Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Foremski's Take: MSFT Powerset Aquisition is not about Search

Posted by Tom Foremski - July 4, 2008

Foremski's Take:

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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