How desperate is Microsoft to steal a piece of Google and Yahoo’s share of loyal searchers? Pretty desperate, since they enrolled a method to literally repay their users for using their search engine and buying something online.

Bill Gates explained during the company’s annual advertising customer event, advance08, that it will offer ad-funded cash rebates to whoever searches and purchases something through Microsoft Live Search cashback.

What this means for users is that they’ll have 10 million products to choose from, provided by a total of 700 merchants, including 13 of the top 40 retailers in the U.S., and they’ll get a nice prize from Microsoft, ranging from 2 to 30 percent in cash rebates.

Microsoft Live Cash Back is based on the technology acquired by Microsoft in October 2007, when the company bought the comparison shopping site Jellyfish.

Names like Barnes & Noble.com, Circuit City, Cookware.com, Crutchfield, eBay, HP, Jockey, TigerDirect.com or Zappos.com are already part of Microsoft’s “buy, you’ll get something back” initiative.

According to Bill Gates, this will offer more value to customers and advertisers, and the goal for the future is to make Live Search cashback “the most rewarding commercial search destination on the Web.”

That explains it all! I knew this was not a way of paying Google and Yahoo users to switch to Microsoft…

The service practically rewards its search-and-buy addicts; it’s good for advertisers too, and most importantly, as Gates said, it gives consumers “a new way to stretch their dollars.”

So, Google and Yahoo better watch out, because Microsoft search users now have something their users don’t: a way to get money by spending money. And that’s not all, as this is a good way to prove that being loyal really pays off.