Paul Allen’s Companies Partnering Up

It seemed like only a matter of time before the various companies that have Microsoft co-founder Paul Allen as an investor started signing deals. One such deal was announced on Thursday. Mercata, a new e-commerce company that helps consumers get together as a group to receive discounts on merchandise, announced that it has partnered with online network Go2Net (Nasdaq: GNET) to create a new category on Go2Net’s shopping channel.

The category is called Group Buying. Customers can use this new category to drive down prices on products by participating in the buying process with other customers who are interested in the same items.

Product categories include electronics, home and kitchen, lawn and garden, sports and fitness, tools and gifts. In addition to offering the new category, Go2Net will advertise Mercata throughout its network of sites, which includes search engine MetaCrawler, financial discussion site Silicon Investor and business Web hosting service Hypermart.

How Mercata Works

Mercata has developed a new way of buying items on the Internet called the PowerBuy. A PowerBuy is a limited-time buying opportunity, during which the price of product drops over a period of several hours to several days. The more consumers participate in the PowerBuy, the lower the prices get.

“We’re pleased to introduce users of the Go2Net Network to the Mercata shopping experience, which leverages the power of the Internet to get large groups of buyers together in a way that simply can’t be accomplished offline,” said John Keister, president of Go2Net. “Go2Net and Mercata both have close working ties with Paul Allen and (Allen’s investment firm) Vulcan Ventures, Inc., so this arrangement was a natural fit.

Allen Expands Internet Empire

On March 15, Allen announced a deal worth about $750 million that would give him a majority stake of Go2Net. Allen now seems intent on turning the Go2Net Network into a major portal site. Allen continues to add to his Internet holdings. On Thursday, Island ECN, the nation’s second-largest electronic trading network, announced that it had received a $25 million investment from Allen — for a 12 percent stake in the company.

Island will use the investment to fund its expanding infrastructure needs, as well as help pay for the costs associated with the company’s planned filing to become a national securities exchange. Less than three weeks earlier, Allen invested in Island’s parent company, online broker Datek.

Stock Impact

It’s unclear what Allen’s plans are for all of his Internet holdings, but it’s fairly obvious that most of them will end up having a major presence on the Go2Net Network. On a down day on Wall Street Thursday, shares of Go2Net were strong, climbing 3-15/16 to 111-13/16.