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Week in review: Microsoft seeks for search gains

Company gets creative in quest for larger search market slice, while Facebook tries to make nice with Google. Also: Soft cell market.

Microsoft is determined to get a bigger presence in the search market, and it's willing to get creative with its checkbook to meet that goal.

The software giant says it has issued another proposal to Yahoo and is in talks for some type of transaction with the Internet search pioneer that would not involve the acquisition of all of its assets.

"Microsoft is considering, and has raised with Yahoo, an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo," Microsoft said in a statement.

One source suggested that Microsoft is considering buying Yahoo's search business and taking a "minority, passive stake" in Yahoo, once the Jerry Yang-led company has spun off its Asian assets. Another scenario suggests that Microsoft proposed an arrangement in which it would sell advertisements that would be displayed next to Yahoo search results in an effort to fight back competition from Google.

Yahoo has been talking with Google about an advertising partnership in which Google would supply some text ads alongside Yahoo search results. The companies both seem satisfied with results from a two-week test. However, a partnership between the two companies has stalled due to antitrust concerns.

The announcement comes just days after billionaire investor Carl Icahn launched a proxy fight to unseat Yahoo's current board at the Internet search pioneer's upcoming July 3 annual shareholders meeting.

Icahn, a large Yahoo stakeholder, aimed to pressure the search company to restart talks with Microsoft, after the software giant withdrew its unsolicited buyout bid of $33 a share on May 3. Hedge fund Third Point and corporate raider T. Boone Pickens are also throwing their support behind Icahn's proxy fight.

Then Microsoft announced plans to lure users by dangling cash rebates to people who buy stuff using the company's search. The software maker launched a cash-back program to those who buy things after using its search. Essentially, advertisers can get placement by offering to pay Microsoft a cut of the sale as opposed to paying per click. Microsoft is returning 100 percent of its cut to consumers.

Face time with Facebook
On the Facebook front, Microsoft denies that it has felt out the social-networking site about a possible acquisition, if the Yahoo talks fail to pan out for Microsoft again.

"There's nothing particularly new on that front," Ballmer said. "We have a great relationship with Facebook, and we look to continue to invest in that partnership."

While there is no love lost with Microsoft, Facebook CEO Mark Zuckerberg wants to sit down with Google to resolve issues surrounding the search engine's use of Facebook data.

Facebook and Google have been squabbling over Google's Friend Connect service, which allows Web sites to add social-networking features. Facebook said the Google application violated its terms of service.

Google denied the claims and even took the step of on how its service works.

The issue with Google is that the search giant launched the service without talking to Facebook, and "we had no choice but to follow the rules that we had set forth for any developer on top of our platform, and we followed them," Zuckerberg said.

Facebook plans to unveil a redesign of profile pages in coming weeks to help members cut down on the clutter. The redesign, which was previewed this week, slots member information under five new tabs: personal news feeds; profile information; photos; applications; and a customizable tab.

With the design changes, the company risks angering application developers that rely on Facebook for distribution and member usage. Designers of less popular widgets, for example, could feel somewhat marginalized by Facebook's placement of external applications on a dedicated profile tab.

One developer, who asked to remain anonymous, speculated that members might not like the fact that you can no longer view a Facebook profile on a single page. "(It takes away) the user's ability to create a unique profile page that they identify with," he said. "Even your Twitter profile seems to do a better job of representing you, these days."

Soft cell market
AT&T is edging closer to completing a 3G upgrade just in time in for the rumored release of a 3G iPhone next month. The company says it is only six cities away from reaching its goal of faster 3G uploads in 275 cities. AT&T has already deployed faster 3G download technology in these cities, and by the end of June, these markets will also have faster upload speeds.

Meanwhile, Nokia is finally bringing the latest XpressMusic phones to the United States. The Nokia 5310 XpressMusic is a very slim candy bar-style phone measuring only 0.39 inches thick and weighing just 3 ounces. It features a 2-megapixel camera that takes still pictures and videos. And, of course, it's got a music player with external controls and stereo Bluetooth connectivity along with T-Mobile's special MyFaves support.

The Nokia 5310 MusicExpress handset hits T-Mobile stores on May 28. Unfortunately, the flashier Nokia 5610 won't be available until sometime this summer. T-Mobile is the first and only wireless operator in the States to sell the new 5310 Xpress Music phone and its big brother, the 5610 Xpress Music phone.

However, sales of cell phones in the States declined during the first quarter of 2008, as the maturing market was hit by a slowing U.S. economy. This is the first time since NPD Group started tracking mobile handset sales in 2005 that it a saw a decline in the first quarter after the holidays. The market research firm believes that the decline could be tied to economic troubles.

Also of note
Microsoft plans to add new formats to Office 2007, including the OpenDocument Format, Portable Document Format, and XML Paper Specification...eBay plans this summer to help publicly launch, a marketplace for buying fair-trade products...Google is beginning an "experiment" that incorporates graphical ads with image search results...Twitter issued a detailed post on its corporate blog explaining the repeated outages affecting the service and what the company plans to do to resolve them...Yandex, a Russian search engine, reportedly plans to raise $1.5 billion to $2 billion in an initial public offering this fall.