Tech 101
The Search Wars
By Frank Ferrara
Gather ‘round, faithful readers, because do we have a story for you.
It is a tale worthy of Charles Dickens, or at least of Danielle Steele. It
is a tale rife with chicanery, uneasy alliances, (virtual) gunpoint diplomacy,
and careful strategic maneuvering.
In the last decade or so, the Internet
has evolved from technical curiosity long on potential
but short on utility into a fully realized tool that
has
become a nearly ubiquitous presence in our lives. During this time, literally
thousands of companies have attempted to do business using the Internet.
Some have been successful—a WebMD here, a Priceline.com there—while
many others collapsed with startling speed (such as a certain pet supply retailer
featuring a loveable sock puppet mascot). Amid the chaos, four companies have
come to dominate the landscape and are jockeying for supremacy in the Internet
marketplace. Whichever player becomes the dominant brand in this arena will
earn a spot on countless desktops, along with untold millions in additional
revenue. This article will explain how Google, Yahoo, MSN.com, and Amazon came
to be where they are today, and how they are positioning themselves for a no-holds-barred
brawl for the hearts (and keyboards) of consumers.
Our story begins in Stanford, California, in February of 1994, when David Filo
and Jerry Yang—a pair of PhD candidates in electrical engineering—created
an online list of their favorite websites. After a while, the list became long
and unwieldy, so Filo and Yang divided it into helpful categories. The initial
listing was entitled “Jerry’s Guide to the Web,” but within
a year that name was changed to the name by which it became famous: Yahoo!
Over the years (visit mdng.com for
the online version of this article, which features an extensive timeline of
key events described here), Yahoo gradually evolved. The directory serving
as the basis of the service, compiled by human beings and usually featuring
brief descriptions of indexed sites, was adequate for a while. However, as
users began expecting more comprehensive coverage of the ever-growing Internet,
Yahoo’s creators wished to enable automated searches for material of
interest.
Fortunately, an ideal solution was at hand, and, in fact, had
been created on the very same Stanford University campus. In the
summer of 1995, Larry Page and Sergey Brin met when the latter
was assigned to give the former a tour of the school; they shared
a common interest in Internet search technology. Early the next
year, the two began collaborating and sought to depart from the
simple keyword-search model favored by most search engines of the
day, which scanned Web pages for instances of a given word or phrase
and presented them ranked according to how frequently that word
or phrase appeared. Brin and Page developed an utterly unique search
paradigm. They initially called it “Backrub,” because
it analyzed “back links”—links pointing to a
given site from other sites—in creating its site rankings.
Essentially, Backrub allowed the searcher to use the entire Internet
as a sort of quality-control; if enough Web developers thought
enough of Site X to include a link to it on their own page, the
ranking of Site X would increase. For an exhaustive explanation
of the technology behind Backrub (later renamed Google), see Page
and Brin’s 1998 paper at www-db.stanford.edu/~backrub/google.html.
At first, the power of Google lay in its ability to improve content
filtration. As Brin and Page wrote in their 1998 paper, “the
completeness of the index is not the only factor in the quality
of search results. ‘Junk results’ often wash out any
results that a user is interested in.” Google’s “PageRank” system
ameliorated this problem by creating an objective way to judge
the value of each site, and thereby separate the junk from the
useful information.
By the spring of 2000, Google had become one of the most popular
search engines among a host of competitors and was answering more
than 18 million queries every day. A partnership between Yahoo
and Google seemed inevitable, and on June 26, 2000, it became official;
Google signed on to provide search services as a complement to
Yahoo’s existing directory of sites.
In the four years plus since the Google-Yahoo partnership was announced, Google
has become the undisputed king of the search engines, barely even visible from
second place. The University of Michigan’s American Customer Satisfaction
Index gave the service a rating of 82 on its search service; the next highest
rating went to Ask Jeeves (www.ask.com)
at 71. Today, Google answers some 200 million queries every day, and indexes
approximately 880 million images and four billion websites. The company has
established lucrative relationships with other big names, providing search
services to AOL and Netscape, among others. In the process, Google has made
a number of people extremely rich, deriving its considerable income partly
from partnerships and partly from the 150,000+ companies that purchase advertising
from the company each year.
Along the way, Google has remained admirably dedicated to the
continuous improvement of its product. The current Google interface
is incredibly clean and easy-to-use, and search results are generated
more-or-less instantly. The technology behind the engine has continued
to evolve and still produces the most relevant results in the industry;
meanwhile, the placement in search results is never sold, lest
the quality of those results be diminished. Advertising is unobtrusive,
limited to pages where it is relevant and is never contained in
pop-up windows. At the heart of these qualities is a corporate
philosophy emphasizing service to the user; the informal corporate
motto is “Don’t be evil” (www.google.com/governance/conduct.html).
All in all, the future at Google looks bright, although it’s
hard to say where the company might be headed, because, in its
own Python-esque words, “We don’t talk much about what
lies ahead, because we believe one of our chief competitive advantages
is surprise. Surprise and innovation. Our two chief competitive
advantages are surprise, innovation, and an almost fanatical devotion
to our users.” However, Google did make its IPO in late August,
after a bit of controversy; the stock opened at $100/share and
stood at around $106 in early September (http://finance.yahoo.com/q?s=GOOG).
Yahoo (www.yahoo.com;
YHOO), has also emerged as one of the most heavily trafficked sites
online. Nearly 237 million users will visit Yahoo this month, representing
25 nations and 13 languages. Today’s Yahoo is a Web portal,
a single site that affords access to online resources of a wide
variety of types. Yahoo has its own free mail service, hosts free
Internet space for would-be Web designers through Geocities (which
it purchased in 1999), provides a huge amount of news, and maintains
an online music store that was recently named the number one online
destination for this purpose (http://biz.yahoo.com/bw/040824/245167_1.html).
Yahoo is currently the number one portal in the business world,
reaching more than 70% of corporate desktops, and also leads its
competition in traffic, advertising, and household reach.
In February of 2004, Yahoo rolled out its own proprietary search technology,
casting aside Google’s search results. Abruptly, these two companies,
which had enjoyed a symbiotic and mutually profitable partnership for nearly
four years, found themselves squaring off in direct competition.
As long as Yahoo used Google’s search results to power
its own search engine, Yahoo had limited control over its own listings.
By reclaiming control over its own searches, Yahoo is now able
to sell preferred positioning (remember, Google does not do this)
and otherwise use search as an integrated component of its product
line as a whole. “If Yahoo can keep those people on its portal
right there when they search, their opportunities for driving revenue
should be plentiful,” said Piper Jaffray analyst Safa Rashtchy
to the E-Commerce Times. “They’ve got an advantage
in terms of eyeballs and an upper hand because of existing relationships
with advertisers” (www.ecommercetimes.com/story/32890.html).
Yahoo does have several advantages over Google, including the
fact that the company indexes the entire page for every site it
searches—up to 500KB, far more than Google’s 101KB
limit. Further, the actual results returned by a search on Yahoo’s
new engine will be similar to those returned by Google (for common
queries, at least; to test the two engines against one another
on any query, visit www.langreiter.com/exec/yahoo-vs-google.html).
All the same, in terms of pure searching, Google will be nearly
impossible to beat. Google recently boasted an increase in the
size of its index to more than six billion pages, far outstripping
Yahoo’s index. More importantly, Google already has a reputation
for quality search results, a reputation Yahoo has yet to develop.
However, most Web surfers would prefer to conduct searches, read
news, check box scores, and so on from one central page; generally,
consumers will accept slightly inferior search results, for example,
in exchange for a central location where all of their online activities
can be pursued efficiently. As a portal, Yahoo enjoys a distinct
advantage in this area, an advantage it is attempting to press
by incorporating other resources into its search engine. For example,
enter a search for “Yankees scores” into the Yahoo
search engine, and you will be able to view recent box scores through
Yahoo! Sports in addition to the Yankees home page. Yahoo will
also allow users who complete a free registration to receive search
results filtered according to their preferences and geographic
locations. According to Jeff Weiner, senior VP at Yahoo, “we
are trying to integrate our content to make searches easier and
faster and smarter.”
Meanwhile, as Yahoo and Google skirmish, a third party is preparing
to enter the fracas: a controversial kajillionaire determined to
prove that no competitive advantage can’t be overcome with
massive amounts of money. No, it’s not George Steinbrenner.
We refer instead to Bill Gates, the founder of Microsoft, whose
MSN portal (www.msn.com)
has been providing modest competition for Yahoo for several years.
Gates has now fixed his attention on the search engine market,
with Microsoft investing in search on what one representative called
an “immense scale.” Let us be clear: when a Microsoft
employee uses the phrase “immense scale,” the time
has come to become afraid. According to Beta News, MSN’s
news search engine will be “algorithmic and engineered to
make relevant search results the number one priority” (www.betanews.com/article/1077273127).
MSN.com began life on October 11, 1996. The Microsoft Network
(MSN), Gates’ subscription-based Internet-access solution,
was engaged in a brisk competition with other Internet service
providers, notably America Online (AOL). To give MSN subscribers
added benefit, Microsoft created MSN.com, a site featuring a variety
of content related to television, movies, and other forms of entertainment.
The original MSN.com was located behind a firewall, available only
to those who paid MSN’s $19.95/year subscription fee (although
consumers using a different ISP who wanted to view Microsoft’s
proprietary content could pay a separate fee to do so). However,
as time passed, and MSN subscriptions began to wane, Gates and
company began experimenting with a new model. Little by little,
Microsoft began moving content out from behind its firewall, separating
the MSN.com portal from its Internet access service arm. Within
a few years, “Microsoft was banking hard on the MSN portal
to be the cornerstone of its Web content strategy,” says
CNET (http://msnbc-cnet.com.com/2100-1023_3-224145.html).
However, “The company still faces an uphill battle against
established leaders that have maintained a stronghold of brand
awareness and loyal users while Microsoft has been working out
the bugs of its Internet efforts,” wrote Jim Hu at the time.
To address this challenge, Microsoft has adopted a strategy best
characterized as “Anything You Can Do, I Can Do Bigger.” While
Yahoo and Google developed partnerships with small companies and
one another, Microsoft teamed its Web efforts with those of ESPN,
NBC, and even Disney Corp. When Google introduced Gmail and offered
free e-mail with one gigabyte of storage, Microsoft responded by
announcing that Hotmail—its own free e-mail service, acquired
in January 1998—would henceforth offer two gigabytes. On
August 22 of this year, MSN announced a powerful new service available
through MSN.com that would deliver personalized news to the user.
This service is similar in feel and function to Google’s
automated news program; it automatically scans information from
a variety of sources (Google scans 4,500 online sources; Microsoft
scans 4,800—anything you can do...) and groups stories about
the same subject together. MSN’s news program also tracks
what the user reads and automatically customizes the news it delivers
in the future to match his or her demonstrated preferences (http://newsbot.msnbc.msn.com).
Amidst the maneuverings of Yahoo, Google, and MSN, the fourth contender in
this field has remained as inconspicuous as is possible when one is a giant
multinational corporation handling huge streams of money on a daily basis.
In 1994, a computer scientist with a job on Wall Street noticed that, although
the Internet was growing at a rate of nearly 2,300% every year, there was still
no significant commerce transacted through the medium. After studying the mail
order business, he found that book sales were impractical using mail order,
because the catalogs were too large to be sent to consumers. Accordingly, he
developed an idea: he would collect inventory lists from major book wholesalers
and compile them in a single Internet location, where buyers could come, search
the catalog (which could be as large as necessary thanks to the limitless database
space available online), and make a purchase. His Wall Street employers weren’t
interested in proceeding with the idea, so he drove to Seattle to found his
own dotcom. The name of this entrepreneur is Jeffrey Bezos; he called his company “Amazon.”
Amazon.com debuted with a mostly text, mostly gray website in
July 1995. “Even though it was the dark ages in terms of
what everybody was doing,” said early investor Tom Alberg, “it
worked and it worked pretty well.” Within four months of
its inception, Amazon was selling more than 100 books each day.
The site was particularly successful because of an additional innovation:
Amazon allowed readers to submit reviews of books listed in its
catalog, and discuss those reviews, allowing users to research
a prospective purchase and make that purchase in the same place.
These features also created an online sense of community that kept
buyers returning.
Amazon grew at a startling pace, going public in 1997 and branching
out into the sale of music CDs and movie videos a year later. By
Christmas of the following year, Amazon had added toys, electronics,
software, video games, and home improvement products to its catalog,
and articulated its overarching strategy: “Get Big Fast.” The
company began to expand its inventory still further by acting as
a middleman between major retailers and the buyer. In 2002 alone,
Amazon sold nearly $4 billion in merchandise and posted an annual
profit for the first time the following year. Jeffrey Bezos’s
parents, who had contributed $300,000 to his original venture,
taking the funds from their life savings, are now billionaires.
In recent months, Amazon has entered the
fray described in the first part of this article by creating
its own search engine, designed
especially for e-commerce; this search engine, called “A9,” may
be found online at http://a9.com/-/search/home.jsp.
The other participants have already begun to address this new competition.
Froogle (www.froogle.com),
a new offering from Google, allows users to pursue “smart
shopping” by searching for products available for purchase
across the Internet.
And so, the battle is joined. According to Larry Freed, CEO of ForeSee
Results, while Google has an enormous lead over other search engines,
multipurpose sites
will challenge it for overall supremacy. “These other players—MSN
and Yahoo and Amazon—are after Google and will compete with it in the
search space.” Freed maintains that the sharp division between search
engines, portals, and shopping sites may soon be a thing of the past; even
as Amazon, Yahoo, and MSN develop increasingly powerful search technology, “Google’s
saying, ‘[we’ll] sell products with Froogle, [we’ll] have
e-mail that will compete with MSN’s Hotmail, we’ll have a news
service that goes up against portals like Yahoo.” While this situation,
with its combination
of services and functions, evolving partnerships, and constant one-upmanship,
may appear rife with confusion, many observers agree that consumers will benefit
when all is said and done. And who knows? While these titans are jockeying
for position, perhaps somewhere in a college dormroom two computer science
majors are just beginning to formulate the ideas that will spark a new revolution
in Internet search technology.
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