Microsoft reveals European expansion plans

Microsoft has laid out plans to expand into Europe as it looks to further its search capabilities in a bid to take on rival search giant Google following its failed bid for Yahoo earlier this year.

The technology giant has been pushing to improve its ability to conduct internet searches and to attract the advertising revenue that comes with it since Yahoo rejected its £24.3 billion offer in July.

Microsoft has always maintained it is the challenger in search, and not the leader. However, the computing giant is now setting up research centres in France, Germany and Britain to improve its internet search technology.

In addition to working on improvements to Microsoft's existing search capabilities,  chief executive Steve Ballmer said the European research centres would focus on new kinds of searches, including queries from mobile devices and searches involving pictures and video.

Microsoft has described its expansion plans as a vote of confidence in the European economy and in the company's ability to close the gap on Google.

Ballmer said although economic times are tough, the company has to keep its faith in the promise that technology holds the key to transform the future.

Google now accounts for nearly 80 per cent of internet searches in Europe, according to research company ComScore, while Microsoft has one per cent of all searches.

Yahoo, which has also struggled with the search market in Europe, is also stepping up its efforts to compete in the search market. Last month the company announced a research and development complex in Grenoble, France, to focus on search, in addition to other technologies.

Spending on internet search ads will generate £15 billion worldwide this year, 57 per cent of the total spending on Internet advertising, according to eMarketer.

Meanwhile, the proposed $800 million (£455m) Google and Yahoo search advertising deal has been delayed by the two companies as the US Department of Justice (DoJ) continues its investigation into the implications of the partnership.

Both companies issued statements to explain that the deal was being delayed to give the DoJ more time to conclude its investigation.

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