The software giant says the acquisition should benefit its Live Search platform.

Microsoft says it will pay $17.50 a share for Greenfield, which tops an earlier proposal by buyout firm Quadrangle Group to acquire the company for $15.50 per share.

Ciao.com offers advice on purchases, mainly of consumer electronics, and encourages users to join a network of shopping experts to share opinions. It makes its revenues from e-commerce, merchant referrals and advertising sales and operates in seven major European countries.

After its failed attempt to buy Yahoo! earlier this year, it seems Microsoft may be attempting to increase its share of the paid search market by turning to smaller international purchases in an effort to remain competitive.

According to the most recent data published by web usage tracker ComScore, Internet search is dominated by search engine giant Google, which has 62 percent of the global search market and 79 percent in Europe.

Microsoft has a two percent market share in Europe and nine percent worldwide, behind both Google and Yahoo!. In Europe, Microsoft is also outranked by online auction site eBay and Russia's Yandex.

"The team at Ciao has built a passionate consumer community based on intuitive technology and extensive merchant relationships that we believe will deliver incremental benefit to the Microsoft Live Search platform," said Tami Reller, Microsoft's VP for Windows and online services in an interview with Reuters.

Rajat Taneja, who is currently Microsoft's general manager for worldwide commercial search, will oversee Ciao's operations at Microsoft, according to reports on Information Week. The software giant is also planning on opening a European search technology center later this year.

Microsoft says it will be selling off Greenfield Online's main business, which surveys consumer opinion online and sells the results to market researchers, to an unnamed financial buyer.

The companies expect both deals to close during the fourth quarter of 2008.