In an unusual hire of a senior outside executive, Microsoft has hired Steven Berkowitz, former chief executive of Ask Jeeves, to run its floundering Internet division, Microsoft said in a statement.
The move also robs InteractiveCorp, Barry Diller’s TV and online commerce group, of one of its most senior internet executives. Mr Berkowitz joined IAC last year, after Mr Diller bought Ask Jeeves – since renamed Ask.com – to try to build a counterweight to Google and Yahoo!
Mr. Berkowitz became president of Ask Jeeves in 2001 and chief executive in 2003. He helped transform the service, which was introduced to answer questions posed in English phrases, into a search engine to compete with Google. Mr. Berkowitz continued to run the company after it was acquired by IAC/InterActiveCorp last July.
Under his leadership, Ask, originally known as Ask Jeeves, enjoyed a revival in its audience and market share gains in the highly competitive Web search business over the past year.
Effective May 8, Berkowitz succeeds David Cole, a 20-year Microsoft veteran, who is set to begin a one-year leave of absence, Microsoft said in a statement. He had outlined his plans in a memo to employees in February.
Berkowitz was named the senior vice president of Microsoft’s recently formed Online Business Group, which brings together the operations of Microsoft’s MSN Internet business unit with other consumer businesses within Microsoft.
Microsoft’s Online Business Group competes against rivals such as Google Inc., Yahoo Inc., Time Warner Inc.’s AOL unit and Ask.com. The unit’s financial performance has continued to lag its competitors, most recently reflecting the decision to introduce keyword advertising from Microsoft’s own new AdCenter onto MSN.
Microsoft has been struggling to redefine its online strategy and build an advertising-based business to confront competition from Google, Yahoo and others. The company’s MSN service, which dates from 1994, has gone through a series of sharp strategy shifts as Microsoft has wrestled with whether it is a media company as well as a software vendor.
Most recently, the company decided to revive its effort to build advertising-based businesses as it sees Google give away free software, supported by advertising.
The Online Business Group includes MSN.com, MSNTV and MSN Internet Access programming, advertising sales, business development, and marketing for Live Platforms, MSN and Windows Live, with responsibility for generating greater advertising sales.
Microsoft’s MSN Internet division over all was the second-most-visited network of sites in the United States, with 110 million visitors in February, unchanged from a year earlier, according to comScore. Yahoo, the No. 1 site, increased its audience 4 percent, to 120 million.
Despite a large investment to develop and promote its new search engine, Microsoft’s share of the search market in the United States has plummeted. In March, it had 13 percent of the search market, down from 16 percent a year earlier, according to comScore Networks. Ask Jeeves held its share constant at 6 percent over the same period.
In an e-mail message to employees, Kevin Johnson, the head of the Microsoft division that includes Windows and Internet services, said Mr. Berkowitz would be a senior vice president, succeeding David Cole, who is going on leave in May.
Berkowitz is credited in the industry with orchestrating the turnaround of Ask.com, the Web search and media business acquired by Barry Diller’s conglomerate, IAC/InterActiveCorp, for $1.85 billion 13 months ago.
He propelled Ask Jeeves into the contemporary Web search market with the acquisition of Teoma in 2001. He led the redesign of Ask, made the site easier to use by removing pop-up and banner ads and providing greater context on searches.
Previously, Berkowitz was president and chief operating officer of technology trade publisher IDG Books, where he built a hit consumer brand by expanding the "Dummies" series of books to cover topics ranging from the Web to pet care. “He expanded IDG Books by acquiring publishing brands such as Cliffs Notes, Frommers Travel Guides and Betty Crocker Cookbooks.”
Revenue more than doubled under his leadership.
Mr. Berkowitz, however, will have more limited responsibilities than Mr. Cole had. He will run marketing, sales and business development for MSN and the new Windows Live brand, which is meant to incorporate Microsoft’s mail, instant message and search services. He will not oversee product development. His appointment was first reported on the Web site of The Wall Street Journal.
Development of e-mail and other communications services is run by Blake Irving, and search development by Steven Sinofsky.
Berkowitz will report to Kevin Johnson, co-president of Microsoft’s platforms and services unit, Microsoft said.
An IAC/InterActiveCorp spokeswoman said that for now Mr. Berkowitz’s responsibilities would be assumed by Doug Lebda, its president.