America Online turns to Israeli technology to take it into the future
November 13, 2007. Israel 21c: Nicky BlackburnWhen US Internet giant America Online wants to go shopping for new Internet technologies, it heads to Israel. In less than a week, the Time Warner subsidiary has purchased two Israeli companies - Internet advertising technology company Quigo Technologies, for an estimated $350 million, and now search technology start-up Yedda, for an undisclosed sum.
Yedda, a web 2.0 company, has developed a semantic search engine that differs from regular text-based search engines such as YahooAnswers or GoogleAnswers because it can automatically match questions to other related questions and topics, and select the best available users to answer the question. The patent-pending technology, which went live in August last year, intelligently routes questions to relevant communities of Internet users, sending out e-mails or instant messages to 'experts', and creating a large community of people who can discuss and learn from each other's experiences. Content is rated for quality. This is the first Israeli Web 2.0 technology exit.
"In the course of our daily lives we often leverage the experience and expertise of friends, colleagues and professionals like doctors and lawyers to get answers to questions we have," said Ron Grant, president and COO of AOL in a statement. "Incorporating Yedda's unique technology into AOL enables us to bring together our traditional search resources and an entire community of people to help users quickly find answers to questions."
"It's about connecting people and benefiting from people's experiences rather than sifting through large amounts of content and reading a lot of articles to get an answer to your question," Avichay Niessenbaum, Yedda's CEO, told Reuters.
While some see AOL's purchase of Yedda as an attempt to beat its rivals, Google and Yahoo in the questions and answers game, some experts are suggesting that AOL is taking a longer-term look at the industry and using the Yedda purchase to move into the social networking arena.
Yedda (the Hebrew word for knowledge) was founded in Kfar Malal in 2006 by Niessenbaum and Yaniv Golan and to date raised $2.5 million from Israeli venture capital company Genesis Partners and private investors. It employs 20. In the wake of the purchase, thought to be worth tens of millions of dollars, Yedda will incorporate the questions and answer functionality into select programming on AOL.com and will further integrate "Questions & Answers" into its experiences in the coming months.
The Israeli company, which currently has 800,000 visitors to its site, and 5 million visitors through partner sites, will remain independent, functioning as a wholly-owned subsidiary of AOL in Europe and the US. R&D will remain in Israel. Yedda will also continue to hunt for strategic partnerships with other content sites, distributors, and medica companies around the world to promote 'knowledge communities".
Niessenbaum, 41, told Israel's financial daily, Globes that when the deal is completed, AOL's 100 million-strong Internet community would turn Yedda into one of the largest personal knowledge centers in the world and a primary source for surfers seeking the experience and know-how of others.
"Our vision is fully compatible with the vision and strategy of AOL," he said. "The platform that Yedda provides a broad network of sites will continue to foster knowledge wherever it is found and will add significant value to users and communities both at AOL and elsewhere."
Before founding Yedda, Niessenbaum founded SmartTeam, which was sold to the French company Dassault in 1999. Niessenbaum worked there with Golan until 2005.
A spokesman for the company told ISRAEL21c that Yedda expects to see substantial growth in its Israeli office in the wake of this sale. "Any opportunity for Yedda to tap into a larger community of people is a source of growth for them," he said.
The acquisition follows last week's buy-out of Quigo, which develops customized content-based advertising technology and products for websites. Like Yedda, AOL, which is now undergoing restructuring, plans to maintain the company's R&D center in Israel.
The deal, which should be approved by the end of this year, was part of a recent online ad buying spree by AOL, which hopes to expand the capabilities of its new Platform A ad system, and bolster its online advertising capabilities to offset declines in subscription revenues and make it more competitive.
Quigo primarily serves contextually targeted cost-per-click text ads to over 500 publisher sites. Under the terms of the deal Quigo will become part of the company's Platform A unit, which includes other new ad technology outfits Third Screen Media, AdTech and Tacoda. Quigo will be a wholly-owned subsidiary of AOL.
Quigo has 100 employees. Most are based in New York, while R&D is based in Tel Aviv and San Jose. The company signed exclusive ad relationships with Forbes.com, and Time, this year.
In November 2006, AOL purchased Israeli start-up Relegance. This was the American giant's second purchase of an Israeli company after it bought Mirabilis (ICQ) for $407 million in 1998.
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