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Diller’s IAC to expand in China

Conglomerate to invest $100 million

BEIJING — Media mogul Barry Diller said Friday his Internet conglomerate, IAC/InterActiveCorp, will invest $100 million to expand in China by creating services designed for local users.

IAC also will launch its Ask.com search engine in China within two years, Diller told reporters in a meeting over breakfast.

AC is looking for opportunities to develop or buy businesses geared to Chinese users, Diller said. He said it wants to avoid the fate of Internet outfits that have struggled in China with offerings developed for the U.S. and other foreign markets.

New York-based IAC’s 30 web brands include dating site Match.com, directory service Citysearch and portal Excite.

“I think what we’re going to try and do is completely different than any of the other processes,” Diller said. “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.”

With 162 million people online, China has the world’s No. 2 population of Internet users after the U.S. But foreign companies have struggled to win market share. Yahoo! and eBay both have turned to local partners to run their China operations.

IAC is ready to invest $100 million in its new China ventures, according to Diller, its chief executive officer.

“We’ve certainly got enough capital to do damage,” he said.

Successful business ideas developed in China might be exported for use in the U.S. market, Diller said.

IAC bought a Chinese online travel service, ELong, in 2005. But Diller said it mishandled the business early on and is trying to recover after falling behind Chinese rival Ctrip.com International.

“I think we, in our imperialistic way, made some early dumb decisions and hopefully we’re making smarter ones now,” he said.

IAC announced this month it will spin off its HSN home shopping network, Ticketmaster ticketing service, Interval time-share business and LendingTree mortgage referral units in order to become a purely Internet business.

Ask.com, with about 6% of the U.S. search market, probably would be launched in China in partnership with a Chinese newspaper or broadcaster to build public awareness, Diller said.

Foreign search providers have struggled to compete with dominant Chinese engine Baidu.com, which has a 60.7% market share, according to research firm Analysys International. Google is in second place with about 23.7%.

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