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Tuesday, August 4, 2009

Search: It's Getting Better All the Time

I'm listening to the audiobook of Telecosm, George Gilder's prophetic book about how abundant broadband would revolutionize the planet--which I recommend to everyone. I came across this passage, which reminded me just how good we really have it:

Reported to catalog only 16 percent of web pages, the best Internet search engines are foundering under the load, taking as long as six months to add new content.

If that was Search 1.0, Search 2.0 is great! Today's search engines will index this post in a matter of minutes and while there are still parts of the "Deep Web" that aren't crawled, a number of Search 3.0 upstarts are working on solving that problem, too!

posted by Berin Szoka @ 11:43 PM | Search

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Yahoo!/Microsoft: Not Such a Bad Deal for Yahoo! After All?

Like many others, I've wondered whether Yahoo! got less than it should have becuase government antitrust regulators prevented Google from bidding up the value of a deal with Yahoo!.

Carl Icahn, who owns 5% of Yahoo! seems happy enough while others still wonder if Microsoft got the better end of the deal, BusinessWeek reports. While many observers have howled that Yahoo! gets revenue-sharing instead of cash up front, Yahoo! Carol Bartz notes that a cash deal "would have had significant tax consequences while contributing only $3 million in annual interest to Yahoo's bottom line."

Whatever the initial terms of the deal, its value depends on speedy approval without onerous conditions being imposed by antitrust regulators--even if they take the form of "voluntary" concessions. Let's hope the government gets out of the way to give this new partnership a real chance to go toe-to-toe with Google in search, as I've suggested here, here and especially here.

posted by Berin Szoka @ 11:42 PM | Advertising & Marketing, Antitrust & Competition Policy, Search

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Thursday, July 30, 2009

The Deadweight Costs of Antitrust Scrutiny: Distracted Management

Nick Wingfield has a great piece in today's WSJ: Yahoo Tie-Up Is Latest Sign Tide Turning for Microsoft's Ballmer (subscription required but can be found through a Google News search) about how Microsoft's fortunes may be looking up across the board--especially with yesterday's Yahoo!/Microsoft search/advertising partnership. The most interesting passage is this one:

For [Microsoft CEO Steve] Ballmer, the agreement provides some redemption in an area he has stressed is critical to Microsoft's future. In an interview, he says the Yahoo deal received "more of my personal attention over the last 18 months than anything else we're involved with," including focusing on its most important new product in years, Windows 7. "It's a big deal," he says.

Of course, complex partnerships always require lots of time from senior management, but in this case, Ballmer's quip speaks directly to the costs of antitrust scrutiny in terms of one of the most valuable resources available to any company: the time and attention of senior management. The "attentional cost" can of this deal for Microsoft could be broken into four parts beyond the normal costs of structuring any deal to make the most business sense:

  1. How to structure the a Microsoft/Yahoo! deal so that it would be approved by regulators (defensive);

  2. How to block a Google/Yahoo! deal (offensive);

  3. Nursing the deal through the regulatory approval process over the coming months; and

  4. The possibility that all of these costs could be wasted, to varying degrees, if antitrust regulators decide to block or restrict the deal.

These are all "deadweight losses" on the economy pure and simple--and ultimately costs to consumers.

Continue reading The Deadweight Costs of Antitrust Scrutiny: Distracted Management . . .

posted by Berin Szoka @ 9:12 PM | Advertising & Marketing, Antitrust & Competition Policy, Search

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A Bargain Deal on Yahoo! for Microsoft & the Regime Uncertainty of Antitrust

Eric Goldman, one of the few active cyberlibertarians in legal academe, has a thoughtful post about the search partnership announced today. Eric notes blogger Danny Sullivan's observation about the decline in Yahoo's assets and his comment that:

Microsoft is getting a huge bargain courtesy of the US Department Of Justice. Without Google being able to compete for Yahoo's business, the billions that were floating around in 2008 become millions in 2009.

Danny and Eric certainly have a strong point: One of the costs of the Justice Department's decision to block Google from partnering with Yahoo! is that Yahoo! wound up fetching much less in its deal with Microsoft. But the intervening slump in the economy and online advertising has also contributed in the drop in Yahoo!'s share price and overall valuation, so it's difficult to make an apples-to-apples comparison. Still, Eric is probably right that in assessment that:
Yahoo was unbelievably crazy for passing on Microsoft's acquisition proposal from a year-and-a-half ago. It looked like a foolish mistake at the time, and hindsight has definitely not improved that assessment!

It would seem that both Yahoo! and Microsoft under-estimated the likelihood that antitrust regulators would block a Yahoo!/Google deal a year ago: Microsoft probably wouldn't have offered as much as it did to acquire Yahoo!'s search business ($31/share) and Yahoo! (currently $15.14/share) certainly wouldn't have held out for a better deal from Google. While the end result ended up being a Yahoo!/Microsoft deal anyway, the delay of over a year in reaching a deal is itself a significant cost of what economists would call the "regime uncertainty" created antitrust: Without clear rules, it's difficult for economic actors to predict the decisions by regulators. A delay of a year could well prove to make a big difference in the ability of the two companies to mount a successful response to Google in search and advertising--just as Microsoft's 18 month delay back in 2003-2004 in developing a search ad auction system to respond to Google's AdWords system (which now produces 2/3 of its revenue) probably did much to thwart Microsoft's initial efforts to compete in search.

Continue reading A Bargain Deal on Yahoo! for Microsoft & the Regime Uncertainty of Antitrust . . .

posted by Berin Szoka @ 9:54 AM | Advertising & Marketing, Antitrust & Competition Policy, Search

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Our Forbes.com Op-Ed on Yahoo!-Microsoft Search Partnership

We've just published an op-ed over at Forbes.com about today's big Yahoo!-Microsoft deal.

Searching For Success: Web 1.0 Titans Struggle to Reinvent Themselves
by Berin Szoka & Adam Thierer

Yahoo! and Microsoft on Wednesday announced a partnership in which Microsoft's Bing search engine technology will power search for both companies, but Yahoo! will manage advertising sales and content creation.

This should be cause for celebration as a good thing for consumers. By providing a strong competitor with a combined 28% market share, the deal should also be a source of relief at Google, which has come under increasing attack for its supposed market dominance. But if recent concerns about online search, advertising, competition and privacy are any guide, many will fail to appreciate why the deal is pro-consumer, or what it says about the rapid evolution of the Internet.

It's easy to forget that just a decade ago most of us still hadn't done our first Google search, Microsoft was still focused on the desktop and Yahoo! was still serving up the online equivalent of the Yellow Pages. AltaVista, AOL, CompuServe and Geocities still ruled the roost.

Today, as we enjoy the fruits of a true cyber-renaissance, cyberspace circa 1999 increasingly looks like the Digital Dark Ages: The old online walled gardens have crumbled, desktop applications have migrated to the cloud and search has redefined our experience of the Web.

Oh, and did we mention just about all of it is "free"? Sounds like exactly the sort of vigorous innovation, expanding consumer choice, falling prices and cut-throat competition that policymakers should want, right?

Alas, regulators seem stuck in the past. European officials in particular seem hell-bent on continuing the antitrust crusade of the '90s against Microsoft, myopically focused on fading paradigms (desktop operating systems and Web browsers). But instead of narrowly defining high-tech markets based on yesterday's technologies or market structures, policymakers should embrace the one constant of the Internet economy: dynamic, disruptive and irrepressible change.

Continue reading Our Forbes.com Op-Ed on Yahoo!-Microsoft Search Partnership . . .

posted by Berin Szoka @ 9:49 AM | Advertising & Marketing, Antitrust & Competition Policy, Search

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Tuesday, July 21, 2009

Zittrain's Pessimistic Predictions and Problematic Prescriptions for the Net

Well, here we go again. Harvard's Jonathan Zittrain has penned another gloomy essay about how "freedom is at risk in the cloud" and the future of the Internet is in peril because nefarious digital schemers like Apple, Facebook, and Google are supposedly out to lock you into their services and take away your digital rights. And so, as I have done here many times before, I will offer a response arguing that Jonathan's cyber-Chicken Little-ism is largely unwarranted.

Zittrain's latest piece is entitled "Lost in the Cloud" and it appears in today's New York Times. It closely tracks the arguments he has set forth in his book The Future of the Internet-And How to Stop It, which I named the most important technology policy book of 2008, but not because I agreed with its central thesis. Zittrain's book and his new NYT essay are the ultimate exposition of Lessigite technological pessimism. I don't know what they put in the water up at the Berkman Center to make these guys so remarkably cranky and despondent about the future of of the Internet, but starting with Lawrence Lessig's Code in 1999 and running through to Zittrain's Future of the Internet we have been forced to endure endless Tales of the Coming Techno-Apocalypse from these guys. Back in the late 90s, Prof. Lessig warned us that AOL and some other companies would soon take over the new digital frontier since "Left to itself, cyberspace will become a perfect tool of control." Ah yes, how was it that we threw off the chains of our techno-oppressors and freed ourselves from that wicked walled garden hell? Oh yeah, we clicked our mouses and left! And that was pretty much the end of AOL's "perfect control" fantasies. [See my recent debate with Prof. Lessig over at Cato Unbound for more about this "illusion of perfect control," as I have labeled it.]

But Zittrain is the equivalent of the St. Peter upon which the Church of Lessigism has been built and, like any good disciple, he's still vociferously preaching to the unconverted and using fire and brimstone sermons to warn of our impending digital damnation. In fact, he's taken it to all new extremes. In Future of the Internet, Jonathan argues that we run the risk of seeing the glorious days of the generative, open Net and digital devices give way to more "sterile, tethered devices" and closed networks. The future that he hopes to "stop" is one in which Apple, TiVo, Facebook, and Google -- the central villains in his drama -- are supposedly ceded too much authority over our daily lives because of a combination of (a) their wicked ways and (b) our ignorant ones.

Continue reading Zittrain's Pessimistic Predictions and Problematic Prescriptions for the Net . . .

posted by Adam Thierer @ 8:52 AM | Advertising & Marketing, Books & Book Reviews, Capitalism, Googlephobia, Googlephobia, Innovation, Internet, Interoperability, Mass Media, Net Neutrality, Philosophy / Cyber-Libertarianism, Privacy, Search

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Monday, July 13, 2009

Cringely's Contradictory Thinking on Microsoft-Google Wars

Goog MS logosI don't get it. Technology journalist Robert X. Cringely, whose work I typically greatly admire, had a confusing editorial in the New York Times yesterday entitled "Chrome vs. Bing vs. You and Me" in which he makes what appear to me to be contradictory statements about the impact of the Google-Microsoft wars. Commenting on Google's recent move into the OS world and Microsoft's launch of Bing, its new and improved search platform, Cringely argues:

This is all heady stuff and good for lots of press, but in the end none of this is likely to make a real difference for either company or, indeed, for consumers. It's just noise -- a form of mutually assured destruction intended to keep each company in check.

That statement itself is hopelessly contradictory. If two companies are engaged in such a heated war "to keep each [other] in check," isn't that by definition something that could make a difference for consumers? Indeed, what Cringely goes on to say seems to confirm that in my mind:
So why does Google even bother? To keep Microsoft on its toes. [...]

So Google Chrome and Chrome OS and Android are all intended to keep Microsoft on the defensive and less likely to push its own Big Red Button. This makes even more sense given the recent advent of Microsoft's Bing search technology, which performs precisely the same competitive control function against Google. Bing hasn't a hope of toppling Google as the premier search engine and Microsoft knows it. To date, Bing's success has actually been at the expense of Google's competitors, not Google itself. But thanks to Microsoft's deep pockets and fierce screwball reputation, Bing has already accomplished its main purpose: reminding Google executives who they're messing with.

Hey, what's wrong with all of this?! Of course, it may be true, as Cringely argues, that, "Some company with a new idea and no legacy products to defend will eventually arise to clean Microsoft's clock. Or maybe Microsoft's market will simply disappear as PC's are subsumed into cars and mobile phones, possibly leaving Windows behind in the process." But what's wrong with Google putting the pressure on in the meantime? And why shouldn't we love the sound of Microsoft putting more pressure on Google with Bing? I've been using Bing a lot lately (I've made it my new Firefox search default, in fact) and have been very impressed. Even if it doesn't win back market share lost to Google in recent years, it really does keep Google on its toes and innovating. And that's a great thing.

Moreover, what would Cringely prefer? For both companies to just cede traditional territory to the other and roll over and play dead? I'm not sure how that would benefit anyone.

His confusing editorial ends with still more contradiction, arguing that, until some other independent innovators arise to truly topple Microsoft and Google, "these [two] companies will posture, spend a little money on research and development, and keep each other in check, while reporters and publications pretend that it matters." Again, Robert, it does matter. The money spent on R&D (which is not "a little" amount, I might add) and the pressure they place on each other by encroaching on each other's core competencies, is important to the market, consumers, and future innovation. Cringely should be praising these developments, not complaining about them.

posted by Adam Thierer @ 10:27 AM | Advertising & Marketing, Antitrust & Competition Policy, Economics, Innovation, Search

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Friday, June 5, 2009

First Amendment Protection of Search Algorithms as Editorial Discretion

Cory Doctorow has called for a Wikipedia-style effort to build an open source, non-profit search engine. From his column in The Guardian:

What's more, the way that search engines determine the ranking and relevance of any given website has become more critical than the editorial berth at the New York Times combined with the chief spots at the major TV networks. Good search engine placement is make-or-break advertising. It's ideological mindshare. It's relevance...

It's a terrible idea to vest this much power with one company, even one as fun, user-centered and technologically excellent as Google. It's too much power for a handful of companies to wield.

The question of what we can and can't see when we go hunting for answers demands a transparent, participatory solution. There's no dictator benevolent enough to entrust with the power to determine our political, commercial, social and ideological agenda. This is one for The People.

Put that way, it's obvious: if search engines set the public agenda, they should be public.

He goes on to claim that "Google's algorithms are editorial decisions." For Doctorow, this is an outrage: "so much editorial power is better vested in big, transparent, public entities than a few giant private concerns."

I wish Doctorow well in his effort to crowdsource a Google-killer, but I'm more than a little skeptical that anyone would actually want to use his search engine of The People. My guess is that, like most things produced in the name of "The People" (Soviet toilet paper comes to mind), it will probably won't be much fun to use, and will likely chafe noticeably. (For the record, I love and regularly use Wikipedia; I just don't think that model is unlikely to produce a particularly useful search engine. As Doctorow himself has noted of Google, "they make incredibly awesome search tools.")

But I'm glad to see that Doctorow has conceded an important point of constitutional law: The First Amendment protects the editorial discretion of search engines, like all private companies, to decide what to content to communicate. For a newspaper, that means deciding which articles or editorials to run. For a library or bookstore, it means which books to carry. For search engines, it means how to write their search algorithims.

Continue reading First Amendment Protection of Search Algorithms as Editorial Discretion . . .

posted by Berin Szoka @ 8:23 AM | Advertising & Marketing, Free Speech, Googlephobia, Internet, Search

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  Search: It's Getting Better All the Time
Yahoo!/Microsoft: Not Such a Bad Deal for Yahoo! After All?
The Deadweight Costs of Antitrust Scrutiny: Distracted Management
A Bargain Deal on Yahoo! for Microsoft & the Regime Uncertainty of Antitrust
Our Forbes.com Op-Ed on Yahoo!-Microsoft Search Partnership
Zittrain's Pessimistic Predictions and Problematic Prescriptions for the Net
Cringely's Contradictory Thinking on Microsoft-Google Wars
First Amendment Protection of Search Algorithms as Editorial Discretion
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