The original deal wasn’t set to expire until the end of 2012, so the timing of this development comes as a bit of a surprise.  Most people and organizations cut things a little closer, and a lot could change between now and then in terms of search technology or even the value of a dollar (economists seem to mention the word “inflation” a lot these days).

Today’s announcement signals that Google’s been an excellent partner for IAC, anyway, which is good news for both sides.

The announcement could even push other companies to give the idea of a search and advertising deal with Google a second look.

Greg Blatt, the CEO of IAC, stated, “Our Search business has grown meaningfully over the past five years, from $58 million in Operating Income Before Amortization in 2006 to $125 million last year, and generated pre-tax free cash flow in excess of $500 million over that period.  The industry continues to grow at attractive rates and we have every opportunity for continued growth and success.”

Unfortunately for investors, not all the news is so cheery, as both companies’ stocks are sinking today. Google’s stock is down 0.35 percent and IAC’s stock is down 1.29 percent at the moment, although there are sure to be many other factors at work.

CitySearch, a business of IAC, has launched Deals by Citysearch, a location-enabled local deals app that aggregates deals from advertisers from its CityGrid Media, as well as from third-parties like Groupon, TheDealMap, etc. 

"Consumers are tired of having their inbox flooded with daily deals. What our users need is not another daily email but a mobile offering serving up the most relevant offers so they can say, ‘These deals are about me,’" said JP Bedoya, Senior Director of Citysearch. "We have curated the best local deals and allow users to search based on their individual needs when they are on the go."

CitySearch also added a new Deals section to its website. 

For the Android app, CitySearch worked with Skyhook to integrate its location engine into the Deals product. 

CitySearch complemented the launch with a contest, allowing one person to win a month of free deals.

Diller, an industry legend, isn’t leaving the company, in any event; he’ll now act as "Chairman and Senior Executive."  Also, Diller intends to purchase enough stock over the next nine months to increase his voting share to more than 40 percent, so it’s not like he’ll be an important figure in name only.

Diller just explained in a statement, "It’s been clear to me for some time that this Company needs a full time aggressive and aspirational executive in the CEO role.  While I’m not going anywhere, IAC, with its operating businesses growing, large cash resources and virtually no debt, needs the kind of leadership that Greg Blatt can bring it in order to continue to grow and thrive many years into the future."

So back to Blatt.  Blatt became CEO of Match.com in early 2009, and the site experienced record growth under his supervision.  Before that, he served as executive vice president, general counsel, and a member of the Office of the Chairman at IAC, and put in some time at Martha Stewart Living Omnimedia, too.

Blatt said with regards to his promotion, "I couldn’t be more excited about the new position and the opportunities in front of IAC."

Much as Disney, NBC, and Warner Bros. (along with 11 other organizations) did several weeks ago, the four companies showed their support by filing an amicus curiae ("friend of the court") brief, so this isn’t just a matter of everyone trying to grab headlines in the hope a judge will be swayed by one.

Also, in the brief, eBay, Facebook, IAC, and Yahoo argued that much more than the fate of a single video-sharing site is at stake, stating, "Plaintiffs’ legal arguments, if accepted, would retard the development of the Internet and electronic commerce."

Of course, as we noted last time, judges aren’t supposed to put legal decisions to a vote, and a lot of lawyers have probably already made these points in court.

Still, the YouTube-Viacom lawsuit – which was a huge deal even before this month’s developments – is starting to turn into a legal showdown of epic proportions as more and more parties become involved.

Hat tip goes to Don Jeffrey and David Glovin.

The IAC owned property has introduced "Ask Deals," a proprietary database of more than 1 million savings offers from national and local retailers across hundreds of product categories.

The Ask homepage now features a new tab labeled "Deals" for users who only want to view the best offers online. The Ask Deals database is continuously updated to provide users with the most current savings offers.

Ask Deals is powered by the company’s proprietary "Deal Detector" technology, which uses Ask’s search technology to scan online promotions, store circulars, and around 40 coupon sites.

The Deal Detector also searches user-generated content on forums, message boards, and blogs to find popular deals people are sharing with each other. Ask Deals filters out low-value, invalid, and expired offers.

"In a tough economy and with the holidays approaching, Ask Deals arrives at just the right time for consumers as a one-stop shop for value. It’s the answer our users are looking for, too, since searches for coupons on Ask have shot up almost 50 percent in 2009," said Scott Garell, President, Ask Networks.

"Ask Deals saves consumers time and money through relevant, high-quality savings built right into our unique Ask search results page. By introducing our ‘search stimulus package’ with Ask Deals, we aim to lift a burden for consumers and make a meaningful impact in their lives."

NBC has named Jeff Gaspin, chief operating officer of Universal Television Group, as chairman of NBC Universal Television Entertainment.

Ben Silverman
NBC Entertainment

The new venture, which does not yet have a name, aims to bring producers, writers, advertisers and distributors under one roof and create all forms of content for distribution including television and online mediums.

"This new venture will take full advantage of all areas of Ben Silverman’s extensive media expertise – as an agent, producer and advertising innovator – to create a truly integrated and truly interactive new media production entity, a next generation enterprise that bridges the gap between traditional television and the internet," said Barry Diller, IAC Chairman & CEO.

IAC will provide initial capital to the venture, though it will not be consolidated with the company’s financial results.  Additional terms of the venture are not being disclosed.

NBC Universal will continue to work with Silverman via the new venture through platform partnerships and a possible investment in the enterprise.

"Media is being consumed across an increasing number of platforms, including TV, the internet, mobile, and DVR. The next generation of media will be defined by the players who can capitalize on those trends and deliver integrated, compelling content across all platforms," said Silverman.

"Uniting advertisers and content creators will fundamentally improve quality and enable a fluid production and distribution model."

Google makes money by charging advertisers every time a user clicks on a Google advertisement, but in the instances described and documented by Edelman, he makes it appear Google and partners are colluding to intercept traffic to websites that would be navigated directly (and for free) rather than by searching.

Edelman’s claims, presented as they are, seem damning at first glance, but at times the connections seem tenuous and would carry a certain amount of deniability on Google’s part for they all involve third party actions, even if they benefit Google end. Google would not comment on third party/affiliate actions or motivations, so the links and proffered proofs are left to us (via Edelman) to consider. Google also declined to comment about the autocomplete feature on Chrome and whether it is designed to encourage search and discourage direct navigtion.

WhenU

Though in 2004 Google apparently banned WhenU.com from its index for cloaking, the domain has since returned, and the company appears to have forged an affiliate relationship with Google. Also known as WhenU Save/SaveNow, WhenU is advertising software that delivers ads, comparison shopping results, and tracks browsing habits, installed by the user in conjunction with other applications.

With WhenU installed, Edelman’s test exhibits a popup screen covering 80% of a webpage he directly navigated to internet access provider RCN. The popup features Google text ads, one of which is for RCN, the rest for competitors. Edelman suspects many users who’ve installed WhenU simply click on the sponsored search result to arrive at the originally intended destination, thus costing RCN for the click and appearing to be a legitimate conversion.

Edelman cites this as a prime example of Google and a partner interceding in the case of direct navigation in order to boost PPC revenue and give RCN the impression of a high conversion rate.

However, it’s possible, as in all of these examples, that the evidence is circumstantial. WhenU has a history of shady behavior and is still unofficially considered by many as malware or “badware.” It is possible Google is unaware of WhenU’s pop-up practices and that this is a tactic designed to benefit WhenU. Google itself wouldn’t comment on WhenU’s practices.

Google Chrome’s Omnibox

Google’s combination of address and search bar, known as Omnibox, made waves in the browser market with fans cheering the efficiency and critics expressing concern about data collected from it. Edelman enters "Expedia" as an example. Before the entire entry is complete, Chrome suggests outcomes for the user, three of which are searches, one of which is the URL for expedia.com, and a third suggestion, "expedia/," which leads to an error page.

Edelman argues direct navigation is discouraged by placing the intended URL at the third suggestion, after a search result and the suggestion that leads to an error page. “By placing this nonfunctional result prominently in the autocomplete drop-down, above the one working direct link to Expedia, and in the same distinctive green font as the working direct link, Chrome discourages users from exploring direct links,” writes Edelman. “After all, if the prominently-listed "expedia/" link did not work, users are less likely to try the similar-looking link Google ranked lower.”

Because Google designed Chrome this way, this is the most convincing example of Google encouring searching over direct navigation. But proving that motivation is a hard case to make because it involves ignoring all other motivations/ design intentions and requires knowledge of internal engineering directives to which we don’t have access (to which Google won’t grant access, either). 

Any determination of motivation on our part involves significant conjecture, and Edelman may have been a bit selective. The argument assumes the user really wants “expedia” and not “expedition” or “expletive” for that matter, and it ignores other stages appearing in the type field, like the “exp” and earlier stage, or other variations of the query/navigation. Google could and would argue the autocomplete feature is intended to get users to their destinations faster. But Google declined to comment other than to note using the "control" key moves suggested queries to the top of the list.

Typosquatting and SmileyCentral

People who register domains a letter or two different from a legitimate domain in order to catch typo traffic when users make a mistake typing a URL directly are called “typosquatters.” Typosquatters often make money via Google AdSense ads, which appear on the page that is not the intended destination rather than an error page, via Google AdSense for Domains. With Google’s matching technology, often the intended destination is featured in the ads, which users click to continue to where they meant to go. In essence, it is another instance where an advertiser pays for traffic it otherwise would have gotten for free if the user had typed correctly.

Edelman also pegs SmileyCentral, a toolbar provided by IAC, which owns Google’s search rival Ask.com, as a way a Google partner manipulates users into clicking sponsored ads by discouraging direct navigation. The toolbar modifies the users’ web browser by pushing the URL bar to the right instead of its traditional position on the left. A forgetful or unsuspecting user typing a domain in that bar will bring up a search with sponsored ads and may click through to the originally intended destination.

“Google’s actions are even worse than opacity: By claiming to have delivered traffic advertisers would have received anyway, Google tricks advertisers into paying for that traffic — and even tricks advertisers into concluding, mistakenly, that the traffic is a good deal.”

Google wouldn’t comment on how IAC designed its toolbar nor what IAC intended by switching the URL and search fields around. But as far as typosquatting goes, where most often squatters target trademarks, a Google AdSense for Domains spokesperson did manage to reiterate the company’s trademark policy:

"We take trademark violations very seriously. When we are made aware of trademarked terms on sites within the AdSense for Domains program we take immediate action including disallowing ad serving. Trademark owners can find more information here: http://www.google.com/tm_complaint_afd.html."

Third Parties

In all but the Chrome example, Edelman’s arguments hinge upon the actions of partners rather than Google’s direct involvement. While it’s true third party abuse of the system may inflate conversion rates, and that Google may indirectly encourage it, Google retains the ability to disavow actions taken by WhenU, IAC, and typosquatters. But it might be argued Google could be more careful with whom the company associates.

Edelman’s bio lists Google rival Microsoft among his clients. In a world of tenuous links, would that count?
 

PubCenter is to be built on the existing adCenter Publisher architecture, and will include "the convergence of technologies and tools provided by the former Atlas and Rapt solutions, as well as a self-serve offering. Microsoft says the new platform will provide innovative forecasting and order management solutions, advanced analytics tools, and enhanced targeting functionality to enable all digital media publishers to have access to the tools and technology they need to provide valuable and relevant ad content to their advertising partners."

The Publisher Leadership Council includes members from IAC, Dow Jones Online, The New York Times, Time, and Viacom. The group will have a hand in determining the product’s design and features.

"Digital media publishers have diverse needs and face many challenges,” said Scott Howe, corporate vice president of the Advertiser & Publisher Solutions Group at Microsoft. "This initiative is validation of our commitment to partnering with the industry to meet those challenges together. Some key features of PubCenter are still on the whiteboard, and we’re giving our partners a pen."

Publishers welcome the opportunity to play a role in the creative process. "As an industry, we’re forced to rely on many disjointed tools and systems, and the quality of the data we receive can suffer as a result,” said Nada Stirratt, executive vice president of Digital Advertising at Viacom’s MTV-Networks.

"Data is critical to managing, measuring and meeting the needs of our advertisers and audience, and enhancing the overall value we deliver," added Stirratt. "By collaborating with Microsoft, we’re in a strong position to help address these needs and, together, chart the industry’s future."

Predictions have been made about a potentially big year for Microsoft on the search front. The company’s advertising efforts might be attracting some attention as well.

 John Malone

Again, the simplest explanation for these moves may be best.  At $15.77 per share, IAC’s stock is currently much closer to its 52-week low ($13.27) than its 52-week high ($26.99).  The period following December 22nd has been especially tough, with it sinking 3.55 percent since then.  And when was the last time you heard great news involving Ask?

But there are other possibilities.  Julia Angwin, who puts the value of Liberty Media’s recent IAC stock sales at $17.5 million, writes, "Mr. Malone, well known for his complex deals to avoid taxes, could use the paper losses from the IAC sales to offset taxes on other gains. . . .  Recently, Liberty Media has written down the value of its IAC stock by $440 million in the third quarter, citing the ‘lack of near-term prospects for recovery’ in its IAC investment."

There’s also a bit of personal history to consider.  Malone and Barry Diller, the chairman and CEO of IAC, had a serious disagreement over whether splitting IAC was the right move.

Regardless, though, it looks like the odds of Ask remaining any sort of player in the search engine game have become a little slimmer.

Let’s start with the most obvious "up" – the company’s stock price.  IAC managed to gain 3.25 percent today, even as the Dow went down by 5.05 percent and the Nasdaq sunk 5.53 percent.  This sort of thing tends to indicate that some other stuff went right, of course.

So Rick Aristotle Munarriz addresses various issues by writing, "Worrywarts may point to the $0.11-a-share deficit, but that figure is weighed down by $20.8 million in spinoff expenses, and an even bigger accounting hit for the early extinguishment of debt."

Then, "Revenue fell sharply from what the conglomerate generated a year ago, but it’s actually a 10% improvement to $369.3 million when you count just the remaining pieces of the company."

As for the subject on which this article started, Ask experienced some success internationally, but saw a decline in U.S. queries.  The partnership with Google seems to be working out reasonably well, and no sale plans appear to be on the table.  IAC gave little else in the way of guidance.