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AUSTIN, Texas - Ask.com, the Oakland, California-based Internet search and media company which is a part of  media giant InterActiveCorp (IAC), will bring its services to the most populous country in the world within two years, as part of a $100 million initiative to start a new media and advertising company in China, according to IAC chairman and chief executive Barry Diller. Within a year's time the new IAC company could begin operations in China, which has the Internet's second largest user base, and will feature a Web site focusing on bringing advertising, media, and online games to local users, according to a recent article in the Wall Street Journal, citing talks held Friday between Diller and reporters in Beijing. As of June the number of Internet users in China stood at 162 million, according to figures released by the China Internet Network Information Center, placing it behind only the United States. China's total population is estimated at over 1.3 billion people. First Move Since Splitting $10 Billion IAC Hot on the heels of Diller's November 5th announcement that he would be splitting New York-based media  conglomerate IAC into five separate public companies, in order to get rid of underperforming parts of his empire, and at the same time alleviate some of the tension between himself and longtime financial backer John Malone. The plans left Diller in control of IAC's thirty Internet businesses including Ask.com, dating Web site Match.com, Web portal Excite, and Citysearch.com, which provides information about U.S. cities. In October Ask.com occupied the fourth position among U.S. searches, with 4.76 percent, according to Internet traffic analysis company Hitwise. Diller told reporters that when Ask.com launches in China, it will most likely be in partnership with a Chinese newspaper. IAC, the world's leading multi-brand interactive commerce company, has already invested $200 million in endeavors inside China, including the 2005 purchase of online travel service eLong, Inc., which has 2,000 employees in China, and a number of acquisitions by Ticketmaster. With a combined value of nearly $10 billion, IAC has "certainly got enough capital to do damage", one-time media tycoon Diller said, while at the same time acknowledging that the new investment in China contains an element of risk. China Proves Tough for Google, Yahoo and eBay IAC's new company will face competition from search leader Google and online auction company eBay, both already operating in China, where they find themselves playing catch up to local competitors. China's $91 million online travel services are dominated by that country's Ctrip.com Internetional Ltd., which in the third fiscal quarter of this year held nearly half of that market, while eLong accounted for only twelve percent, according to data from consulting firm Analysys International. Last year eBay gave up control of its operations in China after being overtaken by Alibaba Group's Taobao.com [in Chinese], passing the business on to a local partner, an outcome also seen by search site Yahoo Inc. Google is seeing forward momentum with its China operations, however it is still trailing the country's leading search engine site Baidu.com by a large margin, with Baidu holding a 60.7 percent market share and Google 23.7 percent, according to Analysis International. Looking to Overcome Past Mistakes in China Besides acknowledging risks the new company faces in China, Diller see opportunities to learn from past mistakes made there. "We've been here and learned some lessons," Diller told the Journal. "We bough eLong and promptly screwed it up," said Diller, who now sees his company's operations in China as being "on a better track." Ask.com Coming to China Amidst $100M IAC Move Diller sees the online gaming market as an area IAC's new company could find some of its first success in, and  told the Journal that his new entry in China will be unlike anything else and not merely an attempt to copy an existing venture such as Internet search. It has been estimated that the online gaming market reached nearly $400 million in the third quarter of this year alone. Diller is expected to spend several weeks in China exploring his options and touring the country, where he may get a first hand look at a country where copyright violations can go unchecked and where the government places strict licensing barriers in front of companies, both foreign and local. The restrictions his new company will face in China are surmountable according to Diller. "When you operate in a country you play by the country's rules," Diller said. "Every place has got its constraints. It doesn't bother me," he said. Something "Completely Different" from CEO Diller Diller told reporters in Beijing that the new IAC venture would try to operate in a way that has not been tried before in China. "I think what we are going to try and do is completely different than any of the other processes, and I know that we have learned a methodology of starting internet businesses and relating internet ideas one to the other and having a different kind of discipline," Diller said. Additionally, IAC is looking to buy or develop other businesses targeting users in China, Diller said. Diller has acknowledged missteps early on after his company's purchase of eLong, but sees brighter days ahead after learning from past mistakes. "I think we, in our imperialistic way, made some early dumb decisions and hopefully we're making smarter ones now," Diller said. The Internet landscape in China may be a vastly different place in two years time, one in which Ask.com may or may not find itself asking whether it should have entered the scene earlier. Related Links:
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12:27 am on Nov. 27, 2007 (utc 0)