Microsoft is expected to offer cash back to users of its search engine who buy products online, as it attempts to close the gap on rival Google.

Users will make savings on products sold by Microsoft's advertiser partners via the so-called cashback service.

The move comes after Microsoft's $44.6 billion bid to buy rival Yahoo, in order to challenge Google, failed.

Google dominates the search landscape in the US, with 60% market share, versus 10% for Microsoft.

Advertisers are expected to be lured to the service with the promise of paying only per user purchase and not per click on an online advert, which is the model used by firms such as Google and Microsoft currently.

The service is expected to be unveiled at a Microsoft conference, called Advance 08, by the firm's head of online Kevin Johnson.

A leaked internal memo by Mr Johnson to Microsoft staff earlier this week revealed the problems the firm is facing.

It said: "Regardless of the outcome of any new discussions [with Yahoo], it is important we continue to move forward to strengthen our online services business.

"The fact is that we are not where we want to be in this business yet and we've been in this position longer than we'd all like."

Users of the service will be able to search for products and find out the total cost and how much cash back they will receive, which is based on a percentage of the product price.

Savings will be credited to users via an online bank account, Paypal or a cheque.

Cashback is expected to be a US-only service at launch.

Source BBC