Diller's IAC/InterActive snaps up Ask Jeeves in $1.85bn deal

NEW YORK - Barry Diller, the one-time movie mogul, is taking over Ask Jeeves in a $1.85bn (£974m) deal, in an attempt to take on rival search engines like Google and Yahoo!.

Diller is buying Ask Jeeves through the IAC/InterActive Corporation, which owns online travel agent Expedia, Hotels.com, Ticketmaster, CitySearch, dating service uDate.com and Home Shopping Network. It also recently bought the online shopping catalogue Cornerstone in a $720m deal.

The deal with IAC will see all of its websites promote an Ask Jeeves search box, making the brand seen by an extra 44m unique users, on top of the 42m US users who visit the site each month.

Ask Jeeves was at the forefront of internet search when it pioneered the "natural" search format, that allowed users to ask questions rather than search on keywords.

However, the advent of Google saw it lose market share. Now that paid-search advertising is proving such a huge revenue stream for internet companies, the battle for search traffic is becoming ever more competitive, with Yahoo! and MSN each developing their offerings in recent months.

Diller, chairman and CEO of IAC, said: "We believe that in the future, Ask Jeeves has the potential to become one of the great brands on the internet and beyond, and by beyond we mean in wireless, in the search for anything on any device."

The company plans to build Ask Jeeves by leveraging other of IAC's brands and offers into Ask Jeeves properties, as well as improving the search engine's local and merchant information.

IAC launched a new website today called Gifts.com, which promises to find the perfect gift for any occasion. The company had revenues of $6.2bn in 2004.

Diller made his name as the head of Paramount Pictures for 10 years starting in 1974, during which time the company made blockbusters including 'Saturday Night Fever', 'Grease' and 'Raiders of the Lost Ark'.

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