In a move that will surprise many of its users, Microsoft just announced that it has canceled the Bing Cashback shopping rebate program that it launched with much fanfare two years ago as part of its effort to catch Google.

"In lots of ways, this was a great feature – we had over a thousand merchant partners delivering great offers to customers and seeing great ROI on their campaigns, and we were taking some of the advertising revenue and giving it back to customers," the company said in a blog post. "But after a couple of years of trying, we did not see the broad adoption that we had hoped for."

Cashback offers from online merchants will stop on July 30, according to the company, although users will have up to a year to redeem the cashback in their accounts.

The program, originally dubbed Live Search Cashback, was launched two years ago. It was a high-profile example of Microsoft trying to leverage its broader financial strength -- and sacrificing online profits — in an attempt to become a larger and more credible rival to Google long term.

Under the program, Microsoft holds in reserve a large chunk (reportedly 75%) of the advertising dollars that online merchants pay for clicks on their designated “cashback” products. That “piggybank” is then used to provide rebates of varying amounts to the registered consumers who end up buying those products.

When Bill Gates announced the Cashback program, he said he believed it would mark a turning point in Microsoft’s battle with Google. “I think years from now, you may look back and say, 'Wow, search started to get a fair bit more competitive, and we can look back to that announcement,' " he said at a Microsoft online conference in May 2008.

Microsoft has, in fact, noticeably increased its share of the U.S. search market, with most of the gains coming since the company revamped and rebranded Live Search as Bing one year ago. The company’s market share was 11.8 percent in April, an increase of more than 3 percentage points from two years earlier, according to the comScore Networks research firm.

Cashback is credited with making Microsoft more competitive in online shopping. In one recent example, Seattle-based online retail company Mercent credited a sharp increase in sales in part to Bing Cashback.

But one big online giant, eBay, recently pulled back from the Cashback program.

And Microsoft’s overall gains in search market share haven’t come cheap. Microsoft has been spending more to generate search traffic — through distribution arrangements with PC makers and other deals -- than it has been getting in return. The loss in the company’s Online Services Division soared to $713 million in the company’s most recent quarter. The company said its cost of revenue for the quarter was up $64 million, or 15 percent, “primarily driven by higher online traffic acquisition costs.”

Costs associated with the company’s upcoming partnership with Yahoo have also been hurting Microsoft’s online profits, perhaps increasing the pressure on the Redmond company to minimize its losses in other parts of its search business.