I asked Barney Pell, Powerset co-founder and CTO, whether there was any truth to a Microsoft-Powerset deal rumors. He said, "No comment," and noted his policy of not commenting on rumors. Microsoft also declined to comment on rumors.
Bringing Powerset, which has no revenue and a tiny user base at this point, into the fold would be spare change for Microsoft compared with spending $45 billion to $50 billion on Yahoo. But, it could bring something useful to Microsoft--and Yahoo, if their union were consummated--in the battle for search users with arch rival Google.
Powerset raises the bar on search based on a preview that I had of the service last month. Powerset differs from the Google in that it extracts and indexes concepts, relationships, and meaning, rather than keywords. It's able to create connections and pivot in some cases in ways that elude Google's proficient engine, which favors more of a statistical approach.
Powerset uses a sophisticated natural language parser(licensed from Xerox PARC) to find subjects, verbs, objects, synonyms, and other elements for indexing.
Initially, Powerset is performing its magic on the 3 million pages of Wikipedia content, enabling a new kind of search and navigation experience on the popular information resource.
A next step would be to index the Web, which would be of great interest to Google rivals. Powerset has garnered $12.5 million in Series A funding from Foundation Capital, Founders Fund, and angel investors. Given the cost to scale up a semantically rich index of 20 billion Web pages, Microsoft would be a good match for Powerset. Then again, so would Google. Stay tuned...