Industry Focus:

Search Engines: Intense Competition Drives Better User Experiences

More and more every day, the on-ramp to the Internet is a search engine. Some 85 percent of Internet traffic is driven through search engines.¹ In November of 2007, more than 10 billion search queries were initiated in homes, businesses, and universities in the United States alone.² Users averaged 74 searches per month in 2007, up from 52 per month in 2006.³

Much more is at stake in the search competition than whether you can quickly find a local movie show time and a good Thai restaurant to go to afterwards. Google’s 2007 revenue is projected at $11.5 billion, the bulk of it coming from paid search advertising.⁴ In efforts to boost their share of the search pie, competitors Yahoo! and Ask.com made major investments in 2007 — Yahoo! in its functionality and infrastructure, and Ask.com in new features and major non-Internet brand promotion. Microsoft is also investing heavily, including making a friendly $1.2 billion bid in January for Norway-based Fast Search and Transfer, which has technology that could potentially be leveraged to improve Microsoft’s web search.⁵

With such huge dollars at stake, even smaller competitors can reap big profits from capturing just small market share, a sweet incentive for well-backed firms such as Ask.com to invest in growing their search businesses. Even the “wiki” team is getting into the search business. Wikipedia co-founder Jimmy Wales is launching a new collaborative-model search engine, Wikia, with a $14 million stake, of which $10 million is being invested by Amazon.com.⁶

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