Google's acquisition of Upstartle, announced on Thursday, will give the search giant new resources for its blogging and advertising efforts, as well as providing a potential rival to Microsoft Office, according to industry observers.

Upstartle is best known for Writely, an online word-processor that has been praised for its functionality and design. Writely uses technology typical of so-called Web 2.0 applications, such as AJAX (asynchronous javascript and XML) - also used by Google in services such as Google Maps and GMail.

The two companies announced the acquisition via their respective corporate blogs, without disclosing terms. The startup's four staff members will join Google as of Monday, according to a notice on Google's blog.

"Writely is now part of Google," wrote Upstartle co-founder Claudia Carpenter on the Upstartle blog. She said the two companies matched in their culture and goals, and said the switch to Google's software architecture would allow Writely to scale to millions of users.

In the mean time, Upstartle cut off new registrations following the announcement, saying it wants to avoid overloading its infrastructure; those interested can sign up on a waiting list.

The move could also assuage the privacy fears users might have about putting their personal documents online, Carpenter said. "Some people didn't feel comfortable trusting a tiny startup with their documents... and we're no longer a tiny startup," she wrote.

However, that may be wishful thinking - Google has had to contend with plenty of alarm over the privacy implications of its own products. Analysts recently warned that enteprises should steer clear of the "search across desktops" feature in the latest edition of Google Desktop.

Google has been rumoured to be developing a direct competitor to Microsoft Office for some time, according to industry analysts, but so far has steered clear of the productivity market. The Writely acquisition on its own probably doesn't signal a massive change to that strategy, according to Ovum.

"Developing software-as-a-service code is far harder than most in the software community recognise," said Ovum analysts David Bradshaw and David Mitchell in a research note. "Google already has some significant experience in this respect... What it lacks is desktop office product development expertise, and four people are unlikely to produce critical mass in a development team."

Writely also integrates collaboration and blogging tools, meaning useful resources for Google's massive Blogger blogging service, Ovum said. In the short term, the purchase could also be good news for Google's advertising plans.

"Acquiring Writely gives Google another place to push online advertising and protect its revenue streams. That could provide enough revenues to pay for the acquisition in months and provide an interesting diversion to keep Microsoft looking over its shoulder," said Bradshaw and Mitchell.

Google has purchased a number of startups in recent weeks, including blog traffic tracker Measure Map, radio advertising platform dMarc, mobile phone software maker Android and mobile social networking technology developer Dodgeball.