Google Signs Search Deal With Top Korean Portal

Google has signed a deal with South Korea’s Daum Communications to provide algorithmic search services for the portal, Daum.net, beginning as early as next week.

The deal means Daum, which is Korea’s top portal, decided to split its search business down the middle, partnering with Google rival Overture Services in a three-year exclusive paid-listings deal two months ago. The financial terms and duration of the Google deal were not disclosed.

Overture and Google have increasingly battled each other abroad, where the paid search market is relatively new. While Overture has beaten back Google to win a number of deals, including agreements with the top ISPs in the United Kingdom and France, another key Asian portal, Yahoo Japan, decided to split its paid search business between the two companies.

Daum.net is a sprawling portal, with more than 2 million online communities and 20 million registered users — accounting for nearly 80 percent of all Korean Internet users. South Korea represents a huge market opportunity, as possibly the most technologically oriented Asian country, with a 40 percent broadband penetration rate.

The battle for dominance abroad has shaped up to be an interesting one, with Overture looking to leverage its deeper experience in paid listings while Google boasts a deep presence in many markets abroad with its search technology.

Overture hoped to overcome this with its recent acquisitions of the AltaVista search engine and the Web search unit of FAST Search and Transfer. In addition to giving Overture the ability to offer a complete search solution of both editorial and paid search, the deal brought Overture more international credibility.

AltaVista, while a shadow of the powerhouse it was during its heyday, has search services in 25 languages. FAST, based in Norway, has a high profile in Europe, with search available in 50 languages. Google, in comparison, is available in over 200 countries and 86 languages.

Overture CEO Ted Meisel has called the international opportunity “immense.” He announced last month that Overture would continue spending on new markets, expanding to Italy and Spain, as well as other European countries, during 2003. Overture already has operations in the United Kingdom, France, Germany and Japan. Its Korea operations, with its Daum deal as the centerpiece, are set to open shortly. When it does, Overture said it would reach 89 percent of Korean Internet users, thanks to its Daum partnership.

Overture’s thrust abroad, along with its moves to sign up non-portal search partners like CNN and ESPN, should alleviate some of the pressure from its two largest partners, MSN and Yahoo, which combined account for nearly two-thirds of Overture’s revenue. Thanks to sweetheart deals, the top portals command a lion’s share of the revenue generated from keyword searches, putting Overture in a precarious position should one of them decided to bolt at the end of their contract. Yahoo’s $235 million acquisition of Inktomi last December has fueled persistent talk that it would dump Overture when it contract expires in April 2005.

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