If I understand the Prediction API correctly it's a text classifier. I would imagine it's a bayesian classifier, like the kind found in most spam filters. I don't know how accurate it is...it would be nice to see how it performs on a standard corpus (like the 20newsgroups).

If you're handy with linux and you don't want to deal with their API, you could probably just download and install rainbow http://www.cs.umass.edu/~mccallum/bow/rainbow/ (though it is a very difficult installation).