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Microsoft looks to Facebook to expand Live Search

Some question whether integrating Live Search into Facebook will boost flagging engine

By Heather Havenstein
July 25, 2008 12:00 PM ET

Computerworld - Microsoft yesterday announced that it is expanding its banner advertising agreement with Facebook Inc. to include Live Search capabilities and paid search advertising on the social network.

Microsoft, which bought a $240 million stake in Facebook last year, told the IDG News Service that it expects the deal will expand the use of the Live Search engine, though some veteran bloggers questioned those expectations. The company did not provide financial details of the new deal.

Greg Sterling, a blogger at Search Engine Land, noted that when Microsoft bought the minority stake, he expected that Live Search would inevitably come to Facebook.

"This is a big deal for both Microsoft and Facebook, which had no Web search prior to this," he noted. "If Facebook eventually drives a good deal of volume, it can help Microsoft gain exposure to users and potentially additional market share over time, but also drive search revenue. Facebook now has in excess of 100 million users globally."

However, TechCrunch's Jason Kincaid pointed out that the new deal is similar to a so-far less-than-successful $900 million agreement Google signed with News Corp.-owned MySpace in 2006 to provide search and search advertising to MySpace and other News Corp sites.

"Google has had a hard time monetizing the search deal with MySpace, but it blames the underperformance on the difficulty with monetizing social networks in general," he noted. "It's probable that Microsoft will run into similar issues on Facebook, but it may be just as concerned with exposing users to Live Search as it is with generating revenue, at least in the short term. Back in 2006 [TechCrunch] speculated that Microsoft may have been taking a loss on its initial advertising deal with Facebook, simply to beat out Google and get some traction in the advertising space. It may be taking a similar approach here."

He added that this is another step by Microsoft to boost the Live Search offering, which has not been as popular as competing engines from Google and Yahoo.

Mashable's Adam Ostrow also noted that the Google-News Corp. partnership has produced only "lukewarm" results for Google because most social networking users use their search service of choice despite any integrated options on social networking sites.

But, he acknowledged that "the law of huge numbers means that at least a few people" will do their Google, Yahoo, or Live searches via a partner site.

"What will be interesting to see is if the social networks begin to do innovative things with social search by leveraging your friends list," Ostrow added. "Yahoo recently released Build Your Own Search Service [BOSS] to allow developers to do just that."



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