Posted June 27, 2008 7:03 am by with 16 comments

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Just six weeks after its coming out parade, natural language search engine Powerset is the subject of two rumors about its acquisition by Microsoft.

VentureBeat kicks things off, by telling us the deal has been done, and the purchase price $100 million.

Microsoft, the software giant flush with billions of dollars in its warchest, has agreed to buy Silicon Valley semantic search engine Powerset, we’ve learned.

The purchase price is rumored to be slightly more than $100 million. An announcement is expected next month.

As if annoyed that VentureBeat might have gotten the scoop, TechCrunch reports the deal is not actually final.

Our sources have been saying this deal is highly likely since May, but hasn’t actually been signed yet and could still be disrupted by the ongoing Microsoft-Yahoo negotiations.

Keep in mind that neither VB or TC have any official confirmation or announcement.

But, let’s assume for a moment that Microsoft has indeed bought Powerset for $100M. That means that despite all of the huffing and puffing by Powerset execs, $100M is all it takes to sell out? Didn’t they just predict “2008 is the year that semantic and linguistic technologies cross over into widespread consumer use”?

$100M is probably the amount of interest Microsoft’s warchest earns in a day, so it’s not a big acquisition for the company. What the price tag does tell us is that perhaps my previous concerns are valid:

  1. Didn’t try natural language search? Didn’t it fail?
  2. Didn’t Google spend the last 10 years conditioning search engine users to use a handful of keywords–not natural language?
  3. Isn’t Wikipedia made up of just 2.3 million pages, while Google’s index is likely 40+ billion? Even I could build a search engine that scales to 2.5 million edited and organized web pages.
  4. If Powerset is licensing its natural language technology from Xerox PARC and its index from Wikipedia, where’s the value? What’s to stop Google or Microsoft from licensing the same technology?

Of course, we’ve not event looked at whether or not Microsoft would even know what to do with Powerset. From my experience, Microsoft doesn’t lack in the technology department, it lacks in the branding and execution department. Powerset doesn’t change that.

  • I really doubt this will change in any way the search landscape, assuming the deal is happening. $100 million is quite nothing for Microsoft so it’s probably just a portfolio acquisition and nothing more, on the principle “I got no clue what to do with this, but it’ll better sit in my lap than running free for anyone to grab.”

    Otilia Otlacan’s last blog post..Publicis Groupe Launches VivaKi, a New Growth Engine for the New Media and Digital Environment

  • The long tail of search is becoming more and more fashionable, so the natural language option is becoming more and more viable. The application and execution remains to be seen and evaluated, but there is definite merit here. Whether Microsoft will be able to capitalise on this technology is the question.

  • I really can’t see this working in light of point #2 – google has conditioned the majority of us to use keyword1 + keyword2 searches rather than natural language, which in my experience is only the domain of the newbie Internet user.

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  • I really dont see this working…

  • What a waste of $

    Brian’s last blog post..Announce your site like its 2000! – Where will we be in 8 years??

  • Of course Google is doing its best to down play this move by MS, yet at the same time Google has already hired many from the company in order to develop thier own similar capabilities. Innovation redefied once again.

    Richard P. Srery
    Operations, Logistics & Engagement Management

  • The only way they can attempt to tackle any of Google’s market share is to go ‘semantic’, and this is one of the bright companies engaged in semantic search.

    “Microsoft doesn’t lack in the technology department, it lacks in the branding and execution department”

    That’s completely off. You think Powerset will help their *brand*?? Nobody outside of those into tech even knows what Powerset even is. …MSFT is far far behind in the technology department, and they are looking to catch up (hence this action, and the action to buy Yahoo!)

    Your article is technically off as well. You say “Didn’t Google spend the last 10 years conditioning search engine users to use a handful of keywords–not natural language”. That has little to do with what semantic search is. Semantic is grepping the words in the page and interpreting that “Ajax” in this page relates to the web tech, not the dish soap. It’s transparent to the user, but the search results presented are more accurate.

    Found this article to be far off on insightful content. Sorry.

    Mark Holton’s last blog post..Microsoft buying Powerset?

  • Holy crap no way PS gets bought for 100 mil. Please tell me it is not true.

    What is MS really paying for here? Cant I create the same thing in Google Custom search?


    Jaan Kanellis’s last blog post..Martinez Rocks The PR Sculpting Peeps Again

  • Thats alot of $, for a chance of it working, and a very little chance too.

  • I agree that it’s just thу waste of money!

  • It would not surprise me if this happened, but I think Mircosoft should focus less on technology and more on bringing over users. Why does the mass market use Google and Yahoo! only to search? Technology yes, but it goes much deeper than that, comfort level, brand, etc…

    Nick Stamoulis’s last blog post..SEO And Content Management Software

  • Its true that natural language would have worked some time back, but now everyone is using only key words. So whats the big fuss all about?

    Eva White’s last blog post..The Ideal Holiday

  • $100 Million might seem little for Microsoft, but compared to other recent online acquisitions this is substantial. There must be hidden agendas that we are not sure of as yet.

  • Scott

    Geesh. Has anyone performed a search on Powerset? They have a long ways to go to get their results close to relevant.

    I searched terms like “how to sell my business”, “what’s my business worth?”, “raleigh weather” and a number of other queries — the first couple of results weren’t even close to relevant!

    Considering MS’ struggles with search engine market share — this looks to be a long-term project in development (kind of like most first round QBs taken in the NFL draft).

  • Probably a waste of money – in my opinion