Microsoft Begins To Invest In Catching Google

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Google’s (GOOG) market share in search may be so large that no one will ever pass it. The second and third place players, Yahoo! (YHOO) and Microsoft (MSFT) would certainly like to, but most investors believe that the cost of adding new eyeballs is too great.

Microsoft doesn’t buy that argument. Perhaps with their cash war chest they don’t have to.

It looks like the world’s largest software company is putting some of that money to work. Microsoft has cut a deal with Lenovo, the firm that bought IBM’s (IBM) PC business, to put its live.com search toolbar as the default on all of Lenovo’s new computers. Lenovo is the world’s third largest PC company and Wall St. can bet that the deal was not free for MSFT.

The partnership may only be a start for Microsoft. The toolbars shipped with PCs are a natural place to get search real estate. Pre-loading the software probably costs something for each machine, but if Microsoft can cut deals with other PC companies it has the chance of helping its own cause.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

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