Overture announced its intention today to purchase a second crawler-based search engine in as many weeks, that owned by FAST. The company operates the AllTheWeb.com web site and provides results to other search engines such as Lycos.com.
Last week, Overture announced it was to acquire AltaVista in a $140 million cash and stock deal expected to close in April. Today's announcement says Overture will purchase FAST's web search unit for $70 million in cash, with the possibility of another $30 million paid over three years through a performance deal. The transaction is expected to close by April.
Why Own Both AltaVista & FAST's Web Search
When Overture purchased AltaVista, the move made a lot of sense. Overture has long needed an "all-in-one" search solution that provides both editorial and paid listings (see the Overture To Buy AltaVista article for an explanation of this). AltaVista gave it a technological base to build the editorial side of its operations.
Purchasing FAST's AllTheWeb largely replicates the technology Overture would gain from AltaVista. Overture has suggested that having both companies will allow it to combine the technologies to "create the next generation of Internet search," as an announcement press release puts it. That's a weak justification.
The reality is, rather than combining technologies, Overture will instead likely focus on further developing one of these -- probably AllTheWeb's, given that many feel it has better results that AltaVista. Yes, Overture will gain from the combined knowledge of both companies. However, it didn't necessarily need them both for success.
Consider a puzzle analogy. Purchasing AltaVista was the missing piece of the puzzle that Overture needed to complete the "all-in-one" search solution that it wants to offer to partners. Purchasing AllTheWeb simply gave Overture getting an extra puzzle piece it didn't need to complete its search products picture. Or vice-versa. If the AllTheWeb deal had been announced first, then the AltaVista deal would seem confusing.
Grabbing both search engines certainly helps deny an important piece of search puzzle to others. In particular, paid placement provider Espotting has seriously challenged Overture for leadership in the European paid listings space. For instance, while Overture has a deal with Yahoo in the US, it's Espotting that has the deal for many of Yahoo's European web sites.
Last month, Espotting announced a deal to partner with AllTheWeb to provide all-in-one search solutions to search sites and portals. Today's move by Overture will almost certainly cause that deal to end, crimping Espotting's distribution plans.
In addition, it becomes harder for Espotting to find a replacement partner. AltaVista's off the table, given its pending acquisition by Overture. The company already fights for advertising spend against LookSmart, which operates the WiseNut crawler. Google offers a crawler, but Espotting competes with Google for advertising spend, as well.
Espotting could perhaps partner with a Yahoo-owned Inktomi, but that might not go over well with potential partners who compete against Yahoo. That leaves Ask Jeeves, with its Teoma-crawler, as a remaining good choice.
While taking the puzzle piece of AllTheWeb may hurt Espotting, it may also hurt Overture with its partners, in particular MSN. It has emerged that MSN was interested in purchasing AltaVista, as reported by the New York Post.
If MSN wanted AltaVista and couldn't get it, then AllTheWeb would have been an obvious alternative choice. Now MSN may have watched Overture take AllTheWeb from it, as well -- and a puzzle piece that Overture has less ability to defend as necessary. That's not something you think would make MSN exceedingly happy.
For its part, MSN said in an interview for Search Engine Watch members that it had examined AltaVista but was not "serious" about buying it. In fact, MSN said that for the time being, outsourcing for its search results seems the best option.
"We're looking at all of our strategic options right now. What's the best thing to do long term, not short term?," said MSN Search general manager John Krass.
If MSN did want to acquire someone, what's left? Potentially, it could go after Overture itself. Realistically, it's more likely to consider LookSmart. The company is an existing partner of MSN, so the communication lines are strong.
MSN could still consider Ask Jeeves, which operates the Teoma crawler. And a long-shot, but one that can't be dismissed, is that MSN might consider Google.
Microsoft certainly has the cash to make an attractive offer, and if you've decided owning technology is important, why not purchase what is still commonly regarded as the best? In addition, you'd pick up Google's widely popular web sites in the US and around the world, while also potentially hurting your chief competitor, AOL.
Of course, Google might not want to be purchased. Even if it did, there would be a real fear that a Microsoft-owned Google might cause Google to shaded with the public fear of dominance that many already have of Microsoft. Google already has enough of a challenge combating this fear without a Microsoft connection.
FAST used the AllTheWeb.com web site as a showcase of its technology and to test new technologies. Overture says it intends to continue the same.
Overture has also previously said that it intends to keep the AltaVista site operating, also as a place to test new technologies. So why run both sites?
To be honest, Overture itself probably doesn't know yet what to do with them. The company has said that the focus on AllTheWeb.com will be to "test and experiment with advanced approaches in search," while AltaVista will be used to "refine implementations for new products and improve presentation to consumers."
AltaVista certainly has a much larger audience than AllTheWeb, which doesn't even register in terms of search hours, so testing how consumers react to things at AltaVista makes sense. But I suspect it's likely that AllTheWeb will be allowed to wind-down in terms of support that Overture provides it.
Of course, AllTheWeb has just recently released an entire new look and features. However, these plans were in the works before the Overture deal was arranged.
Overture To Buy FAST
InternetNews.com, Feb. 25, 2003
More details on the sale.
Alltheweb.com by Fast Search and Transfer
WebmasterWorld.com, Feb. 25, 2003
Comments on the sale by search engine marketers.
Introducing... ClickZ Live!
SES Conference & Expo has merged with ClickZ to bring you ClickZ Live! The new global conference series takes on the identity of the industry's premier digital marketing publication, ClickZ.com, and kicks off March 31-April 3 in New York City. Join the industry's leading tech-advertisers in the advertising capital of the world! Find out more ››
*Super Saver Rates expire Jan 24.