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Microsoft is set to follow Google into the online listings business, opening a new front in the rapidly expanding competition between the two technology companies and creating a new competitor to other newspaper and internet listings services.

While Google has been vague about the precise nature of its ambitions in the area, however, Microsoft has set its sights squarely on becoming a force in online classified advertising.

MSN, Microsoft’s online services arm, has been testing a new service that would let internet users enter details of personal items in a specially designed database. Information in the database would then be made search-able by Microsoft’s internet search engine, or could be restricted to a limited group of personal contacts.

The service, code named Fremont, a reference to a Seattle neighbourhood that plays host to a busy Sunday market, has been available in test form to Microsoft employees since last week, and could be set for a public test in the coming weeks, the company said.

While the idea echoes Google Base, an online listing service which the search engine company launched in beta, or test, form two weeks ago, Microsoft said it had been developing the idea behind Fremont since early this year.

Google Base has become the subject of heated debate among analysts and bloggers, some of whom have been quick to attribute grand ambitions to the new service.

As a structured database that invites internet users to enter information in a prescribed form – for instance, the price of a house would be entered in a box headed “price” on a form specially designed for house sales – Google Base would create a highly organised body of data that could form the basis for a wide range of future services.

However, Google itself has played down the scope of its ambitions with the new database, saying that it was not designed primarily as an attack on the classified advertising business. The company has also suggested that it could be used to advertise various forms of digital media – an idea that has sparked speculation that Google Base might eventually become a broader marketplace for all types of online content.

While Google has so far given little idea about how users would be able to control information they feed into Google Base, MSN said it would give users the power to restrict access to the information to particular groups of people. The service will be integrated with other MSN services, such as the company’s Messenger instant messaging service, the company said.

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