Microsoft to Spend $2.5 Billion a Year To Keep Pace in Race With Google

Microsoft plans to spend at least $2.5 billion a year for the foreseeable future to compete with Google because the opportunity in online advertising is too big to ignore, Microsoft chief executive Steve Ballmer said yesterday. Microsoft, which failed in an effort to buy Yahoo this year, will focus the additional money on boosting the online business and increasing marketing of personal computers and phones to consumers, Ballmer said. Ads for mobile handsets may help put the Web unit in a better position, he said, after ad sales fell short of estimates last quarter. Microsoft, owner of the No. 3 U.S. search engine, is struggling to take market share from leader Google and is working to justify continued investments to its shareholders. The company said yesterday that the social-networking site Facebook will run Microsoft ads with its searches, expanding on a deal for other promotions. Online ad sales will double to $51 billion in the United States by 2012, according to EMarketer.