Overture acquires Fast's Web search division

(February 25 2003) We certainly didn't see this one coming: The Overture pay-per-click search engine company will buy Fast's Web search division (i.e. the division behind the AlltheWeb search engine).

Overture will acquire FAST's Internet business unit for US$70 million in cash, as well as performance-based cash incentive payments for up to $30 million over three years.

So what do they get? According to Fast Overture will take over Fast's "Internet business unit assets" including FAST Web Search, AlltheWeb.com, and FAST PartnerSite products (i.e. paid inclusion services), related intellectual property rights, as well as data centers and equipment in Sacramento (USA) and London (UK). And yes, the relevant personnell will be transferred accordingly.

Now, why would Overture want to do this?

It makes a lot of sense, actually. The Norwegians have made one of the very best search engines on the Net, with a technology and a database that can be compared with Google's. Overture can now offer portals and search sites a complete package, including pay-per-click text ads and regular high quality search results.

This gives Overture a much stronger position vis-a-vis Google, a search engine company that can offer a similar combination package.

"This acquisition allows us to offer a broader and more complete range of products and services to Overture's distribution network and advertisers," says Ted Meisel, Overture's president and chief executive officer. "We can now offer products that include one of the world's best search technologies available today."

Dr. Gary Flake, an expert on algorithmic search engine design, will lead Overture's research and development efforts,the objective being to develop a "next generation of search" built upon AltaVista's, Fast's and Overture's technologies.

What makes us wonder is not why Overture has bought the Web search division of Fast, but why they just recently also acquired the AltaVista search engine.

AltaVista is a good search engine, but not as good as Fast, hence we suppose the Fast team could bring Overture the necessary technology and competences alone, without having to add more from AltaVista.

On the other hand, in this way Overture has stopped possible competitors (Espotting or MSN?) from doing the same.

So what's left of the Norwegian Fast company?

There remains the Fast Data Search division which accounts for over 75% of Fast's current revenue. This part of the company is focusing on Web site search engines.

Fast has made several strong deals in this area recently, including the delivery of search capabilities to the Dell Web site. Overture will license Fast Data Search, according to the Fast press release.

The new reduced Fast company will probably loose some of the synergies gained by developing Web site search technologies as well as an Internet search engine. On the other hand the Web site Data Search part of the company is the most profitable. The income generated by the Web search division has clearly not reached the level Fast would like to see.

To the Norwegian newspaper Dagens Næringsliv CEO John Markus Lervik calls this "an unbelievable good deal". He points out that the deal is two to three times better than the deal Inktomi got when that search engine company was bought by Yahoo!

By the time of writing this article (Feb 25, 16.00 CET) Fast stock had gone up by 23 percent at the Oslo stock exchange.

Read also our story on the European pay-per-click text ad provider Espotting's comments on the Fast/Overture deal.

Fast press release.
Overture press release.
Webmaster World discussion.

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