Microsoft Acquires Health Web-Search Firm

Microsoft Corp. announced today that it has agreed to acquire Medstory Inc., a privately held company based in Foster City, Calif. Medstory is developing an internet search engine for health information.

Financial terms of the deal were not disclosed, as part of the agreement between the companies.

The acquisition will allow Microsoft to enter the growing consumer health care market. The decision by Microsoft is part of a strategy to diversify from it's product lines of Windows and Office. While dominated by Microsoft, they are maturing markets with lower growth potential.

"At Microsoft, we are focused on enabling people to make the best decisions," said Peter Neupert, corporate vice president for health strategy and leader of the Health Solutions Group. "We were impressed with the ability of Medstory's unique technology to organize and surface the most relevant online health content, which empowers consumers who are trying to find the right information about an important life event."

Medstory employees will join the Health Solutions Group, a newly formed division at Microsoft that will manage product development and delivery.

"With Microsoft's reach and experience, I look forward to this soon becoming a standard for online searches of health information," said Dr. Alain Rappaport, chief executive and founder of Medstory, in a press release Monday.

According to Steve Shihadeh, general manager of Microsoft's Health Solutions Group, Medstory's search technology should be incorporated into the fitness section of its MSN web site and other areas "in time."

"Medstory is a great first step in the consumer health market, expect more to come," Shihadeh said.

Health care costs are expected to make up around 20 percent of U.S. gross domestic product by 2015. The number of people seeking health care information online will expand greatly.