- Perion (PERI -10.7%) and AVG (AVG -12.2%), both of whom depend heavily on search toolbar deals to monetize freely-distributed apps/services, are selling off after Israeli translation software vendor Babylon announced Google (GOOG -0.4%) is ending a search toolbar deal. Babylon shares finished down 62% in Tel Aviv.
- The toolbars bundled by companies such as Babylon, Perion, and AVG have often been criticized as "foistware" that users wind up unintentionally installing, and sometimes have trouble removing. However, Babylon has been viewed as a worse offender than many.
- Google, meanwhile, has been willing to sacrifice ad revenue this year by enforcing stricter policy terms, with the goal of creating a better user experience. Thanks to policy changes, Google's ad network revenue rose only 1% Y/Y in Q3 and 7% in Q2; that compares with 22% and 18% growth, respectively, for revenue coming from Google sites.
- Chardan is defending Perion: The firm points out both Perion and reverse merger partner Conduit have two-year deals in place with Google, and that Perion also has a 4-year deal (inked earlier this year) with Yahoo. Chardan also declares Perion hasn't engaged in the "questionable practices" Babylon took part in, and has conducted better product testing/optimization.