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CAMBRIDGE, Mass.—Microsoft Corp. has no immediate plans to integrate the MSN desktop search application into its operating system, a company executive said at a conference here this weekend.

Speaking on a panel on search technology at the Harvard Business School’s Cyberposium, Mark Kroese, general manager of information services and merchant platform product marketing for MSN, said the federal antitrust battle Microsoft waged with the government has made the company think twice about what technologies it can add to the operating system.

“Working at Microsoft today vs. five years ago is different,” Kroese said. “If anyone thinks the antitrust case hasn’t slowed us down, you’re wrong. If I want to meet with a products manager for Windows there needs to be three lawyers in the room. We have to be so careful, we err on the side of caution. We are on such a fine line of conduct.”

Indeed, while including the MSN desktop search application in Windows might seem like a logical step to many, “there’s no immediate plan to do that as far as I know,” Kroese said. “That would have to be a Bill G. [Microsoft chairman and chief software architect Bill Gates] and the lawyers’ decision.”

Microsoft officials on Monday clarified Kroese’s remarks, saying that the company will continue to offer a built-in search facility as part of Windows, as it has done for years, but there are no plans to integrate the MSN Toolbar suite, which includes the MSN desktop search technology, directly into the operating system. The MSN Toolbar suite is currently in beta.

Meanwhile, Bradley Horowitz, director of media and desktop search at Yahoo Inc, said, “We see an opportunity in helping users manage personal information, so our desktop search is about the user’s relationship to that information. So what desktop search allows us to do is create transparency about where that data lives, where it actually is. We see personal research as a place where Yahoo has a big advantage.”

Click here to read about Yahoo’s desktop search client.

Herve Gallaire, chief technology officer of Xerox Corp. and president of the Xerox Innovation Group, said Xerox is taking more of an enterprise focus to search technology.

“What needs to be done is to be able to search all types of information sources in an enterprise,” Gallaire said. “The Web is great, but it’s not enough to do your work.”

Deep Nishar, a director of Google Inc., said, “Our mission is to organize the world’s information and make it accessible and usable.”

Kroese said, “At Microsoft we look a lot more at adding innovation so revenues can follow.”

One area of focus is local search. About 18 percent of searches are for local information, the panelists said.

Will local search live up to its hype? Click here to find out.

“At Yahoo, we think of local search as an extension of vertical search,” Horowitz said. “It reaches into a different business model and provides a tremendous amount of value.”

Microsoft’s approach is a bit different, Kroese said. “At Microsoft our heritage is being a platform and our approach to search will not be a lot different.”

Next page: No limit to searchable data.

All of the panelists said their companies see virtually no limit on the types of data that could and should be indexed by search engines. Panel participants mentioned video, images, library source documents, the contents of users’ hard drives, e-mail, buddy lists, calendars and other enterprise data as within the realm of possible data sources ready to be mined by search engines.

Click here to read more about video search services.

“The Web currently only has 5 percent of information [indexed],” said Google’s Nishar. The rest of the data sources that need to be indexed are stored everywhere from digital cameras, to users’ hard drives, to out-of-print books, he said.

“Rather than trying to prioritize [which of these sources to index first], we want to make all of this information universally available to you,” Nishar said. That’s why Google has fielded a variety of search services and data stores, ranging from its Gmail e-mail, to its Picasa photo service, to its desktop search application, to Google Video, he said.

Xerox’s Gallaire emphasized the interest and need of corporate users to index data that is currently locked away in company’s databases.

“Enterprise users need to access all types of information sources and repositories,” Gallaire said. “You need wrappers [to enable] enterprise product integration.”

Xerox developed this type of technology and sold it to Documentum, Gallaire said.

When asked about the type of business models they expect to support search in the future, the panelists generally agreed that paid search will continue to fuel growth for the next three to five years.

A recent study revealed that—despite FTC mandates—many search engines still aren’t clearly distinguishing between paid ads and legitimate results. Click here to read more.

“Today, paid [search] is a great business model,” said Microsoft’s Kroese. “But we’re also pursuing other business models.”

Kroese noted that the price the search providers charge for paid links is still way below the cost of yellow pages ads.

“There’s lots of head room,” Kroese said.

Horowitz said that Yahoo will continue to use paid search to offset the cost of less lucrative search ventures, such as video search and desktop search.

Google’s Nishar emphasized that “advertising is not necessarily evil.” He noted that 40 percent of Internet search queries are commerce-specific queries. Charging advertisers for placement is not unethical, he said.

Microsoft’s Kroese noted that the gray area in paid search occurs when it’s not clear which search results are paid and which are not.

“Microsoft a year ago didn’t have clarity in its advertising model,” he said, noting that this situation has now been rectified.

“If you put the user first, you will do well,” Kroese said.

Kroese made no mention of MSN’s widely anticipated launch of new betas of its MSN Web search and desktop search technologies. A number of industry pundits have identified February 1 as the date when MSN will trumpet the latest betas of its search services. MSN officials have declined to comment on what, if anything, the unit is planning to unveil Tuesday.

Editor’s Note: This story was updated to include clarification from Microsoft officials on the company’s multiple search technologies.

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