Qi Lu joins Microsoft, is Yahoo! search business next?

Microsoft announced today that Qi Lu, who left Yahoo this summer after 10 years as head of the search business there, will be joining Microsoft on January 5.  In a memo to Microsoft employees today announcing the hire, CEO Steve Ballmer revealed that “Qi will oversee all efforts in search, our online advertising platform, and all of our online information and communications services”, and that Brian McAndrews , who lost out on the job left vacant after Kevin Johnson left last summer, would be leaving the company.

Qi Lu is a techie, like Ray Ozzie and Bill Gates, and not an ad man like McAndrews, or a salesman like Kevin Johnson.  So why would Microsoft go after technical expertise in this hire?  Well search is a highly technically challenging field, of course, especially as Microsoft is making plans to take it quite a bit farther than the “ten blue lines” that Google has raked in the money with these past few years.  And furthering Ray Ozzie’s Azure/Live Mesh aspirations in the online business will take some serious technical leadership.

But is there more to it than that?  Last weekend the London Times floated the possibility that Microsoft was again talking to Yahoo! about acquiring their search business, and although the details as set forth by the Times were widely dismissed as improbable at best, it would almost be more surprising that Microsoft and Yahoo! were not talking than if they were.

And if Microsoft does gain the Yahoo! search business, the job of merging Yahoo!s open source, highly customized, and highly esoteric search infrastructure with Microsoft’s own proprietary systems is going to be a huge technical challenge.  Is there anyone probably on the planet better suited to this challenge than Qi Lu?

If Microsoft were content to go it alone, the bulk of the work would be in convincing people to use Live Search. Even though there is a lot of work on the technical side of the house, it won’t much matter if search market share doesn’t improve.  That doesn’t mean that Qi Lu won’t work hard on the business side, but Microsoft is setting itself up to solve technical challenges first, and that may just mean that they have other ideas about how to gain, oh say about 20% more market share, and quickly.

From the beginning, the technical challenges around merging Yahoo! search into Microsoft were seen as a big roadblock to any kind of a Microsoft/Yahoo! deal, but this Qi Lu hire could make the task significantly easier. For all we know, Microsoft may be just waiting for Kara Swisher’s permission to do the deal.