In the first quarter of 2003, Microsoft announced its intention to increase its investment in its MSN search services, particularly its technology-based crawling and indexing software and algorithmic search capabilities. Microsoft has indicated that it may combine the current directory and index layers of search results on its web sites into a single set of search results. If Microsoft does elect to combine these layers, any renewed distribution agreement would likely result in significantly lower paid clicks and listings revenues. In any event, we may be unable to renew the distribution agreement on terms that are as favorable as the current agreement, if at all.
LookSmart's stock is down 16% today based on this and other nuggets in their quarterly report.
Personally, I think it would be great for MSN's users if MSN to 'diluted' the LookSmart directory results with more relevant natural search results.