Microsoft Corp. announced it may offer a free, advertising-supported version of its basic word processing and spreadsheet software in a move to up the ante against rival Google Inc., which has offered similar technology online for free.

The company has been mulling how it could potentially move its basic suite of business software, which is known as Microsoft Works, onto the web.

"We're also thinking about how we might take advantage of new business models like advertising and other payment models, as well as new forms of distribution," Alan Yates, general manager of Microsoft Information Worker Business Strategy, told Reuters.

Currently software licenses for Office and the Windows operating system accounts for a bulk of Microsoft revenues. Microsoft Works costs around $50 for a retail boxed version; it is often bundled with new PC purchases.