Microsoft has agreed to buy comparison shopping business Ciao in a deal worth around US$486 million, and plans to integrate the service into its Live Search sites, it announced Friday.

The deal is a sign that Microsoft's commercial search ambitions extend to Europe, where Ciao is present in seven countries. Microsoft launched a comparison shopping and search reward site, Live Search cashback, for U.S. surfers in May this year.

The company said it expects to use Ciao to boost its MSN e-commerce services, in addition to incorporating Ciao's services into its Live Search sites.

Microsoft's $486 million offer for Ciao's parent company, Greenfield Online, tops that of a consortium led by private equity fund Quadrangle Group. In June, Greenfield made a definitive agreement to be acquired by Quadrangle for $426 million, and must now pay the consortium a $5 million fee to terminate that agreement.

Ciao, based in Munich, Germany, operates consumer review and comparison shopping portals in France, Germany, Italy, the Netherlands, Spain, Sweden and the U.K.

In addition to the comparison shopping service, Greenfield also owns Ciao Surveys, which pays Internet users for responding to consumer surveys. Microsoft will sell that business to an unnamed buyer immediately upon acquiring Greenfield, it said.

Greenfield expects the transaction to close in the fourth quarter. The acquisition will still go ahead even if Microsoft is unable to find a buyer for the survey business, it said.

Microsoft plans that the Ciao business will report to Rajat Taneja, general manager for worldwide commercial search at Microsoft.

After the collapse of its attempt to buy Yahoo, Microsoft is desperate to boost use of its search services, which draws far fewer visitors than those of Google and Yahoo. Attracting surfers with the offer of rebates on their online purchases through Live Search cashback is just one of the ways it is trying to catch up. The acquisition of Ciao and its established user base may allow Microsoft to extend that approach to Europe. The cashback service was itself built on an acquisition, that of Jellyfish.com.

Yahoo has already acquired a French comparison shopping service, Kelkoo, which now operates in ten European countries, and also drives Yahoo's own-brand comparison shopping service in France, Germany, Italy, Spain, the U.K. -- and Taiwan.

France is also home to PriceMinister, an independent comparison shopping service that operates in France and Spain.

Google's own comparison shopping service, has been renamed from Froogle to Google Products, but is still in beta testing and appears to be an English-language-only service.