Adobe Systems Inc. said on Wednesday Google Inc. had agreed to pay the multimedia software maker a significant amount to distribute the Web search leader's software.
Adobe said it had begun distributing Google search software to new users of Adobe's Shockwave multimedia playback software, which plays interactive programs such as games, entertainment, business presentations, and advertisements in a Web browser.
On its Web site, Adobe confirmed the Google deal displaces a previous agreement it had with rival Yahoo Inc. to deliver Yahoo search software when users download new versions of Shockwave. That deal was first announced in October, 2004.
This, and similar recent deals, to pre-install Google software marks a change of course for the icon of Web search, which historically has incurred little upfront cost to attract customers to its services. Instead, Google has shared a portion of ad revenue with partners who drive traffic its way.
The deal calls for users to receive a free version of the Google Toolbar Web search software when they download Adobe's Shockwave player for use with an Internet Explorer browser.
We're excited to partner with Adobe to make these features available to their users, and look forward to finding other ways to work together, Google said in a statement.
Shares of Google rose 3.9 percent, or $14.96 to close at $402.13 on Nasdaq ahead of news of the Adobe deal -- the first time Google has closed above $400 since world stock markets began a sharp slide in mid-May. In extended hours trade after Adobe announced the deal, Google shares edged up to $402.50.
The rise came after data from Web measurement firm comScore Networks showed Google made further gains in the U.S. search market in May. Its closest rivals, Yahoo and Microsoft held steady, avoiding the market share losses they suffered in recent months, as smaller players lost ground.
WARDING OFF MICROSOFT
Google is racing to do deals with software and computer makers to ensure convenient access to its search software ahead of the arrival of Vista, the new version of the Windows operating system, due out over the course of the coming year.
Microsoft is set to offer the company's own Web search system as a default setting in Vista, potentially undermining Google's dominance of the consumer Web search market if Google does not find partners such as Adobe to use its search system.
The popularity and reach of Adobe technology gives Google even broader exposure to a growing base of consumers, Adobe President and COO Shantanu Narayen said in a statement.
The Shockwave player runs on an estimated 55 percent of Internet-ready desktop computers, Adobe said.
We expect the agreement to represent significant revenue to Adobe over a period of years, Narayen said.
Financial terms of the deal were not disclosed.
Last month, Google struck a toolbar partnership with top computer maker Dell Inc., which analysts have speculated will involve big upfront payments to win prominent placement for Google's Web search and other services on Dell PCs. Google has declined to comment on the payment structure.
ComScore said Google's share of the U.S. market last month grew to 44.1 percent, up a percentage point over April, continuing a surge that has added 6.6 percentage points of market share during the last year.
Yahoo sites attracted 27.9 percent of U.S. Internet searches in May, while Microsoft sites handled 12.9 percent.