Microsoft Corp. is internally testing an online classifieds service that would enable people to sell personal items over the company’s instant messaging, social networking or local search services, media reports said Wednesday.

Code-named “Fremont,” a test version of the service launched a week and a half ago for Microsoft employees only, Garry Wiseman, MSN product unit manager, told Information Week. The service is scheduled to be released in beta, or test, form publicly within the “next few weeks,” accounts said.

Fremont gives users the option of offering goods or services only to contacts on the MSN Messenger instant-messaging service or to groups within MSN Spaces, which is the company’s blogging service, reports said.

In addition, people can send notifications of items for sale through e-mail domains, which would enable them to reach work colleagues, as one example, accounts said. There’s also the option of listing the classifieds broadly through MSN local search, or its regular search engine.

People who have items for sale would have a pulsating yellow star on their Spaces homepage or on the IM window that contacts see. Clicking on the star will launch a small window describing the item and details on purchasing it.

In addition, people will be able to set up an RSS feed to get regular updates on new items being posted.

Microsoft is launching its product in the wake of the Nov. 16 launch of Google Base, a somewhat similar service that allows people to upload content on a publicly searchable online database.

Google Base works somewhat similarly to online classified site craigslist, making it possible to quickly and easily create a free post that will appear online and can be located by searching specific terms, such as “real estate for sale.”

The service gives a unique Web address to each user’s content, allowing people to easily post information without the need to create and maintain a Web page.

Based on the relevance of the items submitted, they may also be included in the main Google search index and other Google products like Froogle, Google Base and Google Local, Google said on its Web site.

With options like craigslist offering free classified ads, real estate and other advertisers have been defecting from print newspaper advertising to online venues. With the launch of both Google Base and Fremont, more online options are available.

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