Glenn Reynolds drew my attention to this paper on search engines which explores whether competition among search engines will result in optimized search results. I have a problem with the paper almost from its outset because I think the authors are operating under a fundamental misconception. Here’s the sentence that stuck in my craw:
By and large, when a product or service is offered for free, the primary dimension of competition is typically quality.
There are a lot of problems packed into that sentence. Remember, they’re talking about search results.
I believe they have misunderstood what business search engine companies (like Google) are in. They do not provide their service “for free” because they are not in the business of delivering search results to users. They are in the business of delivering prospects to subscribers and they emphatically do not provide that service for free. The practice of giving subscribers priority in search results isn’t an unfortunate byproduct of their searches. That’s the business they’re in.
Once that’s understood, optimization takes a rather different form. It doesn’t involve optimizing the search results but optimizing the delivery of prospects to subscribers and, although I haven’t examined that seriously, I would be willing to bet that process is highly optimized.
All that Google really needs to do with respect to people using it as a search tool is convince enough prospects that their search results or good enough. Since Google’s search results, whatever their actual quality, something I’m not sure whether the tools are available to determine, are the gold standard for search results, the question is circular.
Isn’t there another confounding factor though? There are third-party businesses that make money by seeking to optimize search results for their clients. So Google might wish to optimize search results for its clients, and provide “good enough” search results to actual search engine users, and to do both, they need to confound third-parties.
I’ve not been happy with Google this week since they removed Java from Chrome. Java appears to be used to create digital signature certificates necessary to file documents on numerous government websites. It’s been back to explorer for me.
Generally, I think Google is selectively transparent and unselfish with its product, such that they enjoy a level of trust that others in their industry lack. So, you could say that they are also in the “trust” business.
In that case I have good news for you. Microsoft’s new browser (currently called “Spartan”) and allegedly the one that will ship with Windows 10 will do the same thing.
For years my primary browser has been Opera for a whole laundry list of reasons, most of them obsolete now. It used to be much faster than IE or Firefox, smaller footprint, more secure, had lots of handy functionality not present in other browsers, and so on. Most importantly, it tended to be very standards compliant. Lately I’ve been thinking of changing over to Chrome.
Haven’t read the paper yet, but the other way to compete is with bundling. Windows will come with explorer, so presumably most people will at least give it a try. Every time I need to update Java, I think I have to make sure to unclick a box or it will mess with my toolbar and install Ask.
When a service is free to you, you are the product. Facebook denies this.
Popularity of search engines by market share (July 2014):
Google: 68.69%
Baidu: 17.17%
Yahoo!: 6.74%
Bing: 6.22%
Excite: 0.22%
Ask: 0.13%
AOL: 0.13%
If search engines are a market, then that market is an oligopoly dominated by a single firm.
That list is misleading. Baidu is rarely used outside China. When you re-calculate removing Baidu, the picture is even starker. When you remove Baidu from the picture Google has something like 83% of the market.
It’s only misleading if you don’t know what Baidu is, though I must admit that I only suspected what it is. Backing it out, Google had 82.9% of the rest of the market.
From the DOJ: “As a practical matter, a market share of greater than fifty percent has been necessary for courts to find the existence of monopoly power. If a firm has maintained a market share in excess of two-thirds for a significant period and the firm’s market share is unlikely to be eroded in the near future, the Department believes that such facts ordinarily should establish a rebuttable presumption that the firm possesses monopoly power. The Department is not likely to forgo defining the relevant market or calculating market shares in section 2 monopolization and attempt cases, but will use direct evidence of anticompetitive effects when warranted and will not rely exclusively on market shares in concluding that a firm possesses monopoly power.”
I wonder if the story is that Google obtained a first-mover advantage in a newly emerging field; its competitors lost out because of a reliance on bundling or relationships with IPs; and Google does not charge monopoly rates which discourages competition.