Microsoft dangles rebates for web shoppers

Live Search Cashback offers discounts to consumers who do their Internet shopping using the Microsoft engine. Typing 8220;video cameras8221; into Live Search and then selecting a model, for example, a user can see merchants offering discounts from 2 to 9 percent.

In a speech announcing the rebates, Microsoft Chairman Bill Gates predicted that the program would attract more consumers to Microsoft8217;s search engine and potentially change the economics of Internet search. 8220;I think years from now you may look back and say, 8220;Wow, search started to get a fair bit more competitive,8217; 8220; he said.

Microsoft is engaged in an epic struggle to catch up to Google.

The source of Google8217;s fortune is its search engine, which earns money by placing ads around the search results. Of the 20 billion spent on Internet advertising last year, about 40 percent was spent on advertisements accompanying search results. Google has garnered the lion8217;s share of that money, and its mastery of the field has powered its rapid ascent. As a result, Google essentially operates as an Internet guide for most users.

Microsoft8217;s competing search engine, known as Live Search, lags far behind Google and Yahoo.

The rebate plan is a reflection of the company8217;s desire to reinvigorate it, but analysts were split on whether the program could provide Live Search with a significant boost.

8220;It8217;s definitely unique at the moment, and it will definitely cause people to take another look at Microsoft,8221; said Danny Sullivan, editor in chief of an industry publication. 8220;But I don8217;t think there8217;s any guarantee that this is a game changer.8221;

He added that the process to enroll for rebates was 8220;awkward and confusing.8221;

The software maker has offered similar incentives for people to use its search engine but not on the scale revealed Wednesday. For example, Microsoft offered large companies software and services credits for every employee who used Live Search in the workplace.

But other analysts said the incentive could get consumers to Live Search.

While most search advertisers pay each time a user clicks on their ad, participating merchants will pay Microsoft a fee each time a customer completes a sale through Live Search Cashback. The fee will be a percentage of the retail price, and when the purchase is complete, Microsoft will return the fee to the consumer in the form of a cash rebate, the company said. The rebates to the customer, in effect, come from the advertisers.