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Gates: We Welcome Google Competition

Google Inc. is fierce competition for Microsoft Corp., but the software giant does not fear the race and plans to upgrade his search technology in the next six months, Microsoft CEO Bill Gates (search) said in remarks published Wednesday.

On his first-ever trip to Israel, Gates praised Prime Minister Ariel Sharon (search) and Israel's contributions to the global high-tech market. In interviews with Israeli TV and newspapers, he also answered questions about Microsoft's fierce competition with Mountain View, California-based Google.

"We are not afraid of Google, but there is intense competition between us. Google is our main competitor, brilliant people work there, but Internet search engines (search) are still in a terrible state compared to where they could be," Gates was quoted as saying in the Israeli daily Yediot Ahronot.

"This is a situation that we hope will change for the better in the next six months. We are working on it, as are other companies, such as Google and Yahoo," Gates added in comments that were translated into Hebrew.

Microsoft and Yahoo already have been investing heavily in search, hoping to narrow Google's lead in the field.

Google processed 45 percent of U.S search requests in September, outdistancing 23 percent for Yahoo and 12 percent for Microsoft's MSN, according to Nielsen/NetRatings.

Gates denied the Redmond, Washington-based Microsoft intends to acquire Google or other leading Internet companies.

Microsoft has recently formed partnerships with Yahoo Inc. and RealNetworks Inc., and is reportedly interested in buying a stake in Time Warner Inc.'s AOL service.

Google also has teamed up with with Comcast Corp., the largest U.S. cable company, to explore buying a minority stake in AOL.

Microsoft is sometimes criticized as a giant that crushes competition.

Gates' response to the Maariv daily: "Maybe when you succeed there is always someone who will oppose you."

Israel, Gates said, does "fantastic things in the field of technology and I am excited to be here."

Israel has especially contributed to the area of data security, Gates was quoted as saying in Maariv, largely due to expertise acquired by the Israeli military. Many high-tech workers in Israel received training from elite military units in areas such as encryption and computer security.

"Israel has enormous power in the high-tech world ... most people know that Israel, relative to its size, has made achievements in the field of technology," Gates told Maariv.

Gates refused to say whether Microsoft plans to expand its 200-person facility in the coastal Israeli city of Haifa. Expansion of the Haifa facility would provide more jobs in Israel's highly competitive high-tech market.

Israel is considered to be one of the world's leaders in high-tech products, which account for half of the country's exports.

Many large technology companies, including Microsoft, Motorola and Intel, have sizeable research operations in Israel. Google Inc. recently placed advertisements in Israeli newspapers recruiting Israeli engineers for its Ireland-based operations.

"The business achievements of Microsoft in Israel are excellent and the company is currently working to massively expand its research and development budgets worldwide," Gates was quoted as saying in Yediot.