If this is really true, it's significant and it's one more proof that Microsoft has no choice but to regard Google as the "new Netscape".
At the Goldman Sachs internet conference today in Las Vegas, MSN search chief Yusuf Mehdi let slip some of MSFT's plans with regard to search. How do I know he let slip? Well, far as I knew, this stuff was not to be disclosed for quite a while (recall that I was briefed recently by MSFT, on background, for my book).
The news: Microsoft will be including a pretty significant local PC search function as part of its upcoming beta. Mehdi also mentioned that personalized search will be a significant focus going forward, and that MSFT is looking at integrating ads into mail a la Gmail.