Leading Internet search engine Yahoo is in danger of being knocked off its popularity perch, following an exclusive tie-up this week between its rival Excite and American Online (AOL).
Under the agreement Excite will acquire AOL?s Webcrawler service and become the online service provider?s chief search engine and directory service. The exclusivity of the agreement means that Excite?s competitors, like Yahoo, will be locked out of AOL for two years.
The new search engine, to be marketed jointly as America Online Search Powered by Excite, will appear on AOL in about 60 days and is expected to generate substantial increases in traffic - up to 12 million page views a day - and, therefore, increases in advertising revenue for both companies. According to Steve Case, chief executive of AOL, who will take a seat on the Excite board of directors, most of the extra advertising revenue from the deal will go to AOL.
Competition among search engines is pretty fierce and the deal signals a bit of a shake-up in market share. The combined market reach of the new partnership will be 44.1 per cent, significantly higher than Yahoo?s current share. Excite president George Bell said the distribution side of the deal has really intrigued him. ?This gives Excite a lock on the most important source of distribution in the Internet...seven million customers is nothing to shake your head at.?
The deal gives AOL two million shares of Excite, doubling its stake in the search engine company to 20 per cent. Both stocks went up on Monday after the announcement. America Online was up 1 1/2 to 32 5/8 and Excite rallied 3 3/4 to 9 7/8.
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