Who has all the answers?
I think you would agree that searching is the primary way that everyone uses to navigate the
Internet in order to find things, and to answer their questions. This, of course, is why Web
searching, or surfing, plays such a crucial role in most of our lives now. At the last count the
number of Web pages indexed by Google was around 15 billion. And yet evermore content is
always in the process of being created. No fewer than 231 million new websites appeared last year,
so the necessity of using a search engine in order to find any one of them isn’t likely to disappear
soon. In the exciting early years of the Web there were dozens of search engines available to visit,
and one got wildly different search results. But sadly even brilliant search engines like: Infoseek,
AltaVista, Inktomi, AlltheWeb or Northern Light became extinct long ago and we are left the poorer
with their demise.
What is surprising is that here in the Western world, where we’re supposedly secure in an
established culture that overtly prides itself on its free speech, we now all, inadvertently, end up
being directed down the same narrow track when it comes to what is presented when we search
the Internet. Unfortunately the American Constitution was written long before the invention of the
World Wide Web so, as new rules for controlling navigation choices are being created, it is the
European Union, not America, which is setting the lead in legislation. A winner takes all
environment like the Web quickly leads to the production of oligopolies, duopolies and, eventually,
monopolies due to the miracles of the network effect. (Economists, just to be different, refer to this
phenomena as network externalities). But notwithstanding all the well-meant legislation, nowadays
when we search the Web, our search is limited by a duopoly that could very easily become a
I’ve taken the data for this month’s chart from the Ofcom International Communications Market
Report that was released in December. Have a look and you can begin to see what the problem is.
What really struck me was that Ofcom doesn’t seem to have realised that people who search the
Web using Yahoo! actually end up using Bing. Only the layout of the results will differ, the outcome
will be identical. The public announcement that Microsoft’s Bing would take over producing results
for Yahoo! searches was made way back in 2009, and the transition was finally completed by 2012.
If you want to see the visual difference in the layouts just compare the two results by typing the
words: “whale meat” into Bing and Yahoo!. In my chart I’ve recreated Ofcom’s graph and combined
the number of people using Bing and Yahoo into one column, which is where they should be,
instead of keeping them separate. Doing this clearly illustrates just how much of searching online
has become a two-horse race between Microsoft’s Bing and Google. However, you can see that in
countries like Germany and Italy, the majority of people are already helping to establish a Google
monopoly. This is a very depressing state of affairs as all we Internet users, young and old,
ignorant or erudite, are actually being forced to use just two search engines.
But it gets worse: both Google and Bing have “autocomplete” which can be useful, and may appear
to be very efficient, but really means that we often don’t get the chance to type in exactly what we
are searching for. Instead we end up clicking on a half-completed phrase that has been suggested
by its popularity. Thus, rather than being allowed to follow our own individual preferences, we are
merged with the herd in seeing only the most prevalent answer. This leads to a close level of
uniformity and dumbs down all the information we receive.
Now consider this: Most of us are under the innocent delusion that Google’s search results are
objectively gleaned from billions of possibilities, but it just isn’t so. Despite our vastly disparate
curiosity and concerns, we are all funnelled along the same road, so we perpetually end up by
visiting the same restricted data subset of the Web. This is shocking when you consider that on
average less than 2% of everyone using Google will bother to click on the second page of their
search results. So the overwhelming majority of Internet searchers by default opt to limit their
choices to the first 10 results that appear on the page. Are they aware of this? Only 10 results?
And remember that this comparatively minute number of findings will naturally include the biased
“paid-for advertising” results which raises product and service-led aspects of any subject searched
to the top of the listings.
Many of us may think that the Great God Google’s search engine is more efficient at finding stuff
(and in its highly limited way, it may be) but now there is little opportunity to find genuine variety
or originality in the results, and virtually no chance for the intellectually stimulating adventure of
serendipity. What kind of mind would value a library where every subject was represented by just
one book or viewpoint? (There is a simple way round this, and as you’re reading this column the
chances are that you already do it, if not: you can alter Google’s search settings so you can view 100
results per page. This will give you the option of scanning down to get a much richer idea of the
possible results). This closure of selection might not appear to affect you if you use Siri voice
search on an Apple computer, tablet, or iPhone, but as of last year, it does. The search engine
results that Siri will deliver, all come from Bing.
The reason that search engines have dwindled to a duopoly is that to fund a search engine today
takes very deep pockets indeed. One early decision that Satya Nadella, the new CEO of Microsoft,
will have to make is whether to continue with the development of Bing. Microsoft’s Online
Advertising business and Bing together make up Microsoft’s Online Services Division. Online
advertising and Bing are naturally grouped together for accounting purposes because, of course,
search engines are funded by advertising, and paid for search advertising is the most profitable
form of all online advertising. The real difficulty for Satya Nadella is that, as a Microsoft company
veteran who used to be in charge of Bing, he knows full well that up to now Microsoft has never
made any money from Bing and online advertising. The losses run between $1 billion in a good
year and $2 billion or more in a bad year. From 2008, when Microsoft bought Powerset’s search
engine, and rebranded its own MSN search to become Bing, the losses in these five years have
amounted to nearly $17 billion (to be precise $16,648 million).
Compare this situation with Google’s almost $44 billion of revenue earned in just one year, 2012,
from online advertising alone. Google’s huge advertising profit is used to fund a myriad of services
as well as the development of Chrome and Android operating systems. Not forgetting QuickOffice,
Google’s increasingly capable competitor to Microsoft’s Office cash cow. QuickOffice works online
or offline if you’re running Chrome and, if you own an Android device and use Google Drive disk
storage, then QuickOffice is the best way to edit Microsoft Office documents on the move.
Although not yet perfect, I would argue using QuickOffice is a much better experience than trying
to edit Office documents on a Windows phone. So Google is attacking Microsoft on all fronts, and
anything that affects Microsoft Office revenue will mean less money available for developing Bing.
In his last annual report before he announced he was stepping down, Steve Ballmer described the
reason for Microsoft possessing a search engine: “our consumer services such as
Bing….differentiate our (hardware) devices.” Microsoft is making a lot of money selling Office
software to businesses, large and small, on a subscription basis which is how the company has
managed to fund Bing’s losses so far. Of course, Bing’s popularity is boosted artificially by the fact
that when one clicks on search on any computer running Microsoft's Windows 8.1 (and some of the
core Windows' apps) it defaults to Bing. You may choose to click on the “search everywhere”
button, but it's always Bing.
Be that as it may, will Nadella still take a pro-Bing view when Ballmer leaves? The expense of
running Bing will only increase with time as a search engine today is more than just Web
navigation, it’s also real-world navigation in the form of mapping. Maps are exceedingly expensive
to produce, one can only automate so much and then real people have to draw and edit to improve
the map’s accuracy. Here again Google has the clear edge over Microsoft and Apple with its
mapping software. You can see how Google produces its maps by watching this video. It’s not at
all surprising that as the popularity of GPS-enabled smartphones has grown, mapping has turned
out to be a widely used and very important service, as well as an increasingly significant source of
revenue. So you can appreciate that as Microsoft’s Bing search and mapping prowess falls ever
further behind Google’s alternatives Ballmer’s “consumer services” actually become disadvantages.
That heralded Microsoft “difference” is fast becoming an inferior experience that may well deter
people buying the hardware. Ballmer’s justification for pouring money into supporting Bing and
online advertising gets weaker by the day.
At the moment a similar number of people in the U.S. and Japan use both Bing and Google to
search the Web, note the chart shows “active reach” so you can see who uses Google and who also
uses Bing. In the U.S. there is nearly a 50% overlap, so roughly half the American Internet
population use both search engines to some extent. Bing appears to be doing well in Japan, but
this isn’t due to anything Microsoft’s Bing has done better than Google, it’s because of Yahoo!’s local
history in Japan: the Japanese Internet and Telecommunications company, Softbank, is a majority
shareholder in Yahoo! If Microsoft/Bing hadn’t done a deal with Yahoo! then its U.S. and Japanese
market share of search would be half what it is today. If this were the case then Nadella would be
far more likely to staunch the loss of billions of dollars by stopping Bing’s development. As it is I
think the losses are likely continue – Nadella is only the third boss that Microsoft has had, he’s a
dyed-in-the-wool company man, and he will have to be exceptionally courageous to offload Bing.
On the other hand this is the kind of dramatic action a new CEO could take to make his mark. One
should note that Intel recently sold its Internet TV service to Verizon rather than continue to fund a
service that didn’t make much money. So will Microsoft’s new CEO copy Intel’s new CEO and ditch
its ailing search engine Bing to concentrate resources on its profitable core businesses? We can
only wait and see, but if Bing goes, the World Wide Web will be left with a monopolistic search
engine, Google. One fount of all knowledge. And do you think Google’s algorithms can provide the
answer to everything (unless, of course, you speak Chinese…)?
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