A document filed in court by the U.S. Department of Justice in a lawsuit against Google over Google's alleged monopoly in the search market, containing some notable information about the competitive landscape of the search market, including its internal structure, revenue, and in some cases, exit price. It became clear. Potential Google competitors include DuckDuckGo and Neeva, the latter of which was sold to Snowflake last year after pivoting to enterprises.
Google's proposed “fact-finding” submission documents the history of search competition, including Google's own beginnings, innovation, competitive environment, Google's search advertising business, distribution agreements, and more.
Of particular interest to us was the part that mentioned web search startups like DuckDuckGo and Neeva and their business development.
The filing reveals some details we already knew about DuckDuckGo. For example, the company has been profitable since his 2014 and the current source of operating revenue is search advertising, that is, search advertising provided by his Microsoft in the United States. A picture of a startup that doesn't invest in search innovation and focuses on returning investment to shareholders.
DuckDuckGo raised $10 million in 2018, but the majority of that money was “distributed to DuckDuckGo shareholders” rather than being used to improve the search engine, according to the filing. When DuckDuckGo raised money again in 2020 (his $100 million round), some of it was returned to shareholders again. (Exact percentages have been redacted.) When shareholders sold their shares to various venture capital firms, the money was not used to improve the search engine, the filing alleges. But even this point is contradictory, for example, noting that one-third of DuckDuckGo's 50 employees in 2018 were working on improving the search engine.
Image credits: duck duck go
Still, the document points out that despite DuckDuckGo's profitability, it hasn't built its own “comprehensive web index” for organic search results, which is not an advantage for Google. . Additionally, when asked if Apple would consider making DuckDuckGo the default in the Safari browser, Apple's senior vice president of services Eddy Cue replied: . . It's not a good choice for customers. ” ah!
This also includes the scope of DuckDuckGo's operations. The filing states that the company's search engine is estimated to be used by 100 million people worldwide as of 2021. Search engines only receive about 2.5% of common search queries in the US, even though it is estimated that 10% of people in the US claim so. user. This is due to the fact that people often use that search engine for some, but not all, search queries, DuckDuckGo leaders explained.
In Europe, DuckDuckGo received only 0.6% of search queries on mobile devices as of August 2023, even after the introduction of the optional Android “select screen.” Its share of search queries across Europe ranged from 0.5% to 2.5% in 2023, depending on the country.
Image credits: duck duck go
Google publishes these findings to show that people choose its search engine because it's better and more innovative, not because of its exclusive market share. I want to prove it.
It also dismissed DuckDuckGo's approach to privacy as one of failure, arguing that it leads to “significant trade-offs in search quality” by not leveraging data such as search sessions and sign-in experiences. But if anything, these details and others included in the application demonstrate how difficult it will be for competitors to build a search business that rivals Google's.
Another startup that exemplifies this issue is search engine Neeva, founded in 2019 by former Googlers Sridhar Ramaswamy and Vivek Raghunathan. Neeva initially looked promising, not only because of its premise, but also because of its founding team. CEO Ramaswamy worked at Google from 2003 to 2018, holding senior positions reporting directly to the CEO and managing Google's advertising, commerce, search infrastructure and privacy teams, court documents recall.
Leveraging the team's deep technical know-how and experience, they devised a plan to offer consumers an ad-free alternative to Google and generate revenue through subscriptions instead. Niva said it had more than 600,000 users by 2022, but most of the users weren't paying customers at that point.
Decrease the priority of search results. Image credits: Niva
Court filings further elaborate on Neeva's progress, citing funding from top venture capital firms such as Sequoia Capital and Greylock Ventures, in addition to Ramaswamy's own personal investments. . Ramaswamy testified during the trial that the company believed its small 2.5% share of general queries was enough to compete on search quality in the United States and in other markets.
The startup began by offering to serve results via Microsoft's Bing while developing its own search infrastructure. By 2022, the company is using proprietary technology to rank its web results and is expected to rival Google and outperform Bing through the use of machine learning, natural language processing, and other techniques. I believed it.
To develop and train machine learning models, the company licensed anonymous information in the form of commercially available datasets. Google couldn't claim that Neeva wasn't innovating here. The company introduced his Neeva AI, a generative AI capability, last year. This is similar to what Google is currently testing with Search Generative Experience (SGE) in that it uses AI to answer some queries directly on search results pages.
As a result, Neeva was able to gain some users. At its peak, Ramaswamy said it had “millions of unique monthly users,” the filing said. Unfortunately, unable to compete with free search, the startup ultimately shut down its consumer business, pivoted to enterprise, and ultimately retreated to Snowflake. This was because they were unable to raise the venture capital funding they needed to continue expanding their business.
“My co-founder Vivek and I came to the unfortunate conclusion that we would not be able to build the business fast enough to continue raising capital to support the growth of our product and team,” Ramaswamy testified. . “So, earlier this year, in May, [2023] — In fact, we started discussions about a possible acquisition in March — but earlier this year, in May, we shut down our consumer search engine, refunded what customers paid, and announced that we would It was acquired by the company Snowflake. “Said.
At the time, Neeva had less than $1 million in subscription revenue and, while growing, was still a small part of the search market, the filing said.
The startup was sold to Snowflake for approximately $184.4 million in cash, more than double the investment, the filing said. This is slightly higher than previous reports that pegged this figure at $150 million.
Although not a startup, the document also mentions the lost search business of Yahoo (TechCrunch's parent company), which stopped crawling the web after signing a deal with Microsoft for algorithmic search and paid search advertising in 2009. He points out. The partnership allows Yahoo to reduce its investment in search and focus on other more popular products such as Yahoo Finance, Yahoo Sports, Yahoo News, and Yahoo Mail. (Please note that most of the Yahoo section has been redacted.) Mozilla also once had a deal with Yahoo, but added that it broke the deal due to search quality.
With few strong competitors on the market in the search space, Google is competing with many others, including dedicated mobile apps and websites that offer specialized types of searches, such as Yelp, Airbnb, Amazon, Expedia, and Booking. You are trying to claim that your product is in conflict. .com, Hotels.com, etc. It also claims to compete with AI such as ChatGPT and social media such as Facebook, Instagram, Pinterest, and TikTok. The latter three are especially noticeable among younger users.
For example, Liz Reid, Google's vice president of search, said in 2021: “His 63% of daily TikTok users between the ages of 18 and 24[d] TikTok as a search engine last week. ”
It remains to be seen whether the court will be swayed by Google's argument that it does not have a monopoly on search, and search advertising more broadly, which is a big part of this case. Google is clearly the winner in the search market, but as these examples show, it's not because there aren't any competitors trying to get in. However, the trial has already revealed that Google has spent significant resources trying to maintain its position in the search market. For example, we pay Apple $18 billion for the default search on the iPhone. Meanwhile, Apple considered acquiring Bing from Microsoft in 2020 and also considered making DuckDuckGo the default engine for Safari before rejecting the idea of continuing to cash Google's checks instead. .