updated 11/30/2005 11:55:30 PM ET 2005-12-01T04:55:30

Microsoft Corp. is developing an online classified service to compete with the likes of Craigslist and becoming the latest company to capitalize on growing consumer interest in buying and selling everything from cars to baby-sitting services on the Web.

Such Web-based classifieds are proving to be tough competitors for the ads that traditionally provided a big chunk of newspaper revenue.

Microsoft is hoping to distinguish its service, code-named Fremont, from rivals by tying in functionality with other Microsoft products. For example, people will be able to have Microsoft's instant messaging service alert them if items they seek come up for sale, or if someone is interested in buying something they are selling. (MSNBC is a Microsoft - NBC joint venture.)

The company also is developing ways that people can limit who can see their ads, such as by offering goods only to people on their messenger "buddy list." The service also will enable users to limit sales to those attending the same university or working at the same company, based on e-mail addresses.

And it's integrating Microsoft technology for geography-based searching, to let people hunt for items that are for sale in the immediate area.

The service will seek to be even more geographically personalized than Craigslist's city-oriented sites by asking sellers to provide a ZIP code for searching purposes, said Garry Wiseman, an MSN product unit manager. For example, users could say they only wanted to find jobs, apartments or garage sales within a five-mile radius of where they live.

The service will be free for users and supported by advertising that will appear alongside search results.

Wiseman said Microsoft employees are testing the product right now, and a broader public pilot is expected in the coming months.

Google Inc. recently launched a new offering called Google Base that some say could be laying the groundwork for Google to also eventually offer online classifieds.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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