"Earlier today at the Search Champs event I announced the formation of Live Labs, an exciting new partnership between MSN and MSR. I also announced that Live Labs has sponsored a new set of academic research grants, 10 MSR PhD Fellowships, and the acquisition of SeaDragon, an innovative technology startup."
Here's the Live Labs site. It was really interesting presentation - the deck will be up online soon, I'll link to it when it is posted.
Richard MacManus over ZDNet seems pretty excited about the news:
"Microsoft is entering into a fascinating Internet-driven software era and - to my eyes - they are meeting the challenges head-on. It'll be interesting to see how they live up to the following words (at the end of the manifesto document)"
Update: Inside Microsoft has a post