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Microsoft enters online auction business

Microsoft launches an auction site in an attempt to steal some business from market leader eBay and reinforce its MSN Internet access service.

Microsoft launched an auction site today, the latest attempt to wrest some of the lucrative online auction business from eBay as well as to bolster its own MSN Internet access service.

The "soft" launch--to be followed by a formal announcement on Monday--coincides with Microsoft's joining forces with nearly 100 online sites, including Excite@Home and Lycos. The companies are building a network of auction sites that share listings, in an effort to reel in auction leader eBay.

For Microsoft, this is its first foray into the auction business. On the MSN site's first day, the items up for sale ranged from antiques to travel packages.

Amazon.com and Yahoo, the second-largest Internet directory, already have created their own auction sites but both have yet to strongly challenge eBay.

"The auction business is enormous, and there is loads and loads of money [to be made]," said Barry Parr, an analyst with IDC. "eBay pretty much has that market to itself. Companies with large customer bases say to themselves, 'Hey, a piece of that belongs to us.'"

Parr added that brand name notwithstanding, Microsoft faces an enormous challenge in trying to lure away eBay's customer base.

With some 3 million items on its site, eBay lays claim to the largest number of users in the auction business. The large numbers of buyers who shop eBay make the site highly attractive to sellers, who want the most number of people to bid on their goods.