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MSN has unveiled a big upgrade for its search engine to take on Google and Yahoo! at their own game.

The Microsoft subsidiary is cleaning up its results, by eliminating paid inclusion and separating so called algorithmic results from paid results. It says the relevancy of results is improved by 45 per cent, bringing it up to par with market leader Google. The search engine now links directly to Encarta, Microsoft's encyclopaedia, and everything is presented through a new, simpler, faster-to-access home page.

Today's launch represents a $100m investment in search, MSN says.

The Internet portal will take a short-term hit from the changes: it expects to lose tens of millions of dollars in revenue from the removal of paid inclusion. But it has to give people a reason to use its search engine, rather than that of Google, the runaway search market leader. Also, it has to keep up with its other big rival, Yahoo!, which is investing heavily in algorithmic and paid search, both organically and through acquisition.

Besides, more users means more people clicking on paid results - text search ads - which means longer-term revenue uplift.

MSN still relies upon Yahoo!'s Inktomi technology to power its search engine. However, it is alpha testing its own in-house effort and aims to launch a new algorithmic search engine and other search services "within the next year". ®

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