Venturebeat reports that Microsoft might be close to acquiring the San Francisco based semantic search engine Powerset for about $100 Million. No announcement has been made yet by either party. We contacted Microsoft, but did not get an answer beyond "Microsoft does not comment on rumors or speculation." We will update this post once we receive more information.

Rumors about Microsoft's interest in Powerset had been swirling around the Valley since last month, when Dan Farber first brought up the possibility in a post on CNet.

Having backing from Microsoft could help the small company to expand beyond Wikipedia and start indexing more of the Internet. Powerset's technology is still unproven to work well for anything but Wikipedia, but if Powerset does manage to scale beyond this, then it would allow users to by-pass Google's keyword driven search in favor of just getting a direct answer to a large number of their questions.

Mircosoft's search products have struggled to gain any ground back from Google's search. Currently, Google has almost a 70% share of the search market, while MSN/Live Search has about 9.5%.

Powerset's capabilities have generally received very positive reviews and in his original piece on this, Dan Farber already argued that Powerset's ability to create connections between concepts, relationships, and meanings could give it a heads-up over Google's keyword and PageRank driven search.

We first reviewed Powerset vs. Google in May and at the time, Josh Catone's impression wasn't quite as positive and he concluded that "Powerset doesn't do a markedly better job of finding answers than Google for most queries."

Powerset was funded in a $12.5 Million Series A round by Foundation Capital, Founders Fund and various angel investors.

For a more in-depth look at the state of semantic search in general, see also Alex Iskold's article on the myth and reality of semantic search.]]> tag:www.readwriteweb.com,2008://1.6652-comment:58921 Technology Slice http://technologyslice.blogspot.com I think they are taking a leaf out of Google's book and acquiring anything they can't match.