Microsoft to Launch
Cashback Search Service

Microsoft Corp. hopes to make gains on Google Inc. in the lucrative business of Internet search through a new service that pays consumers who buy items they find through the software company's search service, according to people familiar with the company's plan.

The Redmond, Wash., software maker is rolling out a service called "Live Search cashback" that gives consumers money back on certain purchase of products found through Microsoft's live.com Web search service, the people said.

The new service is part of a broader effort by Microsoft to try to attract more consumers to its Internet search service and better compete with Google, which is the leading Internet-search provider and makes most of its money from advertisements tied to search. Microsoft, a relative latecomer to the search business, lags Google and Yahoo Inc., the number two provider.

The debut of the service follows Microsoft's recent attempt to buy Yahoo as a step to expand its share of the Internet search and online advertising market. Microsoft withdrew its offer on May 3 after Yahoo refused to sell for Microsoft's offer price.

People familiar with the matter said in recent days Microsoft floated a proposal to acquire Yahoo's search-advertising business. Under Microsoft's proposal, Yahoo would also sell its Asian assets and Microsoft would acquire a minority stake in what remained of Yahoo, the people said. A Microsoft spokesman declined to comment.

Microsoft will use an annual event it holds for online advertisers to announce the new cash-back service on Wednesday, people familiar with the plan said. Details of the service will be included in a speech by Microsoft Chairman Bill Gates and Microsoft Senior Vice President Satya Nadella, people familiar with the situation said. Plans for the new service were first reported on several Web sites including SearchEngineWatch.com.

A Microsoft Web site describes the cash-back service as a way for consumers to use search to get deals on products. The site says that savings on products would be based on a certain percentage of a product's priced and be paid to consumers via a check, direct deposit to a bank account or an account with eBay Inc.'s PayPal online payment service.

To use the service, consumers will need to open a free account by providing certain information such as billing details, according to the Microsoft site.

The Web site lists a range of products including running shoes, perfume, Canon Inc. digital cameras, Bulova Corp. watches and Oakley Inc. sunglasses. The site also lists participating vendors including Barnes & Noble Inc. booksellers, Circuit City Stores Inc. and Home Depot Inc.

Written by Robert A. Guth at wsj.com