As speculated, Microsoft today announced the acquisition of natural language search technology developer Powerset. The acquisition is hoped to help Microsoft better serve search results, based on a natural language analysis of user queries, and better index of Web content.

These parallel goals come with the assertion that current search algorithms fall short in determining user intent by contextually matching individual words or phrases, rather than a deeper level of context around entire Web pages.

From the Live Search Blog:

These problems exist because search engines today primarily match words in a search to words on a webpage. We can solve these problems by working to understand the intent behind each search and the concepts and meaning embedded in a webpage. Doing so, we can innovate in the quality of the search results, in the flexibility with which searchers can phrase their queries, and in the search user experience. We will use knowledge extracted from webpages to improve the result descriptions and provide new tools to help customers search better.

This falls into the category of Microsoft’s recent efforts to differentiate Live Search from Google and Yahoo!, which lead the company in search market share. The general direction of this strategy was examined in a past interview with Microsoft Chief Advertising Strategist Mike Galgon, and recent moves to this effect include its CashBack and Search & Give programs launched over the past couple of months.

In related news, natural language search company Peer39 received $11.7 million from Canaan Venture Partners, Dawntreader Ventures and JP Morgan. The company is essentially an ad network that differentiates itself with ad placements that take into account natural language content in and around Web pages, such as user reviews.

This can come in handy in additional layers of context such as whether a page’s “tone” is positive or negative — a useful placement metric for some brand or product advertisers. The company claims it’s on track to hit a billion impressions by year-end, and that its advertisers are seeing 4X clickthrough rate improvements over previous placements methods.

Generally speaking, these products carry part of the concept behind the anticipated semantic Web — already being pegged by some as “Web 3.0” (sigh).