A court filing within the U.S. Department of Justice’s case against Google over its alleged monopoly within the search market has revealed a number of notable tidbits in regards to the state of the search market competitors, together with the interior workings, income, and, in some circumstances, exit costs of would-be Google opponents, like DuckDuckGo and Neeva, the latter of which sold to Snowflake last year after pivoting to enterprise.
Google’s proposed “Findings of Reality” submitting paperwork the historical past of search competitors, together with Google’s personal beginnings, its improvements, the aggressive panorama, Google’s search advertisements enterprise, distribution agreements, and extra.
Of explicit curiosity to us have been the elements that reference internet search startups, like DuckDuckGo and Neeva, and the developments of their enterprise.
The submitting reveals some particulars we already knew about DuckDuckGo — for instance, that it’s been worthwhile since 2014 and that its supply of operating revenue is currently search advertising, specifically search advertisements offered by Microsoft within the U.S. Nonetheless, Google’s proposal additionally makes an attempt to color an image of a startup that didn’t spend money on search innovation however as a substitute targeted on returning funding to its shareholders.
Because the submitting claims, DuckDuckGo raised $10 million in 2018, however the “majority of that cash was distributed to DuckDuckGo’s shareholders,” slightly than getting used to enhance its search engine. When DuckDuckGo once more raised funds in 2020 — a $100 million spherical — some share of that was once more returned to shareholders. (The precise share was redacted.) When shareholders bought inventory to varied VC companies, these funds weren’t used to enhance the search engine, the submitting argues. But it surely contradicts this level, too, noting {that a} third of DuckDuckGo’s 50 workers in 2018 have been engaged on bettering the search engine, for instance.
Picture Credit: DuckDuckGo
Nonetheless, the doc factors out that, regardless of DuckDuckGo’s profitability, it hadn’t constructed its personal “complete internet index” for natural search outcomes — hardly a degree in Google’s favor. As well as, when Apple was requested if it could contemplate making DuckDuckGo a default within the Safari browser, Apple’s SVP of Providers Eddy Cue responded, “No, we didn’t . . . that’s not a sensible choice for purchasers.” Ouch!
Included is also the scope of DuckDuckGo’s enterprise. The submitting notes the startup estimated its search engine was being utilized by 100 million folks globally as of 2021. The search engine receives solely about 2.5% of common search queries within the U.S., regardless of estimates that 10% of individuals within the U.S. declare to be customers. This, DuckDuckGo’s management had defined, is because of the truth that folks usually use its search engine for some, however not all of their search queries.
In Europe, DuckDuckGo acquired solely 0.6% of search queries on cell gadgets, as of August 2023, even after the introduction of the Android “selection display,” the place it’s supplied as an choice. In whole, its share of search queries in Europe ranged from 0.5% to 2.5% in 2023, relying on the nation.
Picture Credit: DuckDuckGo
By presenting these findings, Google hopes to show that persons are selecting its search engine as a result of it’s higher and extra progressive, not due to its monopoly share.
It additionally dismisses DuckDuckGo’s strategy to privateness as one among its failures, claiming that the strategy results in “vital trade-offs to go looking high quality,” by not using information like search classes, a signed-in expertise, and extra. If something, although, these particulars and others the submitting contains present how troublesome it’s for a competitor to construct a search enterprise to rival Google’s.
One other startup serving for example of that downside is Neeva, the search engine based in 2019 by former Googlers Sridhar Ramaswamy and Vivek Raghunathan. Neeva had initially appeared to have promise, not solely because of its premise, but in addition due to its founding crew. CEO Ramaswamy labored at Google from 2003 to 2018 and held senior posts the place he reported to the CEO and managed Google’s advertisements, commerce, search infrastructure, and privateness groups, the court docket doc reminds us.
With the crew’s deep technical know-how and expertise, they devised a plan to supply shoppers an ad-free various to Google by producing income by way of subscriptions as a substitute. By 2022, Neeva stated it had amassed more than 600,000 users, however most weren’t paying clients at the moment.
Deprioritizing search outcomes. Picture Credit: Neeva
The court docket submitting gives a number of extra particulars about Neeva’s development, noting funding from high VC companies like Sequoia Capital and Greylock Ventures, along with Ramaswamy’s personal private funding. The corporate believed it may compete efficiently on search high quality within the U.S. and choose different markets with only a 2.5% share of common queries, Ramaswamy had testified throughout the trial.
The startup started by providing to serve outcomes by way of Microsoft’s Bing whereas it developed its personal search infrastructure. By 2022, it was utilizing its personal methods for rating internet outcomes and believed itself to be akin to Google and higher than Bing due to its use of machine studying, pure language processing, and different methods.
To develop and prepare its machine studying fashions, it licensed nameless info within the type of commercially accessible datasets. Google couldn’t declare Neeva was not innovating right here. The startup launched a generative AI function, Neeva AI, final yr, which is analogous to what Google is now testing with its Search Generative Expertise (SGE) in that it additionally solutions some queries straight on the search end result pages utilizing AI.
Because of this, Neeva was capable of entice some customers. The submitting notes that at its peak, it had “a number of million distinctive customers monthly,” Ramaswamy had stated. Sadly, its lack of ability to compete with free search finally noticed the startup shut its shopper enterprise, pivot to enterprise, and in the end exit to Snowflake, because it was unable to draw the required enterprise capital funding to proceed to scale its enterprise.
“My co-founder, Vivek, and I got here to the reluctant conclusion that we’d not have the ability to construct up a enterprise quick sufficient to have the ability to proceed elevating capital to help the expansion of the product and the crew,” Ramaswamy testified. “So earlier this yr, in Might [2023] — we really began potential acquisition conversations in March — however earlier this yr, in Might, we shut down the patron search engine, refunded the cash that clients had paid us, and bought acquired by Snowflake, which is an enterprise information firm,” he stated.
Neeva was producing lower than one million {dollars} in subscription income on the time and was rising, however was nonetheless a small a part of the search market, the submitting additionally informs us.
The startup exited to Snowflake for about $184.4 million in money, greater than double the quantity that had been invested, the submitting states. That is barely larger than earlier reviews that had pegged the quantity at $150 million.
Although not a startup, the doc additionally touches on Yahoo’s (TechCrunch’s guardian firm) misplaced search enterprise, noting it stopped crawling the net after a 2009 cope with Microsoft for algorithmic search and paid search advertisements. This partnership let Yahoo lower its search funding and give attention to different extra common merchandise, like Yahoo Finance, Yahoo Sports activities, Yahoo Information, and Yahoo Mail. (A lot of the Yahoo part is redacted, we should always observe.) It provides that Mozilla as soon as had a cope with Yahoo, too, however dropped it on account of search high quality.
With few viable opponents in the marketplace within the search house, Google makes an attempt to argue that it competes with various different merchandise, like devoted cell apps and web sites that supply some specialised sort of search, like Yelp, Airbnb, Amazon, Expedia, Reserving.com, Motels.com, and others. It additionally claims to compete with AI, like ChatGPT, and social media, like Fb, Instagram, Pinterest, and TikTok — the latter three, significantly amongst youthful customers.
For instance, Google vp of search Liz Reid stated in 2021 that “63% of each day TikTok customers age 18 to 24 acknowledged that they use[d] TikTok as a search engine within the final week.”
Whether or not or not the court docket shall be swayed by Google’s argument that it’s not a monopoly in search and extra broadly in search promoting, which is a big a part of this case, stays to be seen. Google is clearly the winner within the search market, but it surely’s not for lack of opponents making an attempt to interrupt in, as these examples present. Nonetheless, the trial had already revealed that Google used its vital assets to keep up its place within the search market — for instance, by paying Apple $18 billion to be the default search on iPhones. In the meantime, Apple weighed buying Bing from Microsoft in 2020 and had additionally considered making DuckDuckGo the default engine in Safari, earlier than rejecting the thought to proceed cashing Google’s checks as a substitute.
