"You've got to have competition in the word search business," Diller told the audience at the Goldman Sachs Internet Conference yesterday. "I don't want a world where there's one ad system."

Ask.com now represents about 10% of Google's syndicated ad business, Diller said, and a renewal of the contract could be contingent on Ask getting more queries rather than on financial aspects. "Whomever handles our ads must help us get more distribution," he stated, adding that "Google also knows they need to have healthy front-page competitors [as distinguished from the backend AdSense biz, for example]."

Asked if Google might object to helping a competitor increase market share, Diller responded to laughter: "If you have a 55% share, a few little points here and there aren't going to kill you."

On other Ask.com matters, Diller said the upcoming Ask X will be better than iGoogle in vertical searches and will "absolutely change the game," that the search engine's demo continues to age following the changeover from research-centric Ask Jeeves to a more general interest and commerce model; and that he doesn't want to see display ads on search sites.

Diller touted IAC's internal Ad Solutions group, which he said is working to blend advertising into the company's wide range of properties--and he expects advertising to account for a third of all IAC revenues in the future.

Diller, a renowned former TV network executive, also said that IAC will soon announce a "large significant investment in a television/Internet program company"--saying that with the coming growth in Internet television, 'it would be crazy for us not to [use] our residual expertise."

This news story is important. I recommend that everyone read it.