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updated 8/24/2009 6:35:23 PM ET 2009-08-24T22:35:23

Yahoo Inc. will keep innovating in search and try to outsmart both Microsoft Corp. and Google Inc. even as the slumping Internet company prepares to lean on rival Microsoft's search technology.

That message emerged Monday as Yahoo previewed a series of search engine upgrades that it plans to introduce before the end of the year, just a few months before Microsoft is supposed to take over responsibility for powering most of Yahoo's search results.

(Msnbc.com is a Microsoft-NBC Universal joint venture.)

With Microsoft handling the heavy lifting, Yahoo will focus more on designing special touches aimed at making its search results more useful than its rivals, said Prabhakar Raghavan, Yahoo's senior vice president of labs and search strategy.

"We are not going to be a version of Bing," Raghavan said, referring to the brand of Microsoft's search engine. "We are going to have our own Yahoo search experience."

Toward that end, Yahoo plans to devote the left column of its search results to other popular Web services like Facebook, Twitter, Yelp and even Google's YouTube. Click on any one of the icons there, and information from that service matching the search keywords will appear instead of the regular search results at the center of the page.

Going after ‘Google's domain’
The feature will enable users to look at Facebook's personal profiles, Twitter's message updates, Yelp's restaurant reviews and YouTube's video clips without having to leave Yahoo.

By drilling deeper into destinations filled with personal information and images, Yahoo is betting its search engine will gain a reputation as the best place to research and discover things about people.

"Searching for people has been Google's domain," said Larry Cornett, Yahoo's vice president of search products and design. "We are going to take that away from them."

Yahoo will be pursuing its lofty ambitions in search with a smaller budgets and fewer engineers.

If it's approved by antitrust regulators, the Microsoft partnership is supposed to reduce Yahoo's spending on search by more than $500 million annually. Part of those savings will be achieved by transferring 400 of its 13,000 employees to Microsoft's payroll. Yahoo also expects to lay off an unspecified number of workers.

The cutbacks has convinced some analysts that Yahoo eventually will phase out of search entirely — a notion that Cornett tried to dispel. "Yahoo will continue to innovate in search," he said.

As it stands now, Google commands a nearly 65 percent share of the U.S. search market, with Yahoo at about 19 percent and Microsoft at nearly 9 percent, according to comScore Inc.

Front-age makeover
Yahoo's plans to bring more of a social touch to its search page mirrors what the Sunnyvale-based company has been doing in other parts of its Web site.

Late last month, Yahoo front page underwent a makeover that embraced more applications and information from Web sites. And now its widely used e-mail service is ushering in more outside applications as part of long-awaited changes unveiled Monday.

Yahoo believes it can become the main place where people spend their time online by making it easier for its more than 500 million users to import information from elsewhere.

In the process, Yahoo hopes to recapture some of the buzz that it lost to rising stars like Facebook and Twitter while also luring back more advertisers. Yahoo's ad revenue dropped 13 percent in the April-June period, the worst erosion since the dot-com bust at the start of the decade.

The question now whether it has taken Yahoo too long to become a more social animal. For instance, some of the improvements that are finally being blended into its e-mail service were first publicly discussed at a major electronics trade show in January 2008.

More on: Yahoo | Microsoft

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