Apparently Microsoft can run only so many experimental labs during a downturn.

The company today confirmed that it’s cutting by half the staff of Live Labs, the search-oriented research group created in 2005. PaidContent.org broke the story this morning.

Lab founder Gary Flake, who started a similar group at Yahoo before he was recruited by Microsoft in 2005, will continue to lead the remaining group.

This won’t necessarily contribute to Microsoft’s frugality pledge to trim its headcount.

Lab members are being diverted to product groups “that are in need of Live Labs talent to accelerate existing projects,” spokeswoman Stacy Drake said.

“We are restructuring Live Labs to a narrow focus on Web experiences,” she said. “The team will focus on rich data exploration and information retrieval, discovery, navigation and organizational approaches that include but also go beyond search.”