Terms of the deal were not announced, though TechCrunch reported that the price was just under $100 million.
Microsoft said it will initially integrate VideoSurf's technology into its Xbox Live service, so members can search through video content stored on the gaming and entertainment service.
"Over time, as we integrate VideoSurf's technology into our system, we are excited about the potential to have the content tagged in real-time to integrate the speed and relevance of the search results," said Alex Garden, director of Microsoft's Xbox Live unit, in a statement.
[ Microsoft's Skype also is gaining new capabilities. Read Skype Gets Direct Link To Facebook. ]
VideoSurf's visual search capabilities would complement voice search technology that Microsoft recently added to Xbox Live through its Kinect control unit. Kinect allows users to simply speak the name of the title they are looking for in order to locate it online.
Over time, Microsoft could add VideoSurf to some of its other products and services, such as Bing.
"Microsoft's Interactive Entertainment Division is the leading edge of connected entertainment," said Lior Delgo, VideoSurf founder and CEO, in a statement. "We are incredibly excited to be working together on our mutual passion for creating amazing consumer experiences and reinventing how consumers search, discover, and enjoy content on their televisions."
VideoSurf operates a consumer-oriented website that allows users to search videos posted on Hulu, CNN, Fancast, DailyMotion, and other content providers' sites. In addition, VideoSurf also offers Android and iPhone apps. Under Microsoft, it's likely the company will also produce an app for Windows Phone 7.
VideoSurf was privately held, and backed by a number of high-profile individuals, including Facebook COO Sheryl Sandberg, SurveyMonkey CEO David Goldberg, and former U.S. Vice President Al Gore. The company says it uses patent-pending algorithms that allow machine-based visual searches of video content, as opposed to simply searching for text tags.
VideoSurf is the most recent in a string of acquisitions by Microsoft, which was sitting on about $57 billion in cash and equivalents as of the close of its most recent quarter. Many of its recent buyouts, including its $8.5 billion deal for Skype, have involved companies that produce products or services that help individuals more easily use and find information on their computers and connect with others.
Such acquisitions are likely to continue as Microsoft looks to close the gap with Apple and Google in key markets like mobility and search. "While we're certainly focused on building extraordinary technology like Kinect, we're also forging new partnerships and making bold acquisitions to break through," said CEO Steve Ballmer, at Microsoft's annual shareholder meeting earlier this month.
Shares of Microsoft were off 1.06%, to $24.53, in pre-holiday trading Wednesday.
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