Yahoo! bets on search

Yahoo! has planted a new stake in the ground when it comes to its own long-term development.

The company on Monday formed Yahoo! Research Labs, a team of scientists that will investigate and develop future Internet technologies, said Gary Flake, the group's principal scientist.

A top priority is web search and related advertising, he said.

"Today, search engines are like the 8-track tapes of the music industry," said Flake, former head of research for Overture Services, which Yahoo! now owns, and a self-proclaimed geek who holds a doctoral degree in data mining. "We're very much at the beginning of an industry here, and the amount of innovation in the next 10 years will be mind boggling."

Yahoo! is devoting new resources to research and search at a time when several large competitors are doing the same. Yahoo! plans to add about 10 more people to the roughly two dozen it already employs at Overture's headquarters in Pasadena, California.

Search rival Google runs a research lab that is responsible for innovations such as Google News and Froogle.com, its comparison shopping engine that competes with Yahoo! Shopping. Outside of its software research and development unit, Microsoft has devoted about $500m to pioneering new search technologies. Other technology companies with research arms include online retailer Amazon.com and IBM.

Much of the research is designed to improve web search and the relevancy of sponsored listings so these companies can win the loyalty of visitors and advertisers.

Yahoo!'s Research Labs originated from the company's recent $1.7bn acquisition of Overture Services, the nexus of commercial search in the past several years. Flake founded Overture Research in August 2002 to pioneer research in pay-for-performance search, Overture's primary business model, and web search, a new focus for the company at the time. Within the division's first year, it authored several academic papers, filed several patents related to search technology, and helped integrate Overture's web search acquisitions, Flake said.

Members of the Overture Research team also got involved in open source projects such as Nutch. Flake said Yahoo! will continue to contribute resources to such search projects.

Flake joined Yahoo! when it bought Overture last October; and he plans to relocate to Yahoo!'s Sunnyvale campus.

Yahoo! formed the research lab to focus more on long-term projects that take a holistic view of Yahoo!, its applications and the industry, Flake said. In contrast, Yahoo! has long employed engineers within different divisions to develop innovations more quickly.

Related to search, for example, the lab will focus on how to personalise the experience for people across the Yahoo! network.

"We're here to help, not just in one or two areas, but across the whole spectrum of Yahoo! products," such as finance, news, IM and email, Flake said.

Stefanie Olsen writes for CNET News.com