Google: The New Market Gorilla

Every company, big or small, faces unfavorable market conditions at some point in its trajectory. The common sense thing to do is to try to adapt—modify the business strategy to survive and continue thriving. Unfortunately some companies, especially big and successful ones like Google or Microsoft, are stubborn and prefer that the market adapt to them. It really is difficult to hit the ‘Back’ button, throw away what you’ve built, and try something completely new. It is far easier—at least it seems so at first—to create publicity designed to adapt the market to your own needs.

The problem, for both Microsoft and Google, is that it rarely works. Let me show you why.

The Old Market Gorilla

Microsoft made and continues to make most of its fortune by selling users an electronic piece of paper (the End User License Agreement) that says what they are allowed to do with its software. Users don’t own the software in the traditional sense; they have simply bought permission to use it. Until now, this has proved an excellent business model because, while it costs a lot to produce software, you can sell an infinite amount of copies and the cost-per-unit becomes minuscule.

Then came the open source software movement and it broke all of Microsoft’s business rules. Software is given away for free, even its source code, and users not only own it in the traditional sense, but they can also modify and adjust it to their needs as long as they understand the programming language. Companies can still make money, but they do so in other ways—by selling support services, value-added packages or even through ads. The open source model has produced a wide variety of successful products and profitable companies: Linux, the Apache web server, Mozilla FireFox to name just a few.

What has Microsoft’s response been against its formidable new adversary? It tries to spread fear, uncertainty and doubt (FUD). Unfortunately for Microsoft, this hasn’t worked so far and is never going to work. It may be a huge market gorilla, but it cannot bully the entire market. In a few years’ time, we’ll see if the gorilla can even keep up. :-)

The New Market Gorilla

Google and most popular search engines are making their fortune by selling clicks. Philosophically, it is not so different than Microsoft. Software is what they produce and using their software is what they sell. The key difference is that they don’t charge users of the software, they charge advertisers: companies that want to tap into their software’s user base.

Of course users are paying indirectly for the use of Google’s software with the most valuable currency in today’s economy: their click stream of intentions. Looking at Google’s valuation and revenue numbers, the model has been extraordinarily successful so far. Its success, however, comes primarily from the premium value of links to web pages. But other people and companies are creeping in to take some of Google’s pie. They are trading, buying, selling or stealing links to profit from Google’s ecosystem themselves.

Just like Microsoft’s loathing of the open source community, Google is similarly peeved that its financial foundation is being attacked. And not surprisingly, the company’s response is just like Microsoft’s: they try to spread FUD, this time among webmasters. Google requests that webmasters adapt to its way of doing business rather than trying to adapt itself by revising its original assumptions about links as votes, or looking for stronger and potentially better solutions.

Again, this is not going to work. One single company, no matter how big, cannot police the whole Web. No matter how hard it tries, people will keep finding ways to exploit link vulnerabilities(via searchenginepeople.com).

Google likes to say that all top search engines are affected by the paid links problem. Well, apparently one Ask.com scientist doesn’t think so:

Apostolos Gerasoulis, executive vice president of search technology at Google competitor Ask.com is equally pessimistic about the search industry’s battles with Webmasters who manipulate results. He says that Ask doesn’t suffer from paid links schemes as much as Google, thanks to an algorithm that only counts links between sites about the same subject. But sites that manipulate search results, he says, plague the entire industry. Google’s public criticism of such tactics won’t make them go away.

“We know better than to say anything,” Gerasoulis says. “The more pressure you put on them, the smarter they become. This war between spam sites and the search engines has no end.”

The evolution of the market and the danger of stagnation

The good thing about this type of attitude is that when big players refuse to adapt, they open the door to more flexible competitors. Look, for example, at how Digg users are giving life to Mixx thanks in part to Digg’s stance on trying to adapt its user base to the company. Perhaps we should start spending more of our ‘click power’ and use alternative search engines such as Ask.com more often. In the end, webmasters provide the content and searchers provide the clicks. Without them, Google’s software is useless, and the gorilla gets left behind again.

What do you think? Should the Web adapt to Google or Google adapt to the Web? Sound off in the comments!

16 replies
  1. Simonne
    Simonne says:

    Ideally, Google should adapt to the Web. Unfortunately, as long as the web keeps on playing the Google tune, Google doesn't have any reason to adapt.
    For example, as long as advertisers who seek to buy reviews on blogs will continue to value PR and almost ignore other indicators, they give Google its power. As long as Yahoo and MSN will treat traffic from outside USA by showing then the behind, Google will be powerful. As long as the default installation of Firefox will have Google search on the front page, Google will be king.
    I can't understand how Google can sell links, and accuse the competitors for doing the same thing. I agree that a private company can do whatever they want with their search engine, however, I feel the need of a law to prevent such monopoly situations.

    Reply
  2. Hamlet Batista
    Hamlet Batista says:

    Ideally, Google should adapt to the Web. Unfortunately, as long as the web keeps on playing the Google tune, Google doesn’t have any reason to adapt.

    Hi Simonne,

    My opinion is that they are fighting a battle they are ultimately going to lose.

    As long as there is money to be made, people will find creative ways to fight back.

    This war between spam sites and the search engines has no end.

    At least one of the other top search engines understands this.

    Reply
  3. jez
    jez says:

    If Google penalise white sites for selling links I think there will be an increase in the use of grey sites / mashups / low quality content where penalties are less of a risk (as you have not invested time building a good quality site).

    Trying to get the world to fit your description of it (algorithm) is not a good aproach….

    Reply
  4. Dave L
    Dave L says:

    "Unfortunately for Microsoft, this hasn’t worked so far …"

    So, Microsoft has failed in business? That should be your headline. Everyone else thinks they are one of the world's greatest success stories still today.

    "… rather than trying to adapt itself by revising its original assumptions … or looking for stronger and potentially better solutions."

    So you know Google's algorithm? Again, that should be your headline, since no one else claims to know it.

    rel="nofollow" is a way, like robots.txt, to adjust your link equity to benefit your rank in search engines. All search engines do, and should, penalize excessive spam and black hat methods.

    Google reduces the value of your content for a variety of reasons, whether you use robots.txt or rel="nofollow" (and other methods) or not. Using them gives you a greater variety of methods of adjusting your link equity and monetizing via advertising. The SEO/SEM community has requested a variety of things from Google to minimize content theft and organic rankings penalties. Google has responded to requests from this community, and continues to respond (addressing subdomain spam currently).

    There are a lot of things Google isn't doing, but no one is doing what they do—the algorithm—better than Google. Helping users use advanced operators, tabbed results, and much more are proven to help users get better results over time. Google seems more interested in providing the best results from the simplest interface, leaving a great opportunity—the interface/GUI—to it's competitors.

    … my two cents worth.

    Reply
  5. SlightlyShadySEO
    SlightlyShadySEO says:

    I'm so glad someone is finally appreciating Ask's algorithm. The more I learn about it, the more awesome it becomes. I hope THEY become the new "gorilla", just because the concept of trying to rank within them makes me all giddy with excitement at the challenge. As things stand now though, there's just not enough traffic to warrant me putting in that effort :-(

    Reply
  6. David Hopkins
    David Hopkins says:

    The problem is with Ask.com is that a lot of searches on Ask will only really bring up information sites, which is good if you are wanting want infomartion, but not if you want to buy something. If Google started faltering, people will just find out Ask's loophole and exploit them. A lot of the information sites that rank well on Ask may have no nofollow blogs, mailing lists etc that people will start abusing. Alternativly these sites will become unindated with link exhcnage requests.

    Personally, I think the next level could be something a bit like Digg, but with an web spidering capabilities. Basically, some sort of Wikipedia-esque policing system where sites get rated. Naturally this system would be open to spam to. Would be interesting to see how it does, Jimbo Wales o' Wikipedia fame plans to launch something along those lines with the algorithms being open source. I think this could be a good way of allowing peoople to develop their own search engine algorithms using Jimbo's core data.

    Reply
  7. SlightlyShadySEO
    SlightlyShadySEO says:

    @David.
    I cannot really translate into words how much a digg style system would fail as a search engine. I'm speaking as a blackhat here. Digg has survived largely because their isnt too much incentive to spam it, as the users don't click ads, and you'll get nailed when you hit front page. With a search engine, there are billions of sites, and millions of "front pages", and the incentive to spam it is tremendous. Google is toying with this idea(or so I've heard), but even then. God. 1000 gmail/blogspot accounts currently cost $6-$20 depending on who you know. With that kind of power, there's no way a system like that could survive.

    Reply
  8. Hamlet Batista
    Hamlet Batista says:

    Dave L – Thanks for your comments. I have to think that you scanned my post and not read it fully. My critique is not to M$ or GG as businesses but to their bullying practices.

    I don't know Google algorithm, but apparently you work there as you say that rel="nofollow" is the way to achieve high rankings. I have probably wasted five years of my life doing SEO with the completely wrong assumptions. :-)

    SlightlyShady – From what I have researched, Ask's algorithm is superior in the way they evaluate links, but they have not been very successful at becoming wildly popular. One the other hand, maybe they seem better because they are not as attractive to spammers as Google is. Catchy name, BTW.

    David – I partially agree that Ask might fall once they become a target, but at the moment we don't know for sure. They don't weight links coming from random unrelated sites. They only weight links from sites on the same subject, so at least their are immune to some of Google's current problems. On the other hand, I agree with SlightyShady. Voting on the serps (they are already experimenting with this) will just bring more abuse than they currently have.

    Jez – The problem with an open source search engine is that the rating code becomes public and its ridiculously easy to game such as system.

    Reply
  9. SlightlyShadySEO
    SlightlyShadySEO says:

    While I agree that Ask might not have been exploited yet simply due to the lack of popularity, there's only a few possible solutions that I can think of to get around their algorithms, and that's saying something. Find issues with algorithms is pretty much my job, and I like to think I'm good at it.
    The best way I can think of right now is to initially get a backlink from some of their "authority" sites, to maybe 3 of your own, then try and annex their position as the "authority". And that would require a LOT more effort than current day google blackhat.
    But hey, time will tell.

    Reply
  10. Hamlet Batista
    Hamlet Batista says:

    I guess you mean a link from their "Hub" sites. I am not sure a single link will help much, but it sounds like you have a sound initial strategy.

    I plan to write a detailed post with my research on HITS/Teoma/Ask soon. Stay tuned!

    Reply
  11. Robert Irizarry
    Robert Irizarry says:

    The idea of Ask.com's algorithm only counting links from related sites is interesting but it raises concerns for those of us in niche subjects.

    An SEO site may be a straightforward subject to identify (maybe) but consider the long tail of sites with unique subjects.

    For example, I blog about guitars – specifically ergonomic guitar design and construction.

    What would Ask.com say about links coming in to my site from guitar sites, design sites, woodworking sites and ergonomics sites? I receive all of these and they all relate to my site's subject matter. Would Ask.com decide that only one of those are related when in fact they all are?

    In many ways, its similar to the problem I see with contextual advertising like Adsense in these niches. The algorithm's sense of relevance doesn't match my or my readers sense of relevance.

    In the end, what happens to the myriad sites that don't neatly fit into one of Ask.com's potentially restrictive definitions of relevance?

    I'd love to hear opinions.

    Reply
  12. Website desinger in
    Website desinger in says:

    Hi Hamlet

    I have really enjoyed your post ! its well written , well done ! but there is one aspect that you have missed out ! Yes I agree at certain instance companies whether big or small they have to adopt to the customer’s requirements. However the fact remains when companies become so big (like of Microsoft, Google ) , up to a certain degree they control how the market works .

    So over a period of time there will be little change in how we think and engage in business?

    OK I agree that Open Source software has won certain amount of popularity over the past couple years , but we have to ask the question has it really changed how we think of off the shelf products ? The simple answer is NO! Microsoft still manage to sell and introduce new software and services in increasing numbers . Yes it’s not what we like to hear , but that a fact .

    I think a solution may be to have guidelines and rules on monopoly ….but does it really works ? yes may be …but do the law makers want to do something which really makes a difference ? May be not! Because they also heavily relies on these big money making companies

    Reply
  13. Marc Crouch (Alterit
    Marc Crouch (Alterit says:

    I consider the internet search field in much the same way as traditional economic markets. The internet provides a customer base (a very large one), and everything on the web operates broadly within a free market infrastructure.

    As such, you can predict the futures of Microsoft and Google by studying the trajectories of other huge companies such as GE, General Motors, Coca-Cola, Wal-Mart etc. Do they dictate the market? Most of the time, yes. In blind taste tests, Pepsi always wins, but Coca-Cola's brand strength influences the market so effectively that they have remained dominant. It's a similar situation with Ask.com, in that the latter may be a better product but Google has the stronger brand.

    Google and Microsoft both have the strongest brands in the computing marketplace, and brand is king where consumers are involved. Ask.com's refusal to be vocal about the spamming battle will ultimately hurt their brand equity; whether or not the battle is winnable is utterly irrelevant. Google shout the loudest, so people remember Google, and people use Google. It's really as simple as that.

    Reply
  14. Ollie Phillips
    Ollie Phillips says:

    Great parallels between Google and Microsoft. Seven years ago, Google was the saviour, now we're dancing to their tune, instead of /as well as Microsoft (delete as appropriate). And now there's Google Chrome, which I think can serve adverts on error pages (see post on my website). Don't go near it – you can't boycott their search, but dont give them another foothold by adopting their web browser.

    Reply

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