Microsoft acquires semantic search company Powerset

Financial terms of the deal were not revealed, but it is estimated that Microsoft acquired the San Francisco-based company for $100m.

The computer giant is seeking to expand its search business in the face of Google's dominance.

Powerset claims it can produce more relevant search results than Google by better reading and understanding of search queries and web pages.

Instead of searching for keywords on a page, as Google does, Powerset's technology takes apart and "understands" entire sentences, as well as the meaning of individual words.

Microsoft said it had acquired Powerset because of its natural language technology, but most of all for its team of engineers and computational linguists.

Satya Nadella, Microsoft's senior vice-president of search and advertising, said: "We're buying Powerset first and foremost because we're impressed with the people there. Powerset chief technology officer and co-founder Barney Pell is a visionary and incredible evangelist.

"When he introduced our senior engineers to some of the most senior people at Powerset...we came away impressed by their smarts [sic], their experience, their passion for search and a shared vision."

Powerset product manager Mark Johnson said the company believes that Microsoft will help it deliver its technology to a wider audience much more quickly than the start-up could do by itself.

Johnson said: "Microsoft shares our goal to improve search through deeper analysis of queries and documents, and understands that our technology and expertise will play a key role in the evolution of search."

In the year ending May, Microsoft's MSN share of search in the US had fallen from 7.6% to 5.9%, according to traffic analysis company Hitwise. Over the same time period, Google's share had grown from 65.1% to 68.3%.