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VentureBeat is reporting that Microsoft has agreed to buy semantic search engine Powerset for somewhere around $100 million, which is the price we previously reported was being offered to the company.
Our sources have been saying this deal is highly likely since May, but hasn't actually been signed yet and could still be disrupted by the ongoing Microsoft-Yahoo negotiations.
..."Microsoft's acquisition of Powerset [if it does indeed go through] makes perfect sense and is probably the best shot at a disruptive technology that might allow it to leapfrog Google," says Andrei Hagiu, assistant professor of strategy, focusing on technology, at Harvard Business School.
Microsoft wants to buy Powerset, which is developing what it hopes is a smarter way to search the Web. Powerset uses so-called "semantic Web" technology that brings up results based on an understanding of a word's meaning and the context of its use. That's in contrast to the method used by the major search engines, which work primarily by matching words in queries to those on Web pages. News of Microsoft's interest in Powerset was reported June 26 by industry blog VentureBeat. According to the article, Microsoft has offered more than $100 million to acquire the company. A person close to Powerset says several search engines have expressed interest in the company and that a deal with Microsoft has not been finalized. Microsoft and Powerset spokespeople declined to comment.
The public at large is not unhappy with Google, so there's no real reason for them to turn away from Google's method of traditional search. However if it's possible for MSN/LIVE to position itself as a true semantic search engine, then that will differentiate their service from Google -- achieving a level of "valuable uniqueness" is exactly what they need to stand out and pull in more visitors.
I wish them luck and success -- if they can pull this off, then they're back in the game, and we're all better for it.