Microsoft buys linguistic Web search firm Powerset

By Eric Auchard

SAN FRANCISCO (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) said on Tuesday it had agreed to buy Powerset, a start-up that is working on a new class of Web search that relies on insights from linguistics rather than simple keyword strings.

Satya Nadella, senior vice president of Microsoft's Search, Portal, and Advertising business, confirmed the purchase in a statement, following months of rumors that they were in merger talks. Financial terms were not disclosed.

Powerset's technology breaks down the meaning of words into related concepts, freeing users from having to type the exact words they want to find. This emerging approach to Web search, known as semantic search, has fascinated researchers for decades but proved frustratingly difficult to commercialize.

"Powerset has always been a small company with big dreams, with the ultimate goal of changing the way humans interact with computers through language," Powerset product manager Mark Johnson wrote in a company blog post announcing the deal.

The start-up, with several-dozen staff including academic experts in the field of natural language processing, is one of a handful of Web search acquisitions by Microsoft, even as it has been frustrated in its pursuit of Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz).

The software giant said in January it was buying Norway's Fast Search and Transfer ASA, a top provider of Web search services used inside businesses, for about $1.2 billion.

But Yahoo, the No. 2 provider of consumer Web search behind Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz), rebuffed a $47.5 billion bid and a partial deal to buy Yahoo's search business for more than $9 billion.

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