Ask.com cuts 130 engineering jobs, gives up on search business

Ask.com, the Internet search engine that media mogul Barry Diller acquired for $1.85 billion to compete with Google Inc., is cutting 130 engineering jobs and conceding much of its search business to competitors.

Ask.com, a unit of Diller’s IAC/InterActiveCorp., is dismissing engineers based in Edison, N.J., and in Hangzhou, China, and ceasing work on its algorithmic search technology, Ask.com President Doug Leeds said.

The search unit will consolidate its engineering operations at its headquarters in Oakland and focus its resources on developing its online question-and-answer service. Twenty of the engineers in New Jersey will be asked to relocate to Oakland, the company said.

Leeds said that Google has become too powerful a competitor to justify Ask.com’s continued pursuit of those search users.

“It’s become this huge juggernaut of a company that we really thought we could compete against by innovating,” Leeds said. “We did a great job of holding our market share, but it wasn’t enough to grow the way IAC had hoped we would grow when it bought us.”

Google, the No. 1 search provider, controls 65% of all U.S. searches, according to Nielsen Co. Ask.com, ranked sixth among search providers, has less than 2%.

Ask.com says it will maintain the prominent search box on its site and deliver search results provided by one of its competitors. Leeds declined to specify which company, citing a confidentiality agreement. Ask.com already has a partnership with Google, which generates a portion of its search results as part of a wide-ranging agreement between IAC and Google. That agreement runs through 2012.

For Diller, the decision to pull out of direct competition with Google marks a surrender. Diller bought the search engine then known as Ask Jeeves in 2005, betting he could battle the likes of Google and Yahoo Inc. Renamed Ask.com, the search engine struggled to increase its market share, and in February IAC took a $992-million impairment charge for its search and media business, which includes Ask.com.

“We’ve realized in the last few years you can’t compete head on with Google,” Diller said in a statement.

Yahoo has also ceded much of its search business to competitors, signing a 10-year agreement to use Microsoft Corp.’s Bing search technology on its Web properties.