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Business Impact

MySpace-Photobucket

NEW YORK (AP) – A Web site that enables its users to store photos and video for inclusion in MySpace profiles will become a part of the popular online hangout.

MySpace’s parent, News Corp.’s Fox Interactive Media, agreed to acquire Photobucket Inc. just weeks after a public spat in which MySpace partially blocked content from Photobucket. The block was mysteriously lifted after about two weeks, but both sides had been silent on the details of their peacemaking.

Fox also agreed separately to buy Flektor Inc., which offers Web-based tools for creating slideshows, video mash-ups and other interactive presentations.

Financial terms of the two deals were not disclosed.

MySpace users often embed third-party photos, video and other material in their personal profile pages, and sites like Photobucket and Google Inc.’s YouTube make that easy by providing the programming code to cut and paste into MySpace pages.

The practice has made Photobucket one of the leading sites on the Internet, even though relatively few access content directly through its home page.

The Photobucket block, which occurred in April, followed MySpace’s complaints that the hosting service had been encouraging users to incorporate an ad-supported slideshow into their MySpace profiles. MySpace said the sideshow violated its policies banning unauthorized commercial activities.

Photobucket’s chief executive, Alex Welch, responded by accusing MySpace of limiting free expression and treating users as a commodity. He was more conciliatory two weeks later, saying the two had ”established open lines of communication and procedures,” but he made no mention of any negotiations over a sale of his company.

Fox’s agreements to purchase Photobucket and Flektor represent the latest acquisitions of startups by a larger Internet company. In November, Google bought video-sharing site YouTube for $1.76 billion (euro1.31 billion).

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