Strategy for Information Markets/Search engine business models

Search engines are programs that search the world-wide-web for specified keywords, and return a list of potential results. A search engine is really a general class of programs; however, the term is often used to specifically describe systems like Google, Bing and Yahoo. Search engines hunt for information by mining data from the World Wide Web, File Transfer Protocol servers, and databases. Internet search engines originated to help people find information from other websites. Prior to search engines this could be very time consuming, and tedious There are different ways in which various search engines work but they all carry out the same tasks. They search the internet, or parts thereof, based on key words. They then keep an index of the information they find and where it was found, and finally allow users to look for words or groups of words found in said index. The results from the search are commonly displayed as a list of results, which are often referred to as search engine results pages. The information presented in the results page may contain web pages, videos, images, information and other various types of files, and the page rank of sources vary according to the relevance as determined by the search engine algorithm.

Search engines are mostly supported by advertising revenue. For instance, In 2011 Google, who controls the majority of market share in search in the United States, earned 97% of its revenue from advertisements.

In the beginning stages of the Internet, when the typical household used dial-up modem to navigate the World Wide Web, Yahoo emerged as one of the leading search engines. It was prevalent for its ease of use and free email service. As the Internet grew and changed, Google arose as the front-runner for search engines. Competition among different search engines is still fierce; however, Google remains the top competitor in the industry. Although international competition often yields different results, for example Google controls 65.6% of all searches online in the United States as of November 2011. In China Google only controls only 16.7% of the markets share in China, trailing behind Baidu, a Chinese search engine that controls 78.3% of total searches in China.

Revenue

Search engines do not charge a fee for searches. Search engines typically make their revenue by carrying advertisements. Companies will pay search engines for displaying advertisements on a search results page. The first incarnation of this system was the Pay-per-click model. In this model advertisers would pay search engines for every click their advertisement received. Google, for example, still uses a version of this method. Google's AdWords charges an activation fee and a per-click fee. For these fees, companies choosing to advertise this way will see their results in the "Sponsored Links" area in the side column of the page and occasionally the advertisement will appear above free results. When you choose to advertise this way you simply enter a "bid" of how much you would like to spend per click. Once your bid is set, you set a budget. Bing, a competitor of Google launched by Microsoft, allows users to set a monthly or daily budget depending on how often they wish to change your budget. By setting this bid and budget, they can account for the maximum amount you will spend on this advertising tool each month (or day) depending on consumer preferences and budget.

Google

Google Inc. (NASDAQ|GOOG) is a multinational company based in the United States. Google specializes in internet search, smart phone operating systems, cloud computing, and advertising technologies. While Google finds itself in many different businesses today including Youtube, Gmail, Android, and being a search engine. They still get 97% of total revenue from advertising whether it is on their own site, one of their properties or being run on an outside website.

Google has made several acquisitions in the past decade to enhance their presence in online advertising. These purchases include DoubleClick, Urchin Software Corp., and AdMob.

Google has averaged a purchase of a company every week since 2010. As a public company Google has a right and responsibility to it's shareholders to do their best to increase revenue and do their best to advance their sales price. Google purchases companies when they feel their revenues are threatened or they have an opportunity to meet their obligations to their shareholders. Google’s approach to online advertising is multifaceted.

Google AdWords

Adwords is Google’s top source of revenue grossing an average of $28 billion annually over from 2000-2010. Adwords was launched in 2000. With Google controlling 2/3 of all internet searches worldwide their Adwords program is the largest advertising platform in the world.

When a customer uses Google’s search bar, the keywords in the search will instantly trigger the Adwords platform. Adwords allows for great customization for advertisers. Advertisers are able to select what demographic and geographic locations that they wish for their ads to be shown to. The advertisements can consist of one headline consisting of 25 characters or less and two additional text lines consisting of 35 characters each.

There are certain words which are not allowed to be advertised through Google Ad Words system these words are blocked by Google because it would lead to many companies involved in illegal activities to attempt to advertise on Google. Many of these words and drug, sex, and violence oriented. Once clients have selected which words they want to target in their Adwords campaign they have two choices which will determine how much the campaign will cost.

Yahoo! and adCenter

Advertising on Yahoo! has undergone a lot of changes to keep up with the competition. Yahoo used to be the market leader until Google took that crown. In 2006, Yahoo! implemented the Panama ad system. The system advanced Yahoo!'s algorithm by adding a Quality Index variable so that advertisements weren't only picked based off of the highest bid. In addition, a multitude of features were added to make the process more user-friendly. These additions include a control panel, fast activation times, geo-targeting, advertisement testing tools, and forecasting and scheduling tools. More recently, Yahoo! has collaborated with Microsoft to utilize Microsoft’s adCenter. One account on adCenter now allows advertisers to have their advertisements appear on both Yahoo!, and Bing. This allows advertisers to reach around 166 million people who go to either Yahoo! and Bing to conduct internet searches (which is around 30% of the search market). This appeals to advertisers because studies have shown that users are more likely to purchase something after clicking on an advertisement on Yahoo! or Bing rather than on Google. A dashboard that monitors the budget of an advertiser's campaign has also been added to the homepage of adCenter. Another addition is the increase of the character limit for advertisement descriptions. This increase from 70 to 71 characters allows advertisers to now import their advertisements from AdWords to adCenter without having to make changes to it. Yahoo! and Bing are attempting to gain some of Google’s market share but implementing these changes.

Pay-Per-Click (PPC)

PPC is a method of advertising used by AdWords and AdSense where the advertiser only has to make payment to Google each time the advertisement is clicked. The cost for this model varies greatly depending on the words that you choose. Google Adwords is a freely functioning economic system based upon supply and demand for how it determines the rates for various words. The more advertisers are trying to advertise certain words based upon demand the higher price Google will charge without any maximum. The cost can range from $.50 all the way up to $55. As of this writing in 2012 the 5 most expensive Adwords are:

1. Insurance (example keyword: “auto insurance price quotes”) Costs $55 Per Click!

2. Loans (example keyword: “consolidate graduate student loans”)

3. Mortgage (example keyword: “refinanced second mortgages”)

4. Attorney (example keyword: “personal injury attorney”)

5. Credit (example keyword: “home equity line of credit”)

Advertisers enter all words that they would like to include in their Adwords account and Google will pre-determine the amount that the advertiser will be paying in the Pay-Per-Click Model. Advertisers can then further customize their spending if they wish to stay within a budget and let Google know not to let their bill rise above a certain amount in a day, week, or month.

Cost-Per-Thousand (CPM)

CPM is another method of payment into the Adwords advertising platform. This is paid upon the number of impressions. The rate is much cheaper than that of the pay-per-click but each impression is looked at as not as effective as an actual click. This is when Google will set the amount that the advertiser will pay based on 1000 people that the advertisement is shown to, whether they click on it or not. The rates for specific words trend with the Pay-Per-Click model with the top 20 being the same as the list above.

Google AdSense

Google AdSense is a program run and owned by Google Inc. Google AdSense accounted for 28% of Google’s total revenue in Q1 2011. Adsense allows any content rich website to run advertisements through Google based on the content of the page.

With AdSense, Google matches specific words typed into the search engine and displays advertisements on the right hand side of the screen, or on top of the screen. The advertisements allow a title, a couple of lines of info, and a link to the website. The purpose of using Google AdSense is to allow companies to display their advertisements according to their target user's demographic. Getting users to click on the link and purchase from the website is the goal. Since a company can expect to convert ten percent of clicks to sales, having targeted advertisements increases the chance of the user clicking on the advertisements. Google AdSense also has a payout system. The earnings have to reach a certain threshold in order for a payout to be given, assuming there are no holds on the account.

Customers who have their own websites can enable the Google Adsense technology on their webpage. It functions much like the above Google Adwords and implements much of the same technology. It will use keywords throughout the page and the keywords that the user typed to get to the webpage. When a user clicks an advertisement, the website owner will receive a portion of the fee that Google charges the advertiser for the click or the impression.

Millions of websites have implemented the Adsense technology on their own webpages. Adsense enables smaller businesses and websites revenue generation that would otherwise be unable to build an advertising network. An example of this type of business are the numerous blogs found on the web. Google's AdSense technology has enabled many famous bloggers to make a living from their blogs and their followers.

Google’s Adsense is also customizable to website owners much like the Adwords program is customizable to subscribers. Website owners can request to avoid certain types of advertisements on their website. Such as advertisements for their competitor or advertisements that are against the website owners morals or values. Google has also issued an application programing interface (API) issued for all subscribers. This allows them to fully customize the advertisements shown on their site whether it is by worth of the click, content they feel is more suitable for their website viewers, size or advertisement type (text, video, flash).

Ad Auctions

An important feature that Google AdSense utilizes is called an advertisement auction. The purpose of this auction is to determine which advertisements appear on a website that utilizes Google's AdSense. These advertisements run through a Vickrey Auction System. A Vickrey Auction is one in which the bidders submit concealed bids. The highest bidder wins as with any other auction. However, the difference is that the winner pays the amount that the second highest bidder bid. The bid is not the only determining factor in Google’s AdSense's auctions to decide the winner. Google will then place a quality score per page based on each individual advertisement, based upon how much the advertisement suits what the keywords actually were. The amount an advertiser bids varies and, therefore, its combination with a Quality Score becomes important. The Quality Score is determined by looking at an advertisement's past performance on a site or relevant sites, relevance factors such as keywords, and the quality of the advertiser's landing page . The Quality Score for an advertisement is then multiplied by the amount of money the advertiser is willing to bid to determine an Ad Rank.

The advertisement with the highest "Ad Rank" is then selected to be displayed on a given site that uses AdSense. The amount of money that the advertiser has to pay, however, is determined by taking into account the "Ad Rank" of the next highest advertisement. The second highest ranking advertisement's "Ad Rank" is taken and is divided by the Quality Score of the highest ranking advertisement. This value is taken, and is then rounded up by the given country's lowest currency rate (ie. $0.01 for the United States). Ultimately, the result gives the dollar amount that the advertiser would pay if its advertisement is clicked on by a user.

Vickrey Auction System

A Vickrey Auction system is used by Google to determine the prices for key words in its system.. A single good is bid upon; in this case it is a word or phrase. The winner's advertisement would then be placed in Google's searches. Each individual's bid is sealed and is not revealed to his/her competitors. This type of auction provides incentive for one to bid their true value. The winner is the contender who bids the highest value, they will then pay the value of the second highest bid. This also provides incentive for bidders to reveal their true value in the auction since they know that if they win, they will likely pay less than their bid. This encourages everyone to bid the maximum value they would be willing to pay, thus revealing a user's preferences for these words and preventing preference misrepresentation. .

Infinite Auction

The Infinite Auction is a unique auction system that is famously used by Project Wonderful. The premiss for the auction is to allow an advertiser and a publisher a continuous auction for advertising space on a site. For an advertiser, it is a very simple process. The advertiser selects which sites they want to have their advertisements appear on, and then inputs how much money they would be willing to pay for the available advertisement space on the site. In addition, the advertiser has the option to select at what times they would be willing to bid for that advertising space. From that point on, the advertiser will have its advertisement appear on that site whenever its bid is the highest (only during the times at which they had selected to bid). The advertiser, however, will not need to pay their maximum bid. Instead, the advertiser only needs to pay the smallest price possible that wins the auction for that advertiser. Additionally, the advertiser is able to change all aspects of their bids (i.e. maximum amount and times to bid), and can cancel their bids at any time. For a publisher, there are a lot more options. The publisher is able to select where advertisements appear, what size the advertisements will be, and what types of advertisements can be placed on their site. To give even more control, the publisher is able to select manually which advertisements they want on their site, select to trust all advertisements from a specific advertiser, and is able to remove any advertisements that they do not want on their site, even if it had the highest bid.. All of these tools make for a very streamlined and functional auction system for advertisements on Project Wonderful.

Economic Impact

A study recently published by The Harvard Business School says that the internet has directly employed over 1.2 million people. E-Commerce and online retail sales are projected to be over $204 billion in 2008. The study also stated that the internet is an economic powerhouse that drives U.S. competitiveness and productivity. Companies such as Google and Apple have been a solid rock in the recent U.S. recession. Google Adsense has been a huge success and is a vital part of e-commerce; producing a large impact on the US economy. Google’s Vickrey Auction system has been a part of this success for the company, helping it earn make billions in revenue. Google earns 97 percent of its revenue from it's advertising programs. Google’s 2006 income from advertising was $10.492 billion and only 112 milion of it was from licensing and other revenues. However, with all of its success, Google AdSense has had its downsides and pitfalls.

Competition

The search of business has gone through two pretty distinct phases. These phases went from the early 1990’s to the year 2000. Where there were a lot of options in search engines sharing their market shares to a much greater extent than it is being shared today. By the year 2000 Google had established itself as the market leader and since then the market has continued to tip towards Google, with Google now controlling over 65% of total market share.

History

In the early days of the web there was many search options. One could choose to search Lycos, Alta Vista, Web Crawler, Yahoo, Google and many more. As an early entrant, Yahoo dominated the search market. Yahoo used a system similar to that of a phonebook to index web sites. Yahoo allowed developers to link and describe their sites in the index. This was a good system; however it was vulnerable to exploitation. Site developers could describe their sites in any way they wished and could deceive potential visitors. Google started at Stanford University using a different approach. Instead of allowing developers to index their sites, Google developed a procedure for visiting sites and scanning them for relevance. After reviewing the relevance of these sites, Google would then rank them so as to display the most relevant first. PageRank, the ranking system, also catalogues "back links". A back link is a link from one site to another that does not have a reciprocal link. In other words, it treats back links somewhat like references as if the site displaying the link to your site without a reciprocal is "citing" the site. Also, sites back linked by high PageRank sites are also given greater value. On top of their more relevant results, Google took a less-is-more approach. Today, Google revisits its search engine algorithm on a regular basis. Google’s exact algorithm that it uses to rank pages is kept secret. This helps hedge against Search Engine Optimization "gaming" by webmasters, and keeps their search engine competitive. Google features an uncluttered home page that differentiated it from other search engines from its inception. To this day, when you go to the search engine's home page you see simply the word "Google", a place to type your query, and a top row of additional features, such as Gmail, or Google Images. Google's main competitor in the beginning, Yahoo, on the other hand, presents a slew of links and advertisements. In this case, a lack of noise was seen of as preferable for Google. Second, and perhaps more importantly, Google realized early on that the time it took for search results to materialize was an important factor for potential users.

The State of the Market in the United States in 2012

In recent years it appears, at least in the U.S., that the search engine market has become somewhat of a "tippy" market. With the market's high supply side economies of scale and relatively low taste for variety, it seems evident that one provider may eventually garner a majority of the market share and maintain a stable equilibrium. This idea is further reinforced by market share research that, as of March 12th, 2010, shows Google at #1 (with 65.5%), Yahoo at #2 (with 16.8%), Bing at #3 (with 11.5%), Ask.com at #4 (with 3.7%) and AOL Search at #5 (2.5%).

Although the market appears to be tipping in the direction of Google, Microsoft has been making a comeback since the revamp of its Live Search, now known as Bing. Google remains on top of the market, but Microsoft has partnered with Yahoo in an attempt to grab hold of a larger market share. As of the end of summer 2010, Yahoo search results are being powered by Bing. This means that you will receive the exact same search results from Yahoo as you would from Bing. In addition to sharing search results, pay-per-click advertisements from both engines will be shown on both sites. All advertising is now done through Microsoft's Adcenter. The effects of this merger can be thought of in terms of Network Externalities. By expanding it's share of the market, Microsoft has made it's advertising services more valuable to potential advertisers. Microsoft has essentially grabbed a third of the market through its merger and can now offer advertisers a much larger audience to cater to. As a result of Microsoft allying with a previous competitor, it has increased the size of it's network and is now better positioned to compete against Google.

International State of the Market

Although Google was recognized as the most dominant search engine in the world in 2007, Google has since been defeated by several local search engine companies in the international market, according to a market survey in 2009. For example, Baidu, a Chinese search engine company which provides over 50 various services, possesses 75.7% of the entire Chinese search engine market. To compete with different websites in different areas, Baidu locks-in its current users and expands its market share by creating over 50 various services of importance to consumers. For instance, Baidu provides its users with "Baidu Knows" and "Baidu Encyclopedia," which are similar to the services that Wikipedia provides. These two services allow Baidu's users to share knowledge and experiences in a query-based community which is supported by Baidu's search engine. To further entice consumer retention, Baidu also created a product called "Baidu Space," which is similar to the social networking website "MySpace". Since Baidu is a local Chinese company, it has a better advantage in collecting accurate and abundant local information than overseas search engine companies. In 2009, Baidu claimed it became the largest digital rural encyclopedia in China. Google China, a branch of Google, Inc, captures a 29% market share in Mainland China. One challenge to Google China is the self-imposed censorship in China. A project launched by the Chinese government called "Golden Shield Project" can automatically block prohibited Chinese keywords that appear on a blocked list. The consequences of this action served to dramatically decrease Chinese customers' satisfaction from using Google as a search engine. Due to the internet censorship laws in the People's Republic of China, about 10% of the contents on Google China are unavailable.. In contrast, Baidu voluntarily censors all materials which could possibly break the regulations of the Chinese government. In the Chinese search engine industry, Baidu is famous for monitoring and censoring its search results in a proactive and restrictive way.

In Japan, Yahoo! Japan ranks as the No.1 search engine website holding a 57% market share. Compared to Yahoo! Japan, Google holds around 30% of the market in Japan. At the same time, the market share of Microsoft’s product, Bing, is only about 3%. Yahoo! however, only owns a 35% minority stake in Yahoo! Japan. One of Yahoo! Japan’s biggest shareholders is Softbank, which has a 40% majority stake. In July 2010, BBC reported that Yahoo! Japan plans to use Google’s engine technology rather than utilizing the technologies of its strategic partner, Microsoft. As Yahoo! Japan mentioned in its announcement, they will adopt the advertising and distribution systems which have been created by Google.

Search Engine Optimization

Search engine optimization, commonly referred to as SEO, is the process of increasing the visibility of a website by obtaining a search result from a search engine, particularly with the intention of garnering higher ranked pages. The more regularly a web page is placed on a search result list, the more search engine users will notice its appearance through the search engine. In simple terms, search engine optimization is the process of trying to get a website as high up on a list of search results. SEO has increasingly become a huge part of a company’s growth strategy as more businesses are attempting to find ways to increase their site’s visibility to internet users and searchers. The higher up a company’s website is on a list of search results, the more visible the website becomes, and ideally, the more traffic the website gets.

SEO Techniques

Search Engine Optimization can encompass complicated and complex website restructuring. While many companies hire outside consultants who specialize in optimizing search engine results, there are some techniques that can be done fairly easily to accelerate search engine rankings.

First, you need to know where you rank in search engine result pages. If you don't know your current SEO, you won't know if your efforts are working unless you continuously monitor your ranking and have a baseline to measure from.

Then, it is important to understand how website visitors are being driven to the website, which help you determine which efforts are being best spent. This means tracking which links visitors are clicking on to get to your site, and knowing which search terms they used to find your website. Once one is able to discern which search terms visitors are using to find a website, a common practice is to place those search terms, or keywords, throughout your website. Keywords should be included in your title pages, page content, URLs, and even image names. The title page and page header however, are the two most important places to include keywords. If you are unsure of which keywords your visitors are using to get to your website, or if you don't have very many visitors, think about which words someone looking for information on your website topic would use to search for it. For example, a Phoenix car dealer that sells only Toyota’s would want to incorporate the words: Phoenix, Car, Car Dealership, Toyota, Phoenix Toyota, Tacoma, Corolla, into their website.

Be aware of “keyword-stuffing.” Search engine spiders are specifically programmed to disregard sites have an unreasonable amounts of keywords. “Keyword-stuffing” will not help to optimize your search engine ranking; you must be tactical in the use and placement of keywords. Google's sophisticated algorithm will not only recognize this, but in many instances will punish websites engaging in this behavior by lowering the PageRank of sites and decreasing their rankings.

Google Analytics

Google Analytics enables you to measure sales and conversions, and at the same time, gives you additional insights into how visitors use your website, how they reached your site, and how you can continue to keep them coming back to your site.

Google Analytics lets you view your reports in real-time. This allows you to see the number of people who are currently on your site, how they got to your site, what page/content they are viewing, and how long they spend on your site. You can also make custom reports that define the information you want to analyze in any given date range. You can also create custom variables that help your unique business understand your unique customer segments better and collect only the information that is most important to you. The analytic tools that Google Analystics offers include:

Content Analytics: Content reports make it easy to recognize which sections of your website are performing well. Content analytics show you which pages have the most traffic so that you can see which content visitors are driven towards – this will help one produce an improved online experience for your customers.

Social Analytics: Google Analytics tracks the success of your social media platforms, like Facebook, twitter, Google+, and YouTube. You can evaluate how visitors interact with linking features on your site (like the Google +1 button, the Facebook like button, and the Twitter retweet button), and additionally measures how well organizations are engaging with your visitors across social platforms through updated content.

Mobile Analytics: Google Analytics measures the influence that mobile apps may have on a business, similarly to how they measure the impact of social media sites.

Conversion Analytics: Google Analytics helps determine how many customers are being driven to a website through SEO, through advertising campaigns, or tracking clicks.

Advertising Analytics: Based on how well one's performance is with social, mobile, content, and conversion analytics, Google Analytics helps you make the most of your advertising by suggesting where to display your advertisements. By linking your website activity to various marketing campaigns, Google Analytics helps you increase advertising performance.

Flow Visualization and In-Page Analytics: This tool lets one learn the path visitors take through the site. This allows one asses how visitors interact with different pages on a website, allowing for an analysis of which pages lead to the most conversions.

• Google Places for Businesses

Google Places for Business allows you to claim a business listing/address on google. About 97% of consumers search for local businesses online. Google Places for Businesses is a free platform offered by Google that allows companies to be present online when searchers are looking for a specific business or a general type of business. Business owners have the ability to add photos, videos, websites, and special offers to showcase themselves to potential customers. The tool also lets companies post updates about their business, and respond to positive and negative online reviews. Businesses are able to make improved businesses decisions by learning more about their customers using insights provided by Google Places for Businesses like:

Total Impressions: The number of times users saw your business listing in a search result - This gives you an idea about how well you are doing with SEO for local search engine results.

Total Actions: The number of times users showed interest in your business listing - This gives you more information about how many users clicked your link to get driving directions, to get to your website, etc.

Top Search Queries: The most used keywords by searchers that lead to your website - This helps you determine which key words you should use on your website to attract more traffic

Where Driving Directions Were Requested From: This gives you an idea of how local your market is and which areas of town (by zip code) are requesting directions to your business

• Use Image Descriptions

Search engine spiders, search engines' algorithms or manual monitors, are only able to observe the text associated with an image to determine how optimal your site is. This is because search engines sift through only code to discern relevancy. Spiders cannot identify text in images. This means that is important to make the words that are associated with pictures or images as expressive as possible (using keywords). If a site contains a lot of images and no text, it is necessary to add “ALT” tags (or image names) to each of your images to increase the amount of descriptive text on your site. .

• Continuously Update Your Site’s Content

Search Engine spiders look for websites that are updated regularly with new and accurate information/content. An easy way to assure that your website is receiving new content on a regular basis is to incorporate a company blog. A company blog is an great way to reach out to your visitors, generate more opportunities for linking, while also boosting your search engine ranking. It is also important to dispense links about updated content from your site to appropriate social media platforms. Whether the content is exposed on your website, “shared” or “liked” on Facebook, or “re-tweeted” on twitter, this approach exponentially increases the number of locations where visitors can view links to your site.

• Obtain Indexed

A web crawler is an automated program which usually released by search engine. A crawler tracks web pages for search engine indexing. A web crawler is also known as ants, automatic indexers, bots, or Web spiders, Web robots. Search engine giants such as Yahoo and Google, they sent out crawlers in their system of search results. A paid submission service provides customers with a guaranteed crawling service. Example: Yahoo Directory and Google Webmaster Tools.

• Avoiding crawling

In order to make the materials relevant in search indexes, web administrators should not use spiders to crawls files or directories through the certain domain. Pages usually are not allowed to be crawled, such as sign in specific pages. Example: login pages of shopping carts.

• Increasing Exposure by Linking Back to Your Own Website

Cross-linking can boost a web page’s visibility by offering more links in different pages of the same website. This technique involves the integration of internal links into your website. Using the content which comprises regularly searched keywords can make the variety of search query wider. An example would include adding most searched keywords to web's meta data such as title tag and meta description. Another way to do this is to add a site map. A site map is a web page that lists all major pages on a website and links back to those pages.

Combat of Search Engines

There is a negative effect for "black hat" SEO, utilizing techniques to rank high in a search result list by unfairly "gaming" the system to their advantage. Search engines punish these sites who apply the technique (like “key-word stuffing”) without permission from them by lowering their position in the ranking list or erasing their items completely from their databases. The search engines' algorithms or a site’s manual monitor (spiders) can enforce the penalty to any companies that involve deception and use techniques which disapproved by the search engine companies. For a instance, BMW Germany involved in a deception case in 2006. As a response, Google removed BMW's web page from its database. BMW soon corrected its mistake, it publicly announced its apology to Google and deleted its suspected web pages.

Legal Issues

With the increasing amount of information becoming easily accessible on the web through search engines, many lawsuits have been filed in an attempt to protect private and copyrighted information, to safeguard crippling markets (like news papers), and to defend the search engine marketing efforts of corporate companies.

Privacy

Privacy is important when it comes to search engine data. In 2007 the European Union forcefully investigated many search engine companies in an effort to limit data withholding and preserve searcher privacy rights. This action came about when, in 2006, AOL Research released three months’ worth of private search data from over 650,000 AOL users, in which some searchers were identified by name. The European Union made a call to action for the privacy of personal search data.

Publishing & Copyright Lawsuits

As more content is being created, popularization for individual content is becoming seemingly difficult and scarce. Search engines, and many other forms of online media, permit for improved targeting of potential consumers and less wasteful and more effective business models. Due to the growing irrelevancy of printed material and a fear of a diminishing market, traditional publishing companies have fought back against search engines.

Newspapers

With the emergence of Google and other popular search engines, the newspaper business has increasingly been threatened. When Google began news coverage, some publishing groups sued Google in an effort to try to get them to drop their news coverage. In September 2006 a few Belgian newspaper companies won a copyright lawsuit against Google News for posting their news content. Google now pays a licensing fee to some publishers in order to post news.

Books

Google Print saw a lot of hostility. Google was sued in September 2005 by the Authors Guild and one month later, in October 2005, by a collective group of major book publishing houses.

Photos

Google was sued by Perfect 10, a pornography company for including hidden copies of stolen content in their image index, and for letting publishers to attain a profit on pirated copyright content via Google AdSense.

Pay Per Click & Ad Targeting Lawsuits

Google has the ability to program certain words as keyword triggers for specific advertisements. In 2004, Geico sued Google for a trademark violation when they found out that Google allowed the word “Geico” to be a keyword trigger to solicit competing advertisements. A similar case was later filed by Louis Vuitton. Lane's Gifts sued Google for click fraud. Google settled the case out of court and aimed to free themselves of click fraud related liabilities back through 2002, when they launched their pay per click model.

Reviews/Comparisons

Flight Tickets Search

The trend of searching flight ticket online made many search engines provide airfares services. Bing Travel, an airfare service supported by Microsoft bypasses Google and Yahoo’s airfare services became the best and cheapest flights service. Farecast charts show the recent months and predict the tickets prices’ changes in the future. Yahoo created alike tools for its customers to choose the flight tickets by comparing prices and changing the flight path to save their money. Google doesn't offer its customers a cheap flight tickets searching service.

Online Shopping Search

Bing Shopping service emphasizes user reviews from a multitude of sites. Also, Microsoft created a Bing Cashback program which provides discounts to the customers who purchased products on its Live Search engine. Google highlights the price of the products which is listed in its Google Shopping website. Similar to Bing's shopping service, it provides plentiful information to make its users understand the condition of the product before paying..

Local Restaurants Search

Bing offers a list of local restaurants with overview information such as customer reviews, quality scores and special suggestions. Google has restaurants’ maps, ratings, images and comments shared by Google users. Although Yahoo did provide the general information about the local restaurants, Yahoo gives less information about the local restaurants than Google and Yahoo did..

Network Effects and Tippyness

One important thing to recognize is how Google AdSense and AdWord operate as a two-sided platform. One side consists of the website owners who want to earn revenue via their website, and the other side consists of all the advertisers. This network also has some strong network externalities present. Specifically, as more website owners participate on Google AdSense, the more valuable Google AdWords becomes.

The combination of network externalities with the very low marginal cost that both AdSense and AdWord have makes this particular market very tippy. There is, however, demand for more variety of advertisements outside of Google’s current offerings (i.e. TV and print advertisements). This increase in taste for variety decreases the market’s tippyness. However, this low marginal cost has a lot of companies wondering if they are starting to become more effective than traditional print and television advertisements. For example in 2009 for the first time in 23 years Pepsi Co. spent no money advertising on the Super Bowl and instead decided to put all of their Super Bowl advertising budget towards social media through Facebook and Google.

References

Google AdSense

Google AdWords