Like the 1980 Queen hit, "Another One Bites The Dust," so goes IAC/Interactive Corp's (Nasdaq: IACI) Ask.com search engine. Yesterday, the company announced that it was cutting jobs that support the development of its search engine, and that it would use results provided by a competing search engine. The company already has a partnership with Google (Nasdaq: GOOG), which provides some of its search results. With Yahoo's (Nasdaq: YHOO) deal to use search results generated by Microsoft's (Nasdaq: MSFT) Bing, that brings the number of true algorithmic search competitors down to two, at least in the U.S. and most of the world outside of China.
The winners
IAC faces reality, allowing it to focus on other businesses such as Match.com and areas of search where it has the potential to be a winner such as distributing toolbars and Q&A. The move will likely improve the company's profitability, too, as competing with Google in search isn't cheap, just look at the expanding losses in Microsoft's Online unit, which reached well over $2 billion in its 2010 fiscal year.
In the future, Microsoft's Bing could strike a deal to provide Ask.com's search results, giving it a small but meaningful market share boost that is critical for it to become a more credible threat to Google's dominance.
An unlikely loser?
Despite the potential revenue and share gains, Ask.com's exit could generate for Google, I doubt there's too much celebration. The company loses a nominal competitor that it could point to when antitrust regulators come calling, an event that occurs with increasing frequency for the search giant.
Let us know in the comments what you think about IAC's decision to end its search engine ambitions and whether or not Microsoft will be making a similar announcement in five years. And for more on technology stocks, click here to get The Motley Fool's free report, The Only Stock You Need To Profit From the NEW Technology Revolution.
