Microsoft agreed to buy Greenfield Online, owner of popular European price comparison website ciao.com, for about €331.9 million (US$486 million), a Reuters report said.
The report, quoting Microsoft, also said the deal will boost the company's internet search and e-commerce business in Europe.
Microsoft, whose €32.4 billion (US$47.5 billion) bid to buy Yahoo earlier this year failed after a long battle, said the acquisition, the latest in a series, should help it build a more consumer-friendly, results-oriented search engine.
Internet search is dominated by Google, which has 62% of the global search market and 79% in Europe, according to web usage tracker ComScore.
Microsoft has a 2% market share in Europe and 9% worldwide, behind both Google and Yahoo.
In Europe, Microsoft is also outranked by online auction site eBay and Russia's Yandex, the Reuters report further said.
The acquisition follows those of Norwegian enterprise search company Fast for about €819 million (US$1.2 billion) early this year and shopping-and-auction site jellyfish.com for an undisclosed sum last year, the report added.