New Microsoft Services Chief Ready To Tackle Google

"I think Google is a very, very powerful company," Lu said in a Q&A posted Wednesday to Microsoft's Web site. "They are definitely ahead in the search space. There are a lot of challenges ahead. We've got our work cut out for us."

Lu, former executive vice president of engineering for the Search and Advertising Technology Group at Yahoo, is the latest in a series of several high-profile Yahoo search executives who've left the struggling search giant for Microsoft.

When Lu joins Microsoft on Jan. 5, he'll join a third-place search market player that has had trouble gaining share from its more entrenched rivals. In October, Google had 63.1 percent of the U.S. search market, followed by Yahoo with 20.5 percent and Microsoft with 8.5 percent, according to comScore.

But despite Microsoft's trailing position in search, Lu seems optimistic about the software giant's future search prospects. Not only is Microsoft's search product quality improving at "a very fast rate," Microsoft is also focused on building a powerful advertising platform, Lu said in the Q&A.

"The advertising we see today will be very different in the future because of new platforms for it. Ads will be truly relevant and useful, and the experience will be compelling," Lu said in the Q&A.

Microsoft has been experimenting with a variety of tactics for getting more users to use its Live Search, including agreements with Dell and HP to include the Live Search Toolbar on new PCs, and the much-ballyhooed Live Search Cashback, which gives Web users rebates for purchasing products from participating Microsoft vendor partners through the Live Search site.