May 24, 2008

Microsoft Pulls Plug on Book Scanning Operations

Microsoft's effort to scan whole libraries and make the content searchable has been put on indefinite hiatus in a sign that the company may be backing off their aggressive Google attack.

Last month the world's largest software maker's $47.5 billion bid for Yahoo collapsed and now the company is under pressure to show it has a coherent strategy for turning around its unprofitable online business.

Satya Nadella, senior vice president of Microsoft's search and advertising group, said that digitizing books and archiving academic journals "no longer fits with the company's plan for its search operation."

Microsoft said next week they would take down two separate sites for searching the contents of books and academic journals. They said Live Search will direct Web surfers looking for books to non-Microsoft sites.

"Microsoft will focus on verticals with high commercial intent," said Nadella.

He added: "We believe the next generation of search is about the development of an underlying, sustainable business model for the search engine, consumer and content partner."

This week at Microsoft's Redmond, Wash. headquarters, Nadella demonstrated a new system that rewards customers with cash rebates for using Live Search to find and buy items on advertisers' sites.

Microsoft's entry into the book-scanning business started in 2005 when it contributed material to the Open Content Alliance, an industry group conceived by the Internet Archive and Yahoo. The company started its competing MSN book search site the following year.

Microsoft only scanned books with the permission of publishers or that were firmly in the public domain. Google faces several lawsuits for their decision to scan books still protected under copyright law.

Publishers are expected to receive digital copies of the 750,000 books and 80 million journal articles Microsoft has amassed.

Despite the company's many attempts to emulate Google's innovative search features, in terms of the number of queries performed each month, Microsoft runs a distant third behind Google and Yahoo.

The company acknowledged that its search strategy wasn't working when they offered to buy Yahoo in February. The deal collapsed as Yahoo executives sought more money.

Microsoft's ceding the book-search segment to Google and the Yahoo-led Open Content Alliance could signal Microsoft has a new search strategy and is ready to jettison its unsuccessful me-too efforts.

However, the company is still looking to combine search operations with Yahoo, as the companies are said to be talking about a more limited deal.


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