Tuesday, July 14, 2020

The Search Engine Space is Set for a Third Wave

Search Engine

With consumer trust shaken, new search engines are rising to tackle the giants

 

By Nayantara Bhat

 

While Google now dominates much of our daily Internet explorations through searches and targeted ads, some will remember early entrants in the search engine space. In the late 1990s and early 2000s, Yahoo, AltaVista, and Excite were competing for users. But soon enough, the dot-com bubble burst, and most of these erstwhile-popular search engines went to ground. 

 

Yahoo–one of the few remaining survivors of this extinction event–recovered from the blow, but all the while Google was busy developing its technology and garnering a user base. In the intervening years, the company rose to become a global titan, with a whopping 84.3% of the global share as of January 2020 (NetMarketShare.com). Yahoo faded from mainstream usage and was eventually acquired by Verizon in 2017.

 

Other search engines have briefly made a bid for a spot in the market, but such attempts have almost consistently fizzled. Goo was the first search platform out of Japan, but eventually gave up its algorithm and switched to Google Japan’s engine. Others were swallowed up in acquisitions; Apture, a startup founded in 2007, was acquired by Google just a year after it launched a window-in-window search function called Apture Highlights (TechCrunch).  

 

However, this trend appears to be changing. Alternative search engines like DuckDuckGo and Qwant–both established around a decade ago–have been picking up traction in the wake of numerous privacy scandals that left users reeling and regulators scrambling to implement data privacy legislation. Similarly, accusations of results bias and a series of paid-placement scandals have diverted some users of Chinese search giant Baidu to its competitors ByteDance and Qihoo (Nikkei Asian Review).

 

DuckDuckGo, Qwant, and OneSearch–a new offering launched in January 2020 by Verizon and powered by Microsoft Bing–are all competing in the privacy arena, where they promise users a search experience that is free of targeted ads and refrains from storing any personal user data. On another front are services like Ekoru and Ecosia, which claim to support eco-friendly initiatives by donating money with every search. 

 

The resurgence of interest in building search engine alternatives to Google speaks to the view that users’ priorities have changed. Still, it remains to be seen whether users will opt for privacy or good causes over reliable results from the only search engine they’ve ever used. 

 

Privacy and regulation: Key market opportunities 

 

As Big Tech giants like Google, Microsoft, and Amazon scaled, they established what came to be known as a ‘kill-zone’ around them. Venture capitalists began to shy away from funding startups in the same industries as these companies; VC Mike Driscoll said in a 2018 Economist story that annual developer conferences “send shock waves of fear through entrepreneurs.”

 

However, increasing regulation around privacy has given startups in the search space a new lease of life. OMERS Ventures, a Toronto-based VC firm, added capital to DuckDuckGo in 2018. 

 

“[There] is a real market and growth opportunity in a new category of search: privacy and anonymity,” says OMERS Managing Partner Damien Steel. 

 

He adds that the estimated worldwide segmented market size for privacy-centric search engines was approximately US$8.6 billion in 2017, and continues to grow at a CAGR of 16.6%. 

 

Global marketing agency Merkle’s Digital Marketing Report Q4 2019 found that organic search visits via Google fell 11% year-on-year in the last quarter of 2019, with Yahoo and Bing experiencing steeper declines. Meanwhile, DuckDuckGo achieved 44% YoY growth in the same period. One of the fastest-growing services in terms of user base, DuckDuckGo has also launched a mobile browser and a desktop browser extension in addition to its primary search engine product.

 

“Search engines now even track offline purchases, amplifying the lack of privacy amongst consumers. However, this no longer reflects the interests of search engine users,” says Steel. This disconnect in itself seems to be a significant enough indicator for investors like OMERS to renew their interest in the search space.

Qwant: A European case study

 

In the wake of the Cambridge Analytica exposé and subsequent data-misuse incidents, privacy is an area of increasing concern–particularly in Europe. The European Union has reacted by introducing sweeping reforms, including the General Data Protection Regulation (GDPR). In January, the French government announced a plan to make Paris-based search engine Qwant the default on all government workstations. 

 

Qwant launched a live beta of its search engine in 2013, which claims to be free of targeted ads and personalized search results. The search is currently powered by Microsoft Bing as Qwant works to develop its own engine, and results pages display not only links, but associated news articles and Tweets for added context. 

 

“Search engines are a very important entry point for users going on the Internet,” says Qwant Vice President of Advocacy Tristan Nitot. “How come Europe has left this to foreign companies? Europe is about to become a digital colony, and it’s something that we should avoid.”

 

However, challenging a market leader–especially one like Google–doesn’t come without its hurdles. 

 

“[Google] is well-established, and their product is apparently free,” says Nitot. “We need to deliver a competitive offering while being better on the privacy side. On top of this, we need to operate at Web-scale, which is really huge. We’re talking about billions of Web pages and dozens of billions of links between pages.”

 

Nitot admits that what Qwant is trying to do in Europe is both challenging and risky, but believes privacy and the integrity of European democracy are too important to forgo. The company is counting on increased privacy awareness and its strengths in European languages and markets to slowly sway users to its platform. 

 

EU antitrust law–potentially a misfire?

 

From March 1, 2020, users setting up new Android devices in the EU were offered a choice between four different default search engines. Following a record US$5 billion antitrust fine imposed by the EU in 2018, Google–which developed the Android system–introduced the feature to comply with regulatory demands. The options are selected through an auction system, where search engines bid to be included.

 

While this move was met with criticism from other players in the industry–essentially allowing Google to make money off its competition–plenty of indicators seemed to point to this eventuality. As Politico reported in early 2019, all of the EU’s attempts to restore competition in the market up until that point were somehow twisted into opportunities for the company to make more money. 

 

In a strikingly similar case, where Google was fined for bias toward its comparison shopping service, the company allowed others that offer the same service to pay for greater visibility. Not only was this technically legal under the given stipulations, but Google ended up making money from what was intended as a punitive measure.

 

Early reactions to the choice screen seem to indicate that those who have paid to be included have another bone to pick with Google. DuckDuckGo, which along with Info.com and Google Chrome are the only three search options to be listed in all 31 countries in the bloc, has raised concerns that limited information on the choice screen may actually push users toward Chrome (Bloomberg). 

 

More time is needed to gauge the accuracy of this prediction–if a conclusion can even be drawn. Many who choose Chrome may do so simply out of preference and are indifferent to the entire privacy debate. After all, Google has had the decades and resources to optimize their search engine and has relentlessly pursued opportunities for improvement. 

 

The acquisition of MetaWeb in 2010, for instance, provided the technology and database software behind the infobox that appears when a user looks up a person, film, or book, with snippets of relevant information sourced from multiple sites.

 

Tellingly, Google still captured 92% of U.S. search traffic in the last quarter of 2019. DuckDuckGo’s 47% growth in organic search visits–while commendable–was a drop from a 68% growth rate in the previous quarter (Merkle). 

 

Investors, the founders of search engine startups, and the community of privacy advocates all believe that the age of more responsible data regulation and educated consumption is upon us. The elephant in the room, however, is the possibility that users may strongly value privacy, but may not be willing to relinquish familiar interfaces and branding for it. As regulation evolves, the next few years are likely to define this space–but it’s unclear whether it will lead to fairer competition or a new monopolist. 

 

Nayantara is Jumpstart’s Editorial Associate. 

 

This story was originally published in Jumpstart Issue 29: Back to Basics as New Challengers in the Search Engine Space.

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