IAC/Interactive Corp. will likely launch a Chinese version of its Ask.com search engine within two years, and plans to invest a further $100 million in a new internet venture in the country, Chief Executive Barry Diller said Friday. IAC’s move into China’s highly competitive internet search market follows the entry, with mixed results, of
U.S. search giants Google Inc. and Yahoo! Inc., who both remain far behind local search champion Baidu.com Inc.
Diller told reporters the U.S. Internet company will seek a partner, either a local newspaper or other media outlet, to introduce Ask.com to China, mirroring a strategy used to bring the search engine to the U.K. and other European markets. Ask.com, the successor to the Ask Jeeves search engine, has about 6% of the
U.S. search market according to Diller.
Baidu dominates internet searches in China, with 60.5% of the market in the third quarter, followed by Google, with 23.7%, and Yahoo!’s Chinese unit with 10.4%, according to research firm Analysys International. Asked about ethical and legal issues in operating a search engine in
China, Diller defended Google’s practice of censoring searches for sensitive topics on its Chinese Web site. “All of the noise around those issues I think is very unfair. The fact is if you operate in a country, you operate by the country’s rules,” he said. But Diller criticized Yahoo! for providing information to Chinese authorities on the online activities of two dissidents, who were later jailed. “Yahoo! on the other hand is a different story, in terms of giving information and things like that. That I have a different issue with,” he said without elaborating. Last week Yahoo! settled a lawsuit with the families of the two dissidents. Terms of the deal weren’t disclosed. Diller said IAC also plans to invest $100 million in a new internet venture in
China that it hopes to launch within a year. He declined to give specifics about the business area of IAC’s new venture, but pressed by reporters for details, he said online games “is one of the earlier things I think I’d want to pursue.” IAC may buy a local company or build a new business from the ground up, Diller said. Whatever shape the venture takes, Diller said he wants to develop it in the China market first and then bring it to the U.S., reversing the typical pattern of internet concepts being imported into
China from the West. Diller said he had chosen this development plan because of the “tremendous energy” of people in China, which he said was different from the
U.S. But he said in meetings with Chinese internet entrepreneurs, he hadn’t been particularly impressed with the products. Diller said he is determined to avoid the mistakes made in past forays by U.S. internet companies into China, including IAC’s own initial investment in online travel company eLong Inc. Companies such as EBay Inc. are widely thought to have failed to make significant headway against local rivals like Alibaba Group’s Taobao.com due to insufficient localization at the early stage of investment, a mistake that Diller faults himself with making as well. “We bought eLong and promptly screwed it up,” he said. “We chose the wrong leader for the wrong reasons. We insisted he speak English. I said, next time we’re going to insist he doesn’t.”
Internet-travel firm Expedia Inc., a spin-off of the IAC conglomerate, holds a majority stake in eLong. Diller said he is confident eLong will be able compete effectively against local rival Ctrip.com International Ltd., which is larger in terms of volume of hotel and airline bookings, following initial errors. “I think eLong over time is going to be able to compete very, very well. I’m absolutely convinced of it.” Diller said.
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