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Microsoft looks to gain Web search share with Sun deal

November 10, 2008 | 10:22 am

Microsoft CEO Steve BallmerMicrosoft, a distant third in the search market, has inked a distribution deal with a former foe in a bid to increase its share of search traffic.

U.S. Web surfers who are downloading Sun Microsystems' Java software will be asked if they'd like to also download a toolbar featuring a Microsoft Live Search box, under the deal announced today.

The Java software, which is needed to view some websites, is on 800 million desktops worldwide -- more than nine out of 10 personal computers connected to the Internet -- and gets tens of millions of downloads each month, according to Sun. The companies did not disclose the financial details of the pact. Sun has had similar deals with Google and Yahoo in the past.

Striking distribution deals is a key part of Microsoft's grand plan to catch up to Google. "This is the beginning of the execution of a new strategy for us," said Brad Goldberg, general manager of Microsoft Live Search. "Building out distribution is one of the key things we are focused on."

Redmond, Wash.-based Microsoft has been looking for ways to gin up more traffic since abandoning its effort to buy Yahoo in May. Microsoft Chief Executive Steve Ballmer last week dismissed speculation that he was still interested in buying Yahoo.

Microsoft is battling Google, which dominates search. Yahoo ranks second. Google snared 63% of the U.S. Web search market share in August, leaving Yahoo with 19.6% and Microsoft with 8.3%, according to research firm ComScore. Several analysts believe that Microsoft will still attempt to buy Yahoo's search business.

Microsoft seems focused, for the time being, on other strategies such as distribution deals. Its biggest coup so far was striking a deal with Hewlett-Packard to make its search engine the default on all personal computers shipped in the U.S. and Canada starting in January.

This time, Microsoft has teamed with one of the primary adversaries from its antitrust battles. In 2004, Sun netted nearly $2 billion in a patent and antitrust settlement from Microsoft. The computer-server maker is now struggling, posting a $1.7-billion loss last quarter.

-- Jessica Guynn

Photo: Microsoft Chief Executive Steve Ballmer. Credit:  Tomohiro Ohsumi / Bloomberg News

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