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The British information search specialist Autonomy recently purchased Interwoven, a U.S. content management provider, for $775 million. With the regulatory environment tighter than ever and this major player making moves in the legal software world, expect to hear a lot more about Autonomy and ECM.

Autonomy is a market leader in enterprise document and content search, with an enviable portfolio of enterprise search companies. It targets the regulation and compliance business, providing archiving services and document retrieval tools often for legal and accounting concerns.

As it happens, this is an excellent time to be in the search and archive business, since the U.S. and European regulatory environments have changed requiring many companies to keep document for longer periods. They also need to be able to reproduce those documents at short notice to satisfy legal requirements. And it's not just traditional documents that need archiving, but also e-mail records and online business transactions. A company that offers loans, for example, needs a record of each loan that was offered to a prospective customer, as well as the exact terms for each.

Because of the changed playing field with online transactions, the government has stepped in with tougher retention regulations, leaving many enterprise companies in need of more robust solutions.

Interwoven's business consists of two main parts. The larger and more profitable side involves managing documents, including providing version management and regulatory compliance. The smaller part involves managing content on customer Web sites, making sure that the sites follow all legal guides. So while there's some overlap between the two companies (both are involved heavily in regulatory matters), Autonomy specializes in search and discovery, while Interwoven's is involved in storage and version management.

One company that's happy to see these giants come together is FatWire, which provides tools to help make sites more interesting, engaging, and effective, and specializes in building online communities. "The focus that Autonomy has had on regulatory and compliance will take Interwoven more in that direction," says FatWire CEO Yogesh Gupta. Autonomy stated that in its rationale for acquiring Interwoven, he says. He adds that Autonomy hopes to save $40 million in synergies with the combined companies, which Gupta predicts will result in more than 300 job losses.

If he's right and Autonomy turns Interwoven fully toward compliance issues for legal and financial companies, then it will turn away from the marketing and customer service part of the business. That's good for FatWire. Interwoven had started to compete with his company, Gupta says, but this acquisition will likely take it away from the business of user experience.

"I think this creates a tremendous opportunity for FatWire," he says, "and it creates a tremendous concern for people who were looking for marketing and customer service solutions."

To save the money that its looking to recoup from this acquisition, Autonomy will likely need to shut down some parts of Interwoven, and it has stated that it wants to target the regulatory side of the existing business. Whether Interwoven's Web site management business will be folded or sold off remains to be seen.

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