San Francisco - Still smarting from its failure to snare Yahoo, Microsoft on Tuesday announced that it had reached a deal to purchase search start-up company Powerset in a move seen as part of Microsoft's bid to challenge the online dominance of Google.

The deal was announced on a company blog by Windows Search chief Satya Nadella, and details of the purchase were not disclosed. PC Magazine said that the deal was valued at around 10 million dollars.

The software giant said that it would integrate Powerset and its engineers into the Windows Live search team, though the company would continue to operate from its current base in San Francisco.

Powerset is one of a number of young companies that aim to improve search through contextual understanding of a user's search terms and related terms on possible target pages.

Nadella said that Powerset's technology could help overcome search results that did not match a user's intent.

"We can solve these problems by working to understand the intent behind each search and the concepts and meaning embedded in a webpage," she wrote. "We will use knowledge extracted from webpages to improve the result descriptions and provide new tools to help customers search better." (dpa)