Microsoft on Thursday appointed Qi Lu, who was executive vice president in Yahoo's search and advertising technology group, as the president of its Online Services Group.

Lu previously was Yahoo's executive vice president of engineering for the search and advertising technology group where he was responsible for developing Yahoo's Web search and monetization platforms.

Lu spent 10 years at Yahoo before leaving in August as part of a weeklong exodus of eight executives from the struggling search company. He will officially join Microsoft on Jan. 5 and report directly to CEO Steve Ballmer.

In a statement, Ballmer said, "Dr. Lu's deep technical expertise, leadership capabilities and hard-working mentality are well-known in the technology industry, and Microsoft will benefit from his addition to our executive management team."

After failed bids to buy Yahoo earlier this year, Microsoft is now eyeing some of the company's top talent even as rumors circulate that the two may again be talking about a deal for Yahoo's search business. Microsoft made a $44.6 million offer in February to buy Yahoo, but then-company CEO Jerry Yang turned them down. Microsoft followed with a bid for Yahoo's search business but that deal also fell apart. 

Ultimately, the dealings with Microsoft and a failed marriage with Google crushed Yahoo's stock price and led to the departure of Yang.

Microsoft now is taking on Lu, who holds nearly 20 patents, to help rev up its battle with Google on the search and advertising fronts. Google's search business is projected to become larger and more profitable than Microsoft's Windows franchise sometime in 2009. Google has a nearly 65% share of the search market while Microsoft hovers around 9%, according to comScore.

Microsoft's Online Services Group, which includes its online advertising platform, Hotmail and instant messaging service, Live Search and the MSN portals, posted $770 million in profit during Microsoft's fiscal first quarter of 2009, a nearly 15% increase over the same quarter in 2007.

With Lu's appointment, Brian McAndrews, senior vice president of the advertiser and publisher solutions group, will leave Microsoft. McAndrews, who came to Microsoft when it acquired aQuantive for $6 billion in May 2007, will serve as a consultant to Ballmer and Lu during the next several months.