Microsoft buys ciao.com to boost business

Microsoft has agreed to buy Greenfield Online, owner of popular European price comparison website ciao.com, for $486 million (Dh1.7 billion) to boost its internet search and e-commerce business in Europe.

Microsoft, whose $47.5bn bid to buy Yahoo earlier this year failed after a long battle, said the acquisition – the latest in a series – should help it build a more consumer-friendly, results-oriented search engine.

"We call it 'instant answers'," said John Mangelaars, head of Microsoft's consumer and online business in Europe.

"I hope it is getting very clear that we are very serious about Emea," he added. Internet search is dominated by Google, which has 62 per cent of the global search market and 79 per cent in Europe, according to web usage tracker ComScore.

Microsoft has a two per cent market share in Europe and nine per cent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia's Yandex.

But Mangelaars said buying ciao.com was an important step in Microsoft's attempt to distinguish itself by providing search results more useful to consumers, particularly shoppers, than those thrown up by a Google search. For example, results of a Microsoft search for a particular camera model could include which prices were available from which retailers, and maps of where those retailers were, rather than just links to the manufacturer's and retailers' sites.

The acquisition follows those of Norwegian enterprise search company Fast for about $1.2bn early this year and shopping-and-auction site jellyfish.com for an undisclosed sum last year.

Caio.com is active in seven European countries and attracts 19.6 million unique visitors per month in Europe, more than twice as many as rival kelkoo.com, said ComScore, thanks to its large network of members who contribute product reviews. To attract more users, Microsoft also plans to reward consumers who buy products through its shopping sites by giving them cash back, extending a trial started in the United States a few months ago.

"Google's trying to do all your search needs. What Microsoft is doing with this kind of acquisition is saying: 'We're going to be very good at the commercial side of search, the shopping'," said Forrester principal analyst Rebecca Jennings.

Herve le Jouan, ComScore's managing director, Europe, agreed. "Doing this shopping thing, I think, is a good move," he said, but cautioned that acquisitions alone would never bring Microsoft close to Google's market share in search.

"Nobody is able to compete right now with Google so there is nobody to buy to compete with Google," he said.

Microsoft's Mangelaars acknowledged the distance Microsoft had to cover, especially given the commercial edifice rapidly being built by online advertisers whose models depend on Google's particular view of the web.

"It's a race," he said, "but we also believe it's very early days in search technology." Microsoft's offer of $17.50 per share betters an earlier proposal by media-focused US buyout firm Quadrangle Group to acquire the company for $15.50 a share, and represents a slight premium to Greenfield's closing price of $17.25.

Greenfield had said earlier it had received a $17.50 per share offer but did not reveal from whom. The latest offer represents a premium of 10 per cent.

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