Beyond Binary

Microsoft has now officially acquired Powerset, a natural language search firm, completing the deal it announced last month.

In a blog posting on Monday, Powerset's Mark Johnson said that integration efforts are already well under way. "This Thursday and Friday, there will be a bunch of folks down from Redmond for a symposium to share details about our respective technologies," Johnson said. "We're excited to learn about everything now available to Powerset in the Live Search stack. We're also excited to share the cool things we've cooked up here at Powerset and start planning opportunities for us to integrate with Live Search."

(Credit: Microsoft)

Terms of the deal were not announced, although VentureBeat reported ahead of the deal that the company was looking for $100 million or more from Microsoft.

Microsoft has also not gone into a ton of specifics on its plans for Powerset.

In an interview last month, Microsoft's Ramez Namm said that Powerset's technology will help Microsoft in its long-term effort to create a more ideal type of search, but said there are also some things that could be applied to Live Search soon, although he didn't offer any specifics.

Powerset had created a demonstration of its semantic, or natural language search technology using Wikipedia as the source against which it searched. I asked Namm and Powerset CTO Barney Pell how much time and money it would take to apply Powerset's approach to the entire Web. Namm wouldn't venture a guess on the time frame or cost. Pell, meanwhile, noted that the two main hurdles that Powerset had--limited hardware resources and a lack of core Web search technology--would be removed with Powerset as a part of Microsoft.

Updated 1:15 p.m., with comments from Powerset co-founder and Microsoft executive.

Well, first it was a rumor, then an unconfirmed report, and now it's a deal. Microsoft is buying Powerset.

Microsoft confirmed the acquisition Tuesday on its Live Search blog.

"We're excited to announce that we've reached an agreement to acquire Powerset, a San Francisco-based search and natural language company," the company said in the blog posting. Powerset workers will join Microsoft's core search relevance team and remain based in San Francisco. The company said that Powerset's technology will complement existing natural language processing work being done inside Microsoft's research unit.

Terms of the deal were not disclosed, although VentureBeat, which reported last week that the deal was in the works, said Microsoft was paying $100 million or more.

Powerset, which has licensed technology from Xerox's PARC unit, recently made public a tool for searching Wikipedia. The company has 63 employees, all based in San Francisco's South of Market district.

Powerset's Mark Johnson said in a blog post that the company needed deeper pockets to reach its goal.

"With any start-up, the challenge is to take the seeds of an idea and grow it into a viable company," he wrote. "At Powerset, we transformed our idea into a world-class semantic search platform, demonstrating the future of search with our Wikipedia search experience. But building a large-scale semantic search engine is expensive, requiring an engineering effort and computing resources beyond what most start-ups could ever imagine...We believe that this is the fastest way to bring our technology to market at a large scale."

In November 2006, Powerset said it had landed $12.5 million in Series A funding from Foundation Capital, Founders Fund, and angel investors.

Update: In an interview, Microsoft's Ramez Namm said that Powerset's technology will help Microsoft in its long-term effort to create a more ideal type of search, but said there are also some things that could be applied to Live Search soon, although he wouldn't offer any specifics.

Namm declined to take a stab at how long or how much it would cost to take Powerset's approach and apply it to the web, but Powerset CTO Barney Pell did say that the two main hurdles to that--limited hardware resources and having its own core search product--were now removed. Pell added that search, and natural language search in particular, were likely to be at the center of innovation for the next 20 years.

As for the broad areas where natural language search would help, Namm pointed to the fact that search results today are heavily dependent on using the same wording as the page you want, rather than understanding the meaning of a query.

"Search engines force the user to figure out what words might be used on the right page," he said. "That makes it much harder than it has to be."

Pell declined to say whether Microsoft faced any other active bidders in trying to buy the company and both companies refused to talk about the deal's financial terms.

Also check out this post, for more analysis from News.com's Dan Farber.

Microsoft is close to buying search engine Powerset for $100 million or more, according to technology Web site VentureBeat.

VentureBeat said the deal for the Silicon Valley company, which specializes in semantic, or natural-language search, is due to be announced next month.

Microsoft and Powerset both declined to comment on the report.

The deal could help Microsoft in the wake of its failed Yahoo bid, although sources say Microsoft is also mulling over whether to offer a new bid for Yahoo's search engine, amid urging from Yahoo shareholders.

Rumors that Microsoft was interested in Powerset have been swirling for weeks.

In November 2006, Powerset said it had landed $12.5 million in Series A funding from Foundation Capital, Founders Fund, and angel investors.