ServiceMagic 2009 Annual Report Download - page 7

Table of Contents
Mr. Diller (through his own holdings and the Class B common stock holdings of Liberty over which Mr. Diller has voting control pursuant to the
amended and restated stockholders agreement) controlled approximately 57% of the outstanding total voting power of IAC.
Accordingly, Mr. Diller is effectively able to control the outcome of all matters submitted to a vote or for the consent of IAC's stockholders
(other than with respect to the election by the holders of IAC common stock of 25% of the members of IAC's Board of Directors and matters as
to which Delaware law requires a separate class vote). In addition, pursuant to an amended and restated governance agreement, dated as of
August 9, 2005, among IAC, Liberty and Mr. Diller, Mr. Diller generally has the right to consent to limited matters in the event that IAC's ratio
of total debt to EBITDA (as defined in the amended and restated governance agreement) equals or exceeds four to one over a continuous 12-
month period.
DESCRIPTION OF IAC BUSINESSES
Search
Overview
Our Search segment consists primarily of Ask.com and other destination search websites through which we provide search and related
advertising services, as well as toolbars and applications through which we promote and distribute these services, and Citysearch, a leading
online local city guide.
Search Business
Overview. Search services generally involve the generation and display of a set of hyperlinks to websites, together with summary
information regarding these websites, deemed relevant to search queries entered by users. We provide search services to users who visit our
Ask.com
and other destination search websites and portals directly, through toolbars that we distribute to users directly and through third parties
and through the syndication of our search results via search boxes placed on third party websites. Substantially all of the revenue of our search
business and our Search segment is derived from the display of paid listings and other advertising in connection with the provision of search
services.
Display of Paid Listings and Other Advertising. In addition to algorithmic search results, paid listings are also generally displayed in
response to search queries. Paid listings are advertisements displayed on search results pages in response to search queries that contain
advertiser-selected keywords. A paid listing is a short textual unit containing a link to the website of an advertiser that purchased the relevant
keyword(s). The advertiser generally pays a fixed fee every time a user clicks on the paid listing.
A substantial majority of the paid listings we display are supplied to us by Google pursuant to a paid listing supply agreement with Google
that expires on December 31, 2012. Pursuant to this agreement, we transmit search queries to Google, which in turn transmits a set of relevant
and responsive paid listings back to us for display in search results. This ad-serving process occurs independently of, but concurrently with, the
generation of algorithmic search results for the same search queries. Google paid listings are displayed separately from our algorithmic search
results and are identified as "sponsored" listings on search results pages. To a lesser extent, we also syndicate Google paid listings through third
parties with whom we enter into syndication agreements. See "Item 1A—Risk Factors—We depend upon arrangements with Google and any
adverse changes in this relationship could adversely affect our business, financial condition and results of operations." In addition, we sell paid
listings directly to advertisers and display them on third party and various IAC properties, as well as sell display advertising on our portals and
other IAC properties.
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