Powerset: Hail Mary pass? Updated

Update:

The much-rumoured Microsoft acquisition of “natural-language search” startup Powerset is now official, with a statement from MSFT and one from Powerset. Mike Arrington says that sources close to the deal tell him the rumoured $100-million asking price is in the ball park. Not bad for a company that has virtually no actual operating business.

Original post:

Matt Marshall over at VentureBeat says he has it on good authority that Microsoft is planning to make an offer for Powerset, the “semantic search” startup that has been in stealth mode for quite awhile now, popping up only long enough for a party or two, and recently poked its head out with a small-scale demo of its technology as a Wikipedia search engine. The rumoured dollar value for this deal? $100-million. If true, that would be a hell of a payday for something that hasn’t really shown much in the way of spectacular results so far, and is based at least in part on 30-year-old technology that the company licensed from Xerox’s PARC labs. TechCrunch says the deal could still be derailed by the Microsoft-Yahoo mess.

Of course, for a company like Microsoft, $100-million is chicken feed — Bill and Steve find that kind of money stuffed under the couch cushions when they vaccuum the Microsoft HQ. And the idea of an acquisition has been around before, with rumours floating here and there. It’s a painfully well-known fact that Microsoft’s search is a distant third place to Google and Yahoo, which is one of the main reasons the software behemoth continues its on-again, off-again (currently on-again) pursuit of Yahoo’s search business. If it could use Powerset to add natural-language search tools to its arsenal, that might help to close the gap with Google — although as Danny Sullivan has noted many times, we’ve been around this particular racetrack many times before.

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About mathewi

I'm the chief digital writer at the Columbia Journalism Review in New York, and a former writer for Fortune magazine and the Globe and Mail newspaper.

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