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Chapter Eight: Social Networks and Industry Disruptors in the Web 2.0 Environment

Online File W8.1 Google and Company: Advertisement and Search Engine Wars

One of the major changes from Web 1.0 to Web 2.0 according to O’Reilly (2005) was the change in online advertisement from collaborative filtering (e.g., DoubleClick to Google and its AdSense technology (Chapter 4). Google completely changed online advertising by giving it a major boost and driving the creation of many Web 2.0 companies, including many social networking companies that benefited from the new advertisement concepts. However, the success of Google resulted in fierce competition in search–engine-based companies. Before we get into this subject, let’s look briefly into the search engine concepts and industry.

Search Engine Concepts

A search engine is a document-retrieval system designed to help find information stored on a computer system, such as on the Web, inside corporate or proprietary files, or in a personal computer. Cell phones can perform searches as well.

How Do Search Engines Work?

A search engine allows one to request content that meets specific criteria (typically those containing a given word or phrase), and retrieves a list of items that match those criteria. This list is often sorted with respect to some measure of relevance of the results. Search engines use regularly updated indexes to operate quickly and efficiently. There are differences in the ways various search engines work. But they all perform three basic tasks:

search engine A document-retrieval system designed to help find information stored on a computer system, such as on the Web, inside corporate proprietary files, or in a personal computer.

  • 1.

    They keep an index of words they find, and where they find them.

  • 2.

    They allow users to look for words or combinations of words found in that index.

  • 3.

    They search the Internet based on keywords.

Types of Search Engines

There are hundreds of search engines in dozens of categories. Wikipedia provides examples of 28 categories (see en.wikipedia.org/wiki/Search_engines). Exhibit W8.1.1 provides representative examples.

Search Wars: Google Versus Yahoo! and Others

One of the most spirited arenas of Internet competition is that of Web search engines, and never more so than in 2004. Historically, Excite, Lycos, AltaVista, Inktomi, and others had held the title of “top search engine.” These search engines mostly relied on keyword analysis—counting the frequency and placement of keywords in the Web page—and few ever made a profit.

The Web search world changed in 1998 when Google introduced link popularity—counting the number of links and importance of those links—in its search algorithm (see The Economist [2004] for an explanation of this search algorithm). Soon, Google became the top search engine; now it is part of our everyday language (e.g., to google is now a verb and google bombing is a page-ranking strategy). Google also is the Internet’s first highly profitable search engine, earning substantial profits from sponsored ads and achieving a highly successful IPO launch in mid-2004. The Real-World Case in Chapter 1 describes some of the essentials of Google. Many consider Google the best company to work for (Lashinsky 2007).

Google’s success has not gone unnoticed. Nothing attracts competition like success, and in 2004 other companies, large and small, began to enter this competitive arena. The biggest battles in the search wars are between Google and some of the search engine giants of electronic commerce—notably Yahoo! The search war is about the Internet advertising dollars.

In February 2004, Yahoo!, an innovative and profitable company that had changed itself from a Web directory into an Internet portal, launched Yahoo! Search. It is based on Yahoo!’s 2002 and 2003 acquisitions of search engine technology from Inktomi, AltaVista, and AllTheWeb, all of which were significant search engines in their own right (Sullivan 2004).

In September 2004, Amazon.com introduced A9 (a9.com), a “search engine with memory.” A9 allows users to store and edit bookmarks, revisit links clicked on previous visits, and make personal notes on Web pages for later viewing. Commentators describe Amazon.com’s competitive advantage as follows: “The ability to search through your own history of Web searches is insanely powerful,” and “It’s not just about search, it’s about managing your information” (Markoff 2004a).

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