Patience agreed that scaling the technology could be an issue. "It's an interesting application of semantic technology that's yet to be proven on any size. Wikipedia is not large," he said.

An acquisition by a company with deep pockets, like Microsoft, could be just what Powerset needs to scale its technology to the entire Web.

In a blog entry attributed to Powerset's Mark Johnson, the company believes that Microsoft will help it deliver its technology to a wider audience much more quickly than the startup could do itself.

"Microsoft shares our goal to improve search through deeper analysis of queries and documents, and understands that our technology and expertise will play a key role in the evolution of search," he wrote. "With an existing search infrastructure, incredible capital resources, unlimited data, a leading search team, and clear mission to revolutionize the search landscape, Microsoft can rapidly accelerate our progress in building semantic search technology and bringing it to full Web scale."

While the acquisition may appear to be a knee-jerk reaction following Microsoft's failed attempt to buy Yahoo, that's unlikely to be the case, Patience said. "This is not really an alternative to buying Yahoo," he said. "It's an unproven technology with no revenue."

Powerset doesn't offer Microsoft the strong brand, users and multitude of Web properties that Yahoo would have, Sterling agreed. "This is not a substitute for what they were going for with Yahoo," he said. "This isn't the answer to Microsoft's prayers."

While Yahoo researchers are also doing work on semantic search, Microsoft might have better luck developing and commercializing Powerset's technology than if it had made the Yahoo acquisition, Patience said. "The question is, would the Yahoo people have already left or gotten lost inside the greater Microsoft?" he said. "These [Powerset] guys have a better chance of influencing Microsoft search direction than the semantic engineers at Yahoo would have done."

Microsoft plans to integrate Powerset's technology with some of its own natural-language technology that has been in development in Microsoft Research, Nadella wrote.

The company will disclose more details on how it will use Powerset's technology in its Live Search engine at a later date, he added. Microsoft said it expects the deal to close in a few weeks.

For years Microsoft has been looking for ways to bolster its search strategy, and since the Yahoo deal fell through it is under even more pressure to boost its search market share.

Since search-based advertising is the largest slice in the online advertising pie, Microsoft must increase the profile of its Live Search engine in order to build this part of its business.