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Microsoft is beefing up its MSN search engine to go head-to-head with Google, but at the same time has no immediate plans to cancel its agreement for paid search listings with Overture Services, which was recently bought by MSN rival Yahoo.

"MSN Search falls into the category of our [key] businesses," said Lisa Gurry, group product manager for MSN in an interview at Microsoft's Redmond, Washington, headquarters on Friday. "We are working on building our own search engine from scratch."

While seeking to compete aggressively with Google, Microsoft appears to be taking a different tack with Sunnyvale, California-based Yahoo. Microsoft, for now, continues to use technology from Yahoo-owned Inktomi for MSN Search and has no plans to pull its agreement with Overture for paid search listings on MSN Search.

Search Strategy

In fact, Microsoft appears to be following a course for its commercial search technology that is similar to its plans for its Web search engine. For now the software titan will work with Overture, but in the long term it could develop its own paid listings technology, said Yusuf Mehdi, the head of Microsoft's MSN Personal Services and Business division, at Microsoft's financial analyst meeting on Thursday.

Yahoo announced an agreement to buy Overture of Pasadena, California, earlier this month.

Some of Microsoft's work in Web search has already been noted by Web site owners, who have spotted an "MSN bot" indexing their sites. However, the MSN Search project is far from done, according to Gurry, who did not detail when the new MSN Search should hit the Web.

"This is not a short-term project, it is a pretty extensive project," she said. "It is a strategic area for the [MSN] group; and we are increasing the number of employees in that area, far greater than in any other group in MSN."

Microsoft believes Web search can be done much better than any search engine does it today. "Our research indicates that only 30 percent to 40 percent of the Web is indexed and that people's questions [to search engines] go unanswered half the time," Gurry said.

Analysts with San Francisco-based investment bank SoundView Technology Group earlier this year were among the first to report on Microsoft's increased investment in Web search.

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