Well if it can’t get Yahoo’s (NSDQ: YHOO) search business… Microsoft (NSDQ: MSFT) will acquire semantic search engine Powerset for more than $100 million, according to Matt Marshall at VentureBeat. His exact language is that the company “has agreed to acquire” the company and that it will be announced next month. SF-based Powerset has been something of a media darling, despite the fact that it hasn’t taken off yet. In 2006 it raised a $12.5 million first round from Foundation Capital and The Founders Fund, as well as various angels, including Esther Dyson and PayPal founder Luke Nosek. Despite years of interest in “semantic” or “natural language” search, this area is a long way from proving that it works much better than current search technology. VentureBeat also reports that its first round valued the company at $42.5 million, so this wouldn’t be a huge win for the investors. But given the uncertainty of this area, and the cash requirements of an independent search engine, this might’ve looked like a pretty attractive outcome.
For Microsoft, this deal would be a drop in the bucket — a tuck-in, really. And by buying what’s basically a technology company, not one with much market traction, it’s a sign that in the absence of Yahoo, it still wants to compete with Google (NSDQ: GOOG) by out-engineering it.