MSN to revamp search engine

Reed Stevenson

SEATTLE: Microsoft Corp. said that a new engine for its MSN Search service will start up in July, another step in its plan to challenge Google Inc.'s pole position as the Web's top search destination.

As part of that upcoming shift, MSN -- the Internet arm of the world's largest software maker -- said it will change the way that it displays text advertisements that are listed alongside search results.

Paid listings, or advertisements that piggyback onto search results, have become a hugely profitable component of the search industry, estimated to be worth $2 billion in 2004.

Instead of including paid listings within search results, which critics say results in misleading search results, MSN said it will display paid listings separately at the top and to the right of search results generated by its search engine.

Redetzki said MSN will list three paid listings at the top of every search result, of which at least two will be advertisements sold directly by MSN.

Currently, Microsoft's paid listings are sold through an intermediary called Overture Services, which became a subsidiary of Internet media and portal company Yahoo Inc. last year.

Yahoo also declared its intent to become a search industry heavyweight last year, taking on Google and MSN.

MSN said that it would continue to work with Overture to bring in paid listings, although it has clearly shifted away from relying on such providers.

In January, Microsoft ended its relationship with another paid listing company, LookSmart, and last September said its relationship with Overture would eventually change, but remain intact for the medium-term.

"We will continue to partner with Overture, and are happy with that partnership," Redetzki said.

MSN, which reached profitability on an operating basis two quarters ago, has aggressively expanded its measures to bring in more advertising revenue, including selling its own paid listings and offering free videos on its Web site.

Just over a year ago, Microsoft's executives sat down at its Redmond, Washington, headquarters and decided to build their own search technology that would challenge Google's ability to sift through the Web and return results relevant enough to make it the Web's top search provider.

Redetzki said MSN was making steady progress and that July's launch will reflect results driven by a revamped search engine with better algorithms, the underlying logic involved in sifting through information.

"We're much farther along in relevancy," Redetzki said.

© Reuters