Microsoft Launches Search Rebate Program

SAN FRANCISCO - Stymied in its attempt to buy Yahoo!(YHOO), Microsoft(MSFT) plans to buy search market share directly from consumers.

In a speech at a company advertising forum Wednesday, Chairman Bill Gates announced a plan to give ad-funded cash rebates to consumers who buy certain products through the Microsoft Live Search cashback program.

Joining Gates to announce the program were partners eBay(EBAY), Barnes & Noble(BKS), Overstock.com(OSTK), Sears(SHLD), shoe retailer Zappos.com, and advertising powerhouse WPP(WPPGY).

With such a cast of retailers committed, plans for the program must predate both Yahoo!'s rejection in early May of Microsoft's buyout offer and even the offer itself, disclosed in February.

The portfolio subject to cash rebates includes at least 10 million products from 700 merchants, including more than 13 top retailers, Microsoft said. Consumers can get back a percentage of the sales price, paid to a PayPal account, to a bank account or by check.

Microsoft stock was down 3 cents, or 0.1%, to $28.73 in recent trading.

"Live Search cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars," Gates said in a statement.

But the company's real goal is to break past its steady third-place showing in online search and search advertising. Microsoft's search share was 9.7% in April, behind Google(GOOG) with 62% and Yahoo! at 17.5%, according to Nielsen Online.

It also may strengthen the Windows Live brand by driving more consumers to register, making other online services available to them, such as email.