In 2001, GoTo renamed itself Overture. Following the dotcom bust, the new Overture struggled to compete against Google in ad sales. By 2002, Google had worked its way up to third place in online search behind Yahoo and MSN. While third in page hits, Google attained three times the average time period users spent in search compared to Yahoo and MSN.
The top two leading search engines’ hit numbers came, not from offering a good product that attracted users like Google, but because both Yahoo and Microsoft had signed agreements with ISPs to make them the default search site for customers. However, those customers were spending more time on Google’s site because they were actually using it, not just being presented with it as their default choice. Google was getting attention via word of mouth for suppling a better product for users, while Yahoo and Microsoft were cramming so much content and advertising into their portal sites that they no longer even looked like functional search engines.
Overture supplied the ads for Yahoo and MSN, so it was directly threatened by Google’s rapid gain in popularity. Overture responded to Google’s success by suing the company in 2002 for copying its patented business ideas of bid-for-placement ads and pay-for-performance search. At the time, Overture was still bringing in 2.8 times the annual revenue of Google.
While trying to compete against Google in pay for placement ads, Overture also announced a partnership with Gator spyware in 2003 that involved installing the spyware on users’ computers to record and report their activity. Overture also used the Gator spyware to pop up ads that it had sold from advertisers who thought their ads would be presented on reputable sites.
When advertisers began catching flack from consumers outraged over having their ads popped up over and under web browser windows, Overture’s reputation began to sink. The company was bought up by Yahoo that same year. Yahoo inherited Overture’s three year spyware contract headache and the company’s patent suit against Google. The following year, Yahoo settled with Google in an agreement that granted Yahoo 2.7 million shares of Google in exchange for a perpetual license to the Overture patents related to paid search, setting Google free to develop its position as the new first place provider of web search.
