Ballmer: No More Big Web Buys ... But Plenty of Investment

Microsoft CEO Steve Ballmer, who is currently traveling in Europe for a series of product launch events, told reporters that he has no plans to boost the company's online search efforts with any major acquisitions. Well, probably not anyway. Actually, Mr. Ballmer wasn't particularly emphatic about his assertion. More important, he noted that Microsoft was still willing to spend lots of money to get search right.

The question is a tricky one right now, because Microsoft and Yahoo! are still awaiting regulatory approval of their blockbuster search and advertising deal. Also, Microsoft's internal efforts to bolster its longtime search business, which was recently rebranded as Bing and backed by a $100 million advertising campaign, is starting to stall: After four months of small but steady usage improvements, Bing settled back to previous usage levels in September.

"You'll continue to see us work hard and invest in the marketing and the like, and of course we're trying to get the Yahoo! deal through regulatory," Ballmer said in Great Britain Monday morning. But he also noted that Microsoft was freezing its R&D budget of $9.5 billion for the current fiscal year, partly so that it could put more money aside for the fight with Google. And that fight, of course, revolves primarily around web search.

Part of that fight may involve more partnerships like the Yahoo! deal, but with other companies. One possibility is AOL, which is in the process of separating from Time Warner. AOL owns about 3 percent of the US search market, and currently uses Google on its search back-end. AOL's deal with Google, however, ends soon. And Microsoft is apparently examining a deal with New Corp. (which owns MySpace and other popular online destinations as well).

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