Could a new crop of challengers finally pose a genuine threat to Google’s search engine monopoly?

Concern over the extent of Google’s dominance of the global search engine market is not something new. Over the years, the EU and EC have regularly muttered about the situation. And over $10 billion in fines have been issued by Europe for what its courts have ruled as antitrust violations. Regulators in the USA, Google’s home market, have also started to show signs they want a crackdown on big tech’s dominance, including Google’s.

Just last week sabres were rattled when Australia introduced a new law it wants to force the search engine, Facebook, and potentially other tech companies that distribute third-party content to share royalties with news publishers. Google’s response was to warn the law would make them withdraw some of their services. Australian PM Scott Morrison said lawmakers would not yield to “threats”.

It’s hard to imagine some kind of, possible uneasy, truce won’t be reached. But it’s another sign of discontent with the Google search engine monopoly. 2020 saw an acceleration of the trend towards a more digital economy. And Google is the undisputed gateway to that digital economy.

As of December 2020, Google held a 91.54% share of the global search engine market. That’s despite a very limited presence in China, where local alternative Baidu rules the roost. And lower market share in the Russian-speaking world, where Yandex is a genuine competitor.

But in most of the rest of the world, Google holds a tight monopoly. In the UK, its share of the market is around 92.5%.

Source: statcounter

Source: WebFX

Will Google ever have to face genuine competition in its stronghold territories?

Back in 2006, then French president Jacques Chirac announced Quaero, a gallic attempt at a search engine intended to combat the “omnipresence” of “Anglo-Saxon” online culture. And dominance of the online space by Anglo-Saxon (American) technology giants. President Chirac issued a call-to-arms, fronted by Quaero, stating:

“Culture is not merchandise and it cannot be left to the blind forces of the market. We must staunchly defend the world’s diversity of cultures against the looming threat of uniformity. It’s time to go on the offensive.”

Quaero benefitted from a cool €198 million in public funding. That financed as many as a few dozen prototypes of the home-grown French Google rival. Then the project was quietly discontinued in 2013.

Since, Google has extended its market dominance in Europe. And across most of the rest of the world. As of late-January 2021, Google’s parent company Alphabet is worth $1.28 trillion. While Alphabet and Google have built, or acquired a sprawl of companies that range from YouTube to driverless car technology group Waymo, it is still advertising on the Google search engine, and YouTube, that accounts for the lion’s share of revenues. And all the profits that fund expensive endeavours like Waymo’s assault on the driverless future.

Waymo and other Google sister companies might one day make their own big contributions to Alphabet’s profits. But for now, they are an expense. Funded by Google’s dominance of the search engine market. To Google has become a verb, and outside of China, 9 out of 10 online queries made internationally, are Googled.

But a decade and a half after Chirac’s failed bid to provide Google with genuine European competition, there is a new generation of start-ups with the ambition to dethrone the U.S. tech giant. Or at least eat into its market share to a degree of significance.

But is there any cause to suppose one or more of them might succeed? The probability, at least over the next decade, is probably a slim one. But not out of the question. The UK’s Mojeek has secured some modest funding. And in the U.S. start-ups in the search engine space such as Neeva and You.com have been backed by some of Silicon Valley’s wealthiest investors.

But do they have any genuine hope of eroding Google’s market share to the point they could become genuine search engine players in years to come?

Google’s biggest threat is regulators

If young challengers are to make inroads into attracting search engine queries at Google’s expense, the feeling is it will rely on help in the form of regulatory intervention in the market. And if Google does face one existential threat, it comes from governments and regulators.

In October of last year, the U.S. took its most significant action to date against Google, by suing it on antitrust grounds. 38 state attorney generals subsequently lodged a ‘sister case’ against Google. New York’s attorney general Letitia James explained the case was provoked by Google “weaponising our data to kill off competitors and control our decision making — resulting in all of us paying more for the services we use every day.”

Strong words. Google is undeniably under the most sustained regulatory and legal attack it has ever had to contend with. Some believe that’s what makes it the right time for well-funded rivals to take the fight to them.

But Google is simultaneously also in a stronger global position that it has ever been. Its nearest competitor, Microsoft’s Bing, has a market share of just 2% of global search engine queries. And Microsoft is an even bigger company than Google’s parent Alphabet, worth $1.7 billion.

Over 15 years, Microsoft has invested billions of dollars into Bing. To no avail. If one of the few companies in the world that are bigger than Google isn’t able to trouble its market position, what hope do the new cohort of ambitious start-ups have? Even if they are well funded?

Realistically, the only genuine hope is based on antitrust action clipping Google’s wings. Questions are being asked about the tactics employed by Google to achieve the market dominance it has. For example, the $12 billion or more a year it pays Apple to be the default search engine on iPhones.

Google’s search engine technology has a big head start

But Google’s well-established market position is not just based on it throwing money at hardware providers to make sure it is put in front of users. Most accept Google’s search engine technology is also the best in the world. Matching, or preferably exceeding, the quality of Google’s search engine will be far from easy. And extremely expensive.

Quoted in The Times newspaper, tech analyst Benedict Evans comments:

“People think of Google as a software company with a bunch of people on skateboards, but it is actually a huge industrial company — Alphabet [Google’s parent group] spent close to $20bn last year.You’ve got to download the entire internet, store it, index it — and then, any time someone does a search, map that search against an index of the entire internet. And you’ve got to do that all the time because the internet keeps changing…..You can’t just turn up and say, ‘I’m gonna make a search engine.’ ”

What are the main challenges would-be Google rivals face?

Neeva is the best-funded start-up in the search engine space, having raised $37.5 million in funding in 2020. Investors included Sequoia, one of Silicon Valley’s best-known venture capital firms. It also backed Google in 1998.

Neeva was founded by Sridhar Ramaswamy, who has particularly good insight into how big a challenge his young company faces. He previously ran Google’s $115 billion-a-year ads business. That gave him a ringside seat to how the company has gradually displaced its organic search engine results with a growing number of paid ads pushing them down the page.

Mr Ramaswamy reached the conclusion Google was no longer a search engine that offered up useful answers and showed pure results. He feels its become more like a digital Yellow Pages.

Neeva’s search engine is intended as an ad-free alternative. But at the cost of a monthly subscription tipped to be around $5-a-month. Users’ data will not be tracked. But are people really prepared to pay for an ad-free search engine when Google is free?

Mr Ramaswamy accepts getting potential users over that psychological barrier is the biggest challenge his young company faces. But he thinks that an ad-free search engine experience, especially if it bundles in additional features like software to scan and then manage personal data stored on hardware devices like computers and smartphones, will be a competitive alternative.

But convincing people to pay for a search engine isn’t Neeva’s only challenge. Many sites, including Facebook for example, block the web crawlers of all but the biggest companies, like Google and Microsoft. Web crawlers are used to create the database and organic links used to populate search results. If they are not given access to sites, would-be Google rivals have little chance of being able to provide search engine results that are as complete and relevant.

Which is why companies like Neeva and DuckDuckGo, another search engine alternative to Google, rely on licensing Bing’s index. Which means they are basically showing Bing results in a slightly different guise. And Bing itself only scrapes 2% market share from Google’s grasp.

11-year-old Mojeek, based in Brighton, is taking an alternative approach and building its own index from the ground up. But it’s tiny compared to Google’s. Neeva has also been working on creating its own proprietary elements to its index, to compliment its access to Bing’s.

The challenge faced by both is significant.

But the public would like a Google alternative

Despite the difficulties, there is clearly consumer appetite for a viable Google alternative. The sentiment is mainly based on concerns over user data-privacy and transparency. And that’s the pitch almost every would-be Google rival pitches.

You.com is no exception. Founded by Richard Socher, Salesforce’s former head of AI, and funded by Marc Benioff, Salesforce’s billionaire founder, the search engine claims it will not only offer up more relevant results than Google. But that it will do so without tracking users. No details have, however, been provided on how that will be achieved.

But public appetite for an alternative is there. Mr Ramaswamy claims an extensive Neeva survey found one in five “actively disliked”, Google’s ad-centric search engine model. But consumers are also creatures of habit. We’re very used to Googling, even if we do have grumbles.

Another possibility could be regulators treating Google’s search engine as a public utility, like the power grid. Competition could be forced by allowing other search engine brands to be given access to Google’s engine. Like electricity and gas providers were given access to energy infrastructure in the UK. Or railway companies being given access to tracks owned by another company.

Britain’s Competition & Markets Authority floated that idea this summer, arguing that making Google do something similar would have “the potential to overcome the data advantages that Google has on account of having a much larger user base”, allowing newcomers to “compete on relevance even for unusual queries”.

While that could eventually be the outcome of antitrust cases against Google, it doesn’t look likely to be a development that will happen any time soon. But for Google’s new cohort of would-be competitors, their best hope might be to scratch their way to survival and a fractional market share for long enough for regulators to intervene on their behalf.

In the meanwhile, my money’s on Google’s dominance of the search engine space to continue.