No Big Winners In Search-Engine Wars - InformationWeek

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3/22/2005
11:40 AM
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No Big Winners In Search-Engine Wars

You don't need to be the top dog to be a winner. Barry Diller understands that as his media company IAC/InterActiveCorp seeks to acquire search engine Ask Jeeves for $1.85 billion.

You don't need to be the top dog to be a winner. Barry Diller understands that as his media company IAC/InterActiveCorp seeks to acquire search engine Ask Jeeves for $1.85 billion.Today, Google and Yahoo dominate the search market; they account for nearly 70% of all searches, according to comScore. Internet users conduct about one-quarter of Web searches on sites operated by MSN/Microsoft and AOL/Time Warner. Ask Jeeves accounts for only 5% of searches.

But, as Diller points out, searches represent a very small slice of American media, even less so overseas. He compares the search market to other media, such as cable TV, where no one company dominates but scores of businesses are profitable. Despite its rapid growth, the Internet remains a relatively young industry. And search is even younger.

Appearing on CNBC the other day, Diller addressed the search-engine sector: "It's the very beginning of its growth. … This is going to be a world, just like the media world, where there will be many players, many people providing service."

Diller plans to grow Ask Jeeves by placing a search bar on Web pages of IAC's other sites such as the online travel agency Expedia, Home Shopping Network, Ticketmaster, CitySearch, and Match.com. Diller said IAC sites attract 44 million unique visitors, and expects many of them to use the Ask Jeeves search bar instead of going to another site to conduct a search, such as Google.

Too many people are infatuated with companies like Google. They're judging this sub-sector by the number of searches. True, search and portal companies do reach out through acquisitions and partnerships to create synergies, but that doesn't explain how the market got so out of whack. How else could Google have a market cap topping $49 billion on only $3.2 billion in sales last year when IAC generated nearly twice that amount in revenue but has a market cap of $15.4 billion, less than one-third of Google's?

Industries change, and no one can accurately predict where the rapidly evolving Internet sector heads. Few would have imagined a generation ago that AT&T would become the footnote in the telecom sector that it is today. Google may never become a asterisk in Internet history E-books of the future, but who can say we'll view search as the media force it's now perceived as in the years to come?

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