In grim news for the Israeli translation software company Babylon, officials reported Wednesday morning that Google will not be renewing its contract with the firm.
“This will have a substantial effect on the company’s revenue and profits,” a company spokesman said. Following the announcement Babylon's stock plummeted by 62% on the day's trading. The news comes at a time when Babylon’s contract with Yahoo has also been under strain.
Babylon's stock price had already been suffering since the company announced last week that Yahoo, which provided 32% of Babylon's revenue during the second quarter, had found faults in the way its own agreement was being carried out.
The contract between Babylon and Google will be ending on November 30. Under the agreement Babylon has featured a Google search bar in the toolbar it gives its customers. A large chunk of its revenue comes from the royalties Google has been paying for every search. During the second quarter, Babylon’s contract with Google generated roughly 43% of its total revenue of $45 million.
Babylon officials said that Google decided to end the contract because many users of its browser, Google Chrome, complained that installing Babylon’s toolbar hurt their user experience, raising concerns at Google.
Google officials said that they might reconsider the decision sometime in 2014.
"We are still assessing the situation and examining the implications and the company's operation alternatives," Babylon's CEO Alon
Carmeli said in a statement to the Tel Aviv Stock Exchange.