No one needs to be reminded that IAC/Interactive (IACI) is breaking itself into five pieces to improve "shareholder value". The fight between Barry Diller and John Malone over whether the move was OK played out in all of the papers.
IACI was always a badly conceived company. It tried to put together things like a home shopping network, a lending operation, a ticket sales firm, and an unusually weak group of internet properties. As part of the preparation, for the spin-offs, the world’s smallest search engine, Ask.com, part of the Diller internet division is buying Lexico which owns Dictionary.com, Thesaurus.com and Reference.com. According to The Wall Street Journal. "Lexico sites drew about 15.6 million unique U.S. visitors in March, according to comScore Inc., compared with 55.4 million for Ask and an array of affiliated sites."
Ask.com has about 5% of the US search market while Google (GOOG) has close to 60% and Yahoo! (YHOO) about 25%.
The purchase of Lexico is based on deeply flawed thinking. Consumers who use an online dictionary are not likely to use the search engine which is owned by the same company, especially if that search engine is Ask.com. Ask has already lost the search race because it is a weak product. People using the internet can click from Dictionary.com to their favorite search engine, probably Google, in one click which takes one second.
Buying a potential audience for an internet property that very few people use will not change consumer habits and that makes the investment a waste.
Douglas A. McIntyre
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