Health is one of the most valuable verticals when it comes to search, said David Berkowitz, director of emerging media for 360i. "It's one of those things that is so valuable to consumers and such a huge market, spending-wise--just look at the trillion plus dollar healthcare market," he said. "If you get it right, then you have something really valuable to advertisers that are dying to find new ways to reach consumers."

The acquisition is the second for Microsoft's Health Solutions Group, which bought Azyxxi, a healthcare software product, in 2006. Medstory, a search engine, has "a lot of the tools to compete," and has particularly good search refining tools, returning results on treatments, drugs, and prominent researchers, for terms entered, Berkowitz said.

Currently, the health vertical is dominated by WebMD, which claimed 22.3 million unique visitors in January, up 22% from its traffic a year ago, according to comScore Media Metrix. Second is NIH.gov, which attracted 20.8 million unique visitors, up 4% from a year ago, followed by Yahoo Health with 11.9 million users, up 70% from a year ago.

Fast-growing players in the space include Healthline.com, which garnered 5.1 million unique visitors in January, up 678% from a year ago, and Lifescript.com, which grew its traffic 332% to 2.1 million unique in the same period.

MSN's major portal competitors -- Yahoo and AOL -- both have offerings in the health vertical, though AOL's site, Health.AOL.com, saw its traffic shrink by 1% in the last year, to 3.8 million unique users in January. Microsoft rival Google also began offering extra health refinements to its general search engine under its Google Co-Op product in May. MSN Health recorded 8.4 million unique users in January 2007, but hasn't seen any growth in the last year.

AOL founder Steve Case, no slouch at start-ups, has also launched Revolution Health, an attempt to upend how consumers access their medical care and information.

Berkowitz said despite the legion of health players out there, the space is "relatively nascent," and with Medstory, MSN has a good shot at claiming market share.

"A lot of it is just the consumer education that there are these search engines and portals that are really focused with health above all else, and convincing them that these special search engines can do a better job at getting them information than Google and Yahoo and MSN could normally," he said. "The best of them will do a great job reassuring searchers that this is a much better experience than regular search."

Medstory's approach to search could also help Microsoft beyond the health category by enhancing other vertical categories on MSN.

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