Microsoft's new search engine may rival or even surpass the world's most popular web tool Google, Microsoft co-founder and chair Bill Gates said on Thursday.

In Bangkok to unveil a deal with the Thai government, Gates said his company was developing products to make the internet easier to use.

"The coolest company right now in terms of new things is Google, which does a search product which is very good," Gates told an audience of business leaders and school children.

"I think we'll surprise them by showing how we can do a search that's as good or better than they do. Consumers benefit from that type of competition."

Last November Britain's New Scientist magazine reported that Microsoft's new search engine, which is currently under development, had caught up technically with Google.

Its software experts gave MSN Search high marks for quick retrieval of data, for the quality of hits, the ability to respond to natural-language questions and possibility of fine-tuning the search.

Gates also said while many "great competitors" have challenged his company in past years, there were often areas where the Redmond, Washington-based giant was working solo to build a new market, such as its "tablet" personal computer.