The other day I rambled about the lack of “real news” in the search sector, criticizing hakia’s approach to PR.

Today I have to take my hat off to Powerset, which managed to spread the news of the year.

According to a brilliant analysis by Matt Marshall of VentureBeat, the official announcement of Microsoft buying Powerset for slightly more than $100 million is expected next month.

Way to go, Powerset!

The news proves my point that a smart PR strategy is more likely to lead to such results than low-quality PR, for you see… it’s not that Powerset is better than hakia, it’s just that Powerset is better promoted.

The Power of Powerset

Powerset has an unambiguous goal, stated clearly on its about page:

Powerset’s goal is to change the way people interact with technology by enabling computers to understand our language.

The statement above can be defined in two words: semantic search.

We don’t see much at powerset.com right now – just a search and discovery tool for Wikipedia with a fascinating organizational aspect for search, service launched in May 2008. My impression is that Powerset launched this as a “preview” or a “live demo” of its real power. It’s hard to say what happens behind its closed doors, on levels deeper than the Powerlabs, but with even just rumors about Microsoft agreeing to buy Powerset we can assume that Powerst’s power surpasses our expectations.

Is Google in Any Danger?

Microsoft’s move to buy Powerset is an attempt to close the quality gap between its search results and Google’s. As you see, despite some rumors, Microsoft is not throwing in the towel in the search sector. Because we cannot compare Powerset’s results with Google’s “live” it’s hard to say whether Microsoft will do better through this acquisition. We can only assume that they wouldn’t invest their money in dust in the wind. With Powerset’s technology and Microsoft’s database of indexed web pages we could assist at the birth of the “Google killer” so many search analysts prophesized at the beginning of the year.

Google’s power is merely based on the number of web pages indexed on their servers backed up by algorithms that are now only able to deliver results based on keywords and/or keyword phrases. There is some evidence of Google using semantics to deliver results – for example the question “Will Microsoft buy Powerset?” delivers perfectly relevant results in Google. Personally, I can bet that Google is using both semantic algorithms and humans to refine results, but with no official statements from Google my assertions will be disregarded.

Not too long ago, in an interview at Technology Review, Google’s head of research Peter Norvig dismissed the importance of semantic search for the ordinary web users:

We don’t think it’s a big advance to be able to type something as a question as opposed to keywords. Typing “What is the capital of France?” won’t get you better results than typing “capital of France.”

That the web users are generally too lazy to type in the search query box more than 2-3 keywords is irrelevant. The web users will type in what works better for their needs and I doubt that an educated user will need the “what is the capital of France?” question to find Paris. But a more in depth question like hakia’s featured “Does insurance cover brain surgery?” does make sense. Click on the link to see what type of results are delivered by a semantic search engine in comparison to Google. If Microsoft and Powerset combined raise to hakia’s quality, then yes, Google will have reasons to fear.

But remember that Google does have the financial power to come up with something similar. The only chance for Google to provide as accurate results as Microsoft in the future is to purchase hakia if they don’t have something else in house.

Will the Deal Between Microsoft and Powerset Close?

Although Microsoft’s offer is less than Powerset’s investors had originally hoped for, there’s no reason to believe that the deal will not close. Alone, Powerset has no real chance on the market, and I doubt that any other search startup has. The fight for power still has only three players: Google, Microsoft and Yahoo!. So maybe Yahoo! should buy hakia? Nah, I see them making strategic mistakes again and buying a second-hand startup no one has ever heard about.