Sterling, who has seen the new search engine but is not at liberty to disclose details of it, said that Microsoft believes it has identified a problem people have with finding what they're looking for with competitive search engines, and the company believes it can solve that problem.

"They think they can do a better job of fulfilling those unmet needs," he said.

Microsoft currently is a distant third behind Google and Yahoo in search-engine market share, and it has been investing significantly for a number of years to change that status.

Because Google has such a strong brand and so many people use it, it will be difficult for Microsoft to improve its position, Sterling said.

"People's behavior is pretty well established," he said. "You'd have to find some feature or set of features that's real useful or fun or interesting."