Revving the search engines

Monday, August 4, 2003

SAN FRANCISCO -- In five mind-blowing years, Google has blossomed from a nerdy college experiment to a mainstream sensation so ubiquitous that its goofy name is now synonymous with looking things up.

Millions of people turn to the Internet search engine every hour, trusting Google to speed through its index of 3 billion Web pages to find just about anything imaginable.

In less than a second, Google routinely finds lost friends, merchandise, pop trivia, academic research, news, pornography and even references to God, to whom Google has been compared.

"It's hard to imagine a day when I'm not using Google for something," said Todd Goldman, a 37-year-old marketing executive in Silicon Valley. "I can almost always find what I'm looking for on the first or second page of results. It's almost like black magic."

Google's seemingly mystical powers inspire awe and dread -- reverence for the search engine's apparent omniscience, and fear about its Big Brother potential.

"It's way too powerful," said Daniel Brandt, a fierce Google critic who started a Web site to air his misgivings. "It's scary because if Google drops you, you could be out of business in no time."

Google's influence is perhaps best measured by the 200 million search requests it processes per day, up from 40 million just three years ago.

The steady growth has turned Google into one of the Internet's biggest success stories and made the still relatively small company of 1,000 employees a target for some formidable foes. Both Yahoo! Inc. and Microsoft Corp. are searching for ways to steal Google's thunder in a showdown that could reshape the way people find their way around the Internet.

"Google has a lot of smart people who have built a great search engine, but there are a lot of other smart people out there looking for ways to make search engines even better," said Tara Calishain, author of "Google Hacks," a book about Google's hidden treasures.

Yahoo! has committed nearly $2 billion to its Google counterattack. Microsoft is devoting an unspecified portion of its $49 billion war chest to building a better search engine.

Ambitious growth plans

Privately held Google isn't saying how it intends to protect its franchise. Company executives declined to be interviewed, preferring to focus on the Google mantra of "delivering the best search experience on the Internet."

Google apparently has ambitious growth plans. The company just signed a lease to move its Mountain View headquarters across town to a space five times larger -- a 500,000-square-foot complex now occupied by a fallen Silicon Valley star, Silicon Graphics Inc.

The push to topple Google is being driven by new marketing approaches that have turned search engines into profit machines.

Advertisers spend big for prominent listings in specially marked search results -- $2 billion this year, with robust growth forecast for the rest of this decade.

For now, at least, no one is better positioned to reap the rewards than Google.

Yahoo! and Microsoft "are spending a ton of money to get something that Google has built from the ground up and has been fine-tuning for years," said Danny Sullivan, editor of Search Engine Watch, an industry newsletter. "That gives Google a great advantage."

Sullivan believes Microsoft might seek to buy Google rather than try to play catch-up. Neither Microsoft nor Google have expressed any public interest in a marriage.

With one of the world's most recognized brands, Google likely would demand a hefty price. No one will know for certain what Google is worth until it makes a long-awaited initial public offering of its stock -- something insiders say won't likely happen until next year at the earliest.

Google's revenue this year is expected to range between $700 million and $1 billion. Google has been profitable for at least two years, an advantage that has limited the number of investors since founders Larry Page and Sergey Brin started the company in their Stanford University dorm rooms in 1998.

After getting $1 million from a handful of family and friends, Page and Brin raised $25 million from venture capitalists in 1999 and another $10 million from Yahoo! in 2000 when the two companies were more friendly. Google hasn't needed another infusion since.

User loyalty

Much of Google's success stems from the intense loyalty of its users. While Yahoo and other Internet portals reduced their emphasis on search in the late 1990s, Google introduced a system that made it easier for people to find things quicker.

Google's technology is built around a secret formula called "PageRank" that rates the relevance of Web sites based on the number of links from other relevant Web sites. The method has raised concerns that Google has created a caste system in which a group of elite Web sites largely determine the popularity of other sites.

But Web surfers have embraced the approach. "Googling" information has become so popular that Google.com attracts some of the heaviest traffic on the Web. Only Microsoft's MSN.com, AOL and Yahoo! lure more visitors in the United States.

Google's reach also extends beyond its own Web site. The company licenses its results to a wide variety of other sites, including Yahoo! and AOL.

Sunnyvale-based Yahoo is expected to drop Google from its search engine eventually, because it just bought two other search engine makers, Inktomi Corp. for $280 million and Overture Services Inc. for $1.6 billion. Yahoo won't discuss its long-term plans for Google.

Ironically, Page, 30, and Brin, 29, may not have started Google if not for the advice of Yahoo co-founder David Filo, another former Stanford student.

Heartened by Filo's encouragement, Page and Brin raised enough venture capital to fund their ambitions. To celebrate the financing, the partners held a coming-out party at Stanford, in offices named after someone who is now no doubt craving the Google buzz -- Microsoft founder Bill Gates.

On The Net

www.searchenginewatch.com

Brandt's site: www.google-watch.org

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