for Internet browsers that had once been dominated by Netscape Communications Corp. But as a recent defendant in major antitrust actions, Microsoft is now operating under greater scrutiny and regulatory restraint in the United States and Europe. And despite its deep coffers, Microsoft's efforts to overtake America Online as a leading Internet access service failed.
Still, the timing of Microsoft's maneuvers poses a challenge to Google, which is striving to maintain its leadership as the dominant search engine in the months leading up to its planned public offering of stock.
Google declined to comment on Microsoft yesterday. The company previously signaled in filings with the Securities and Exchange Commission that it anticipated the software giant would enter the search market aggressively and become a vigorous competitor.
Analysts said today's release of the test version of Microsoft's own search algorithm would prove far more important, in the long run, than what they termed the largely cosmetic changes it is making to its MSN search site. Emulating Google, the site has a clean, uncluttered feel.
"The most important thing is Microsoft is delivering a search product of its own," said Danny Sullivan, editor of searchenginewatch.com, an online newsletter that tracks the search engine industry. "The fact they are making other changes on the site is not significant. They are giving their existing site [MSN] a face lift, which search providers tend to do all the time."
In addition to releasing a new search service, Microsoft adjusted some of its policies for displaying search results. Beginning today, Microsoft said it would no longer permit Web sites to pay fees to ensure that they are included in Web searches on MSN. Instead, Web sites will be included in searches based on their relevance, the company said.
Google has called the practice of accepting such payments from Web sites "evil" and vowed never to adopt it. Microsoft said it could change its position on the issue in the future, depending on what research shows about the best way to meet the needs of consumers.
Microsoft's adoption of new practices in search will hurt Yahoo, which currently provides the technology for searches on MSN. While Yahoo's technology will continue to power searches on MSN in the coming months, Microsoft suggested it eventually plans to replace Yahoo, on MSN, with a fully developed version of its own search engine.
Analysts said Microsoft's move increases pressure on Yahoo to consider changing its practice of accepting payments from Web sites that wish to be included in searches. But Yahoo officials said yesterday that they have no intention of dropping the practice, which they said helps to ensure that relevant Web sites do not get overlooked.
"It is business as usual here," said Yahoo spokeswoman Stephanie Ichinose, adding that many of its search results are "fresher and more relevant" as a result of the fees paid by some Web sites to ensure more frequent updates.
Some industry experts said Yahoo's search results appear biased by the practice of accepting fees for placement and said Microsoft was savvy to align itself with Google on the issue. "It leaves them isolated," Sullivan said of Yahoo. "It leaves Yahoo as the only one out there with an assumed taint to their results. Regardless of whether it is true, that taint will still be there."