Microsoft Acquires Natural-Language Search Firm Powerset
San Francisco – After days of speculation, Microsoft on Tuesday confirmed that it will acquire San-Francisco based search-engine firm Powerset, a start-up that specializes in understanding the linguistics of people’s Internet searches instead of matching specific words they use.
Neither company disclosed the financial terms of the transaction on their blog entries, where the announcement was posted.
The software giant said it plans to integrate Powerset technology to enhance its free Live Search service that has been mired in third place behind Google and Yahoo in the lucrative Internet search-related advertising arena, though Powerset will remain a separate company in the Bay Area, Satya Nadella, senior vice president of Microsoft’s Search, Portal, and Advertising business, confirming the purchase in a statement, following months of rumors that they were in merger talks, wrote in a blog post.
“Powerset brings with it natural language technology that nicely complements other natural language processing technologies we have in Microsoft Research,” Nadella wrote.
Powerset’s technology breaks down the meaning of words into related concepts, freeing users from having to type the exact words they want to find. This emerging approach to Web search, known as semantic search, has fascinated researchers for decades but proved frustratingly difficult to commercialize.
“Powerset has always been a small company with big dreams, with the ultimate goal of changing the way humans interact with computers through language,” Powerset product manager Mark Johnson wrote in a company blog post announcing the deal.
The deal was expected to be worth $100 million, but Microsoft did not disclose financial terms.
Microsoft is proving that it has plenty of ways of spending the $40-plus billion that Yahoo turned down earlier this year.
Powerset brings Microsoft a new line of attack against Google, and one that does not rely on quickly gained economies of scale like an acquisition of Yahoo would. Instead, Powerset brings new technology to Microsoft: semantic search.
Semantic or natural-language search relies on sentence structure, syntax, dictionaries, and thesauri to extract meaning from text, rather than relying on how heavily Web pages are linked to one another to determine the relevance of search results.
“We know today that roughly a third of searches do not get answered on the first search and first click,” Nadella wrote. “Usually searchers find the information they want eventually, but that often requires multiple searches or clicks on multiple search results.”
He cited two specific problems for the delay in finding information with traditional search methods — differences in phrasing or context between a user’s search and the way information is expressed on Web pages, and lack of clarity in the descriptions for each Web page in the search result.
Under Powerset’s hood is decades-in-the-making natural-language processing technology the company licensed from the Palo Alto Research Center, formerly of Xerox.
“Powerset set out with a really ambitious vision to bring about the future of search through machines that could understand language,” Powerset co-founder and CTO Barney Pell said in an interview. “One of the questions is, how is a company that is a small little startup like Powerset actually going to bring that out to a large scale? With Microsoft, we have found the right partner. The vision, the goals, and even the culture were really aligned.”
For years Microsoft has been looking for ways to bolster its search strategy, and it needed an alternative to purchasing Yahoo when that deal fell through. This acquisition comes as Microsoft tries to heighten its online appeal in order to better challenge reigning Internet search and advertising king Google.
The company will disclose more details on how it will use Powerset’s technology in its Live Search engine at a later date, Nadella added.
Since search-based advertising is the largest slice in the online advertising pie, Microsoft must increase the profile of its Live Search engine in order to build this part of its business.