Posted by Tom Foremski - July 4, 2008
Microsoft's [MSFT] acquisition of Powerset, the semantic search company, has been widely interpreted as being about beefing up MSFT's search capabilities. But how many searches require a semantic feature? Not that many, which is why Powerset chose Wikipedia as a test for its technology.
If I were to acquire Powerset it would be to use it to improve contextual advertising -- that's where a semantic technology can make a big difference. That's the value for Microsoft.
Yahoo is outsourcing search to GOOG for one reason only--it can provide better contextual advertising. That's where Powerset's technology can provide a big boost for Microsoft and where Yahoo and others can benefit. I'm surprised Google didn't step in to block MSFT, even if it believes it has a better semantic technology. After all, $100m is just a pawn in this chess game.
Either way this is a good deal for Powerset because its technology can be scaled across a global platform. It would take Powerset a decade or more to be able to leverage its technology against the same scale as Microsoft can provide today.
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