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Unless you already have a major foothold in the search engine market – or an amazing, disruptive technology that can make the world take notice – there isn't much point in staying. Competing with Google (NASDAQ: GOOG) is hard enough, even when you're Yahoo (NASDAQ: YHOO) or Microsoft (NASDAQ: MSFT) ... and, apparently, when you're IAC/InterActive Corp (NASDAQ: IACI). Barry Diller is ready to give up Jeeves, but only if asked nicely.
Diller's presence in the search space is Ask.com, ranked #4 behind Google, Yahoo and Microsoft's Bing. With a substantial gap between first and second, fourth barely registers at all. Ask.com has only a 2% U.S. market share, according to Hitwise, more than 60 percentage points behind the industry leader.
During the IAC third-quarter earnings call on Tuesday, Diller said, "We have been asked a lot whether we are open to consolidating transactions in the area of search." The answer is yes, he continued, "And it is unlikely that we'd be the consolidator."
The only question that remains is who'd buy the tiny search site. Colin Gillis, an internet analyst at Brigantine Advisors calls Microsoft "the clearest logical buyer," indicating that it could pick up some market share pretty easily through the acquisition. But, it might not be all that easy. Ask relies on Google for much of its revenue, based on an ad deal renewed a few years ago. Back then, Google was offering lovely terms to build up business. Much has changed since then, though. Ask is unlikely to get the 89% share of the ad revenue it serves upon the next renewal, which would make it difficult to close a deal.
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