Microsoft rumored to be buying Powerset

The rumors have been on again, off again for months that Microsoft plans to buy San Francisco search engine Powerset for $100 million or more.

Now VentureBeat says the rumor will become a fait accompli next month as the software giant locked in combat over search snaps up the semantic, or natural language, search engine. TechCrunch says a deal may not happen if Microsoft swings a search partnership deal with Yahoo, which has turned spurning the Redmond, Wash., company into a worldwide rubber-necking event.

Microsoft and Powerset both declined to comment. Powerset is best known to L.A. Times readers for its employees' facial hair (above).

Microsoft, with its giant warchest, certainly could afford Powerset. The start-up raised $12.5 million in a financing round from Foundation Capital and Founders Fund in 2006, valuing the company at $42.5 million.

Powerset specializes in natural language search. Basically it tries to understand the underlying meaning of the phrases you enter so it can deliver more relevant results. The technology has taken a long time to develop. And, in general, it's a tough and expensive trick to pull off. Which may be why a Microsoft buyout is in the works.

Wonder what Google thinks of that?

Reminds me of ...

... "Ode to Powerset," the poem penned by Foundation Capital's Charles Moldow for the splashy funding party that the search start-up held at San Francisco restaurant Frisson (in which Founders Fund's Peter Thiel is an investor):

Early Web was directory. We'd drill down to stuff

For finding anything was truly quite tough

Then search came along, Inktomi and Magellan

Powered the Web, we were all in heaven

Jerry and Dave created Yahoo and harnessed the power

They created a portal, from whence the Web flowered

Infoseek, Lycos, Excite were the "Me too"

But although they tried, they could not come through

Then along came a promise of a butler named Jeeves

When asked a quick question, he promised to please

But the answers were lame, quite random, bizarre

When asked "who shot Lincoln?" he replied: "It's a car."

So Yahoo had won, hand out Super Bowl rings

Till Larry and Sergey reminded "the show's not over until the fat lady sings."

With better search using link graph analysis

Google gave the other search engines a sudden paralysis

We all got trained to speak keywordease

HBO, Sopranos, Bada bing, Strip tease

Once again pundits have proclaimed the search game is done

Then along comes Powerset with technology to stun

They've aimed their sights high, at the 800-pound giant

They are up to the challenge, Barney and team are defiant

The winner will be crowned when I ask Google a question

And it's only reply is, "Go ask Powerset, that's my best suggestion."

-- Jessica Guynn

Photo courtesy of Powerset