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MSN search bot a glimpse of ambitions

As it prepares its own algorithmic search engine, MSN quietly launches software that will index Web sites, a move that raises questions about MSN's deal with Yahoo unit Inktomi.

In preparation for unveiling its own algorithmic search engine, Microsoft's MSN has quietly launched software that will index Web sites, a move that raises questions about MSN's relationship with Yahoo subsidiary Inktomi.

Called MSNBot, the software scours Web sites and collects hyperlinks and documents. The software is part of MSN's effort to challenge Google by revitalizing MSN Search with its own algorithmic search technology.

MSN currently uses Inktomi's algorithmic and paid listings, as well as Overture Services' commercial results as part of its query mix. Although an MSN spokeswoman said the company plans to maintain its Overture relationship, she was ambiguous about the future of its relationship with Inktomi, now a subsidiary of portal rival Yahoo.

"At this point we are interested in developing the technology in-house," said Lisa Gurry, MSN's group product manager. Gurry said there are no "immediate plans" to change MSN's relationship with Inktomi and added that MSN will increase the resources being put toward developing its own algorithmic search technology.

A Yahoo spokeswoman would not comment on the implications of MSN's search plans but said Yahoo still views MSN as a customer.

"We feel like we'll only be able to provide better solutions to our clients like MSN," said Yahoo spokeswoman Diana Lee.

MSN's efforts fly in the face of its recent pledge of support for its Inktomi relationship. In February, Microsoft extended its license with Inktomi through December 2005, according to a filing with the Securities and Exchange Commission. The filing added that MSN contributed $5.6 million in revenue to Inktomi during the December 2002 quarter. About $5.1 million of that revenue was through paid inclusion and $500,000 was through licensing fees.

Gurry declined to comment on the contract extension.

Popular algorithmic search engines such as Google and commercial search providers such as Overture Services have become increasingly crucial to the livelihood of Web businesses. Google's popularity as a fast, comprehensive search engine has caused former search king Yahoo to shift strategy despite having incorporated Google's technology in its own engine.

Commercial search engine Overture has also boosted revenue and fueled profitability for MSN and Yahoo. Overture auctions off search-result placement to advertisers and shares its revenue per click with its portal partners. (Paid listings are marked as such.) Last quarter, Yahoo said 19 percent of its revenue was derived from its Overture partnership. MSN has also touted its partnership with Overture.

Signs of MSN's push into improving its search engine were apparent in February when it tested a slimmer, faster version of MSN Search.

Microsoft is also developing search technology for the next version of its Windows operating system, code-named Longhorn, that could further its ambitions to take on Google. The search technology, borrowed from the company's SQL Server database, is expected to make it easier to find documents locally, on individual PCs, and across the Internet by linking to MSN's search services.