Redmond, Washington-based Microsoft Corp, which ranks a distant No. 3 - behind Google Inc and Yahoo Inc - in terms of its Online Services Group, has tapped a former Yahoo search executive, Qi Lu, president of its struggling Internet unit. The appointment of Lu has added to the intrigue surrounding a possible search partnership between the two rivals, Microsoft and Yahoo.

Lu, who will become president of the money-losing online services group in January, fills an important position that had been vacant since the departure in July of Kevin Johnson, who played a central role in Microsoft's quixotic attempt to buy Yahoo earlier this year.

Lu is a computer scientist with a Ph. D. and a former IBM researcher who holds 20 patents. He left Yahoo in August after almost a decade there. Most recently, he was an executive vice president overseeing engineering for two important areas: online search and advertising technology.

In selecting Lu, Microsoft chose an executive with deep technical knowledge over others with more advertising and media experience. He will be leading the company's challenge to Google, which dominates the search and online advertising businesses.

Youssef Squali, an analyst with Jefferies & Company, said: "Microsoft is trying to emulate Google in naming a technologist to head the online unit. He added that if Microsoft and Yahoo struck a search deal, Lu's knowledge of Yahoo's operations could be important to Microsoft, and could make the prospects of any integration that much easier. However, Squali also opined that short of such a deal, Microsoft would continue to struggle to build a sizable audience for its search service.