The Microsoft Research Translation Team announced the transition from a third party translation technology to going “in-house”.  From the MSR-MT blog:

• Translation now fully powered by the Microsoft Translator technology is available through Live Search, as well as IE8, the Windows Live Toolbar, and Windows Live Messenger.
• All translation pairs on the site (11 English-X, 12 X-English) are powered by Microsoft Research-developed systems.
• Two transliteration pairs (chs<->cht), courtesy of the Windows International team.
• For several languages, better language quality.
• And finally, the release of TBot, a translation bot for Windows Live Messenger.

More info: Windows Live Translator | Windows Live Messenger Translator Bot

Source:→ LiveSide