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11/10/2008
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Microsoft In Web Search Deal With Sun

The software maker is looking beyond Yahoo as it seeks to boost its presence in the key Internet search market.

Microsoft said Monday that it has reached an agreement with Sun Microsystems, under which the software maker will bundle its search technology and other content alongside Sun's widely used Java application environment.

Under the deal, Internet users who download Sun's Java Runtime Environment will have an option to also download Microsoft's MSN search toolbar, which will give them one-click access to Microsoft's Live Search site as well as other features from the MSN network, including news, sports, and entertainment content.

Financial terms were not disclosed.

"This agreement with Sun Microsystems is another important milestone in our strategy to secure broadscale distribution for our search offering," said Yusuf Mehdi, senior VP for Microsoft's Online Audience Business unit, in a statement.

Given the wide range of Java-based applications downloaded each month, the deal could expose Live Search to millions of additional users. Mehdi said he expects the agreement to "drive increased volume for our search advertisers. Sun estimates that there are more than 800 million Java users worldwide.

As an operating system-agnostic platform, Java allows applications to run on numerous types of computer systems, including Windows PCs and Macs.

Microsoft needs to find new ways to grow its search business in the wake of its failed attempt to acquire Yahoo -- the No. 2 provider of paid search services behind Google. Google controls about 62% of all search traffic in the United States, followed by Yahoo, which owns about 21% of the market. Microsoft is in third place with a 9% share, according to market watcher ComScore.

Last week, Microsoft CEO Steve Ballmer said the company isn't interested in a renewed attempt to buy out Yahoo. The comments sent Yahoo's shares plunging more than 12% on Friday.

Microsoft is looking for alternatives to Yahoo.

In July, the company reached a deal to provide Web search services to users of the Facebook social networking site. Microsoft will provide Facebook with an application programming interface that will add Windows Live Search directly into the Facebook environment. Facebook users' Web queries will produce search results and paid search ads generated by Microsoft's search engine.

Also in July, Microsoft acquired Powerset for a reported $100 million. The company specializes in an esoteric form of Web querying called semantic search. The technique uses a variety of linguistic tools to interpret the meaning of search phrases to produce the most accurate results. The method has been in development for more than 10 years.

In January, Microsoft reached an agreement to acquire enterprise search company Fast Search & Transfer for $1.2 billion.

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