Microsoft Corp is revamping its search engine to counter the dominance of Google Inc in the Web search and related advertising business.

The world's largest software company, which is still in talks with Yahoo Inc over a potential partnership, has long been determined to play a major role in the lucrative Web search market after watching upstart Google take a stranglehold.

Microsoft, which has been testing the search engine internally under the name Kumo for several months, plans to introduce the new service, re-christened Bing, over the next few days, with a full launch next Wednesday. The service will be available at http://www.bing.com.

Advertising Age reported earlier this week that Microsoft was planning a $80 million to $100 million ad campaign to promote Bing. Microsoft declined to comment on the report.

We'll have what I would call a big budget -- big enough that I had to gulp when I approved the budget, said Microsoft Chief Executive Steve Ballmer, who unveiled Bing at a technology conference in Carlsbad, California, run by the All Things Digital tech blog.

The Redmond, Washington-based firm has lots of ground to make up. Last month Google took 64.2 percent of U.S. Internet searches -- up half a percentage point from the month before -- handling 9.5 billion out of a total of 14.8 billion searches.

Yahoo was a distant second with 20.4 percent of searches and Microsoft third with 8.2 percent, both down slightly from the month before, according to data firm comScore.

Ballmer offered no quick turnaround in those numbers. My timeframe is lots of years, he said at the conference. I don't have a specific forecast, but this is lots of years.

The new name, Bing, is short, universal and can be verbed-up, said Ballmer, a clear reference to the fact that 'to Google' has become the generic verb for searching the Internet for information.

NEW FEATURES

Both Google and Yahoo have recently introduced new features in their search engines to attract users, making Microsoft's task even harder.

Microsoft is calling its new product a decision engine, promising to make things like buying a digital camera, booking a flight or searching for a restaurant easier by serving up results based on similar previous searches.

A search on a make of car, for example, will bring up clickable categories on the left-hand sidebar, such as 'problems,' 'reviews' and 'dealers,' which Microsoft has calculated are the most likely places a Web user will want to go from the initial search.

Bing also incorporates the increasingly popular Farecast service in its flight booking section -- making use of the company it bought last year -- which predicts whether fares will rise or fall.

Other new features include getting directions to locations with only one mouse click, and the ability to hover over a search result to see more information, without having to open a new link.

Microsoft's shares rose 36 cents to $20.49 on Nasdaq at mid-afternoon. Google edged up 1.1 percent to $409.96 and Yahoo shares rose 1 percent to $15.09.

(Reporting by Bill Rigby; Additional reporting by Alexei Oreskovic; Editing by Derek Caney, Richard Chang)

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