John Battelle's Searchblog

And they are opening an investigation into it.

According to a Dow Jones Newswire report, on Friday afternoon the FCC sent letters to Apple, AT&T, and Google. The federal inquiry asks Apple why the Google Voice application was rejected from its App Store for the iPhone and iPod Touch, and why it removed third-party applications built on the Google app that had been previously approved. The federal commission also asks whether AT&T was allowed to weigh in on the application before it was rejected, and seeks a description of the application from its creator, Google, according to the report.

For background, see my piece chastising Apple here.

Yesterday I spent an illuminating hour with the folks behind Wowd, a still-private-beta search upstart that is taking a new approach to, well, just about everything in search as we traditionally understand it.

In a odd coincidence, this morning Venturebeat published a thoughtful piece on how search might shift when more data, in particular social data, is added to the mix.

I point these two links out as a marker of sorts, I've got a much longer piece brewing in me about Wowd's approach to search, and how the Big Guys might respond should an upstart like Wowd get traction. More on that soon. Meanwhile, the Wowd guys posted on Tim and my Websquared paper here.

Unfortunately our schedules didn't match up yesterday, and I did not get a chance to talk to the folks now responsible for the Yahoo Microsoft deal.  

But as I thought through the deal and its implications, a ton of questions came to mind, and it seems worth the time to write them down. Perhaps folks can answer them in this thread- I know there has been a lot of information flying around, and it's entirely likely that many of these questions have been posed and answered elsewhere.

So where to start? On its face, the deal is pretty clean. Microsoft runs the technology and owns the long tail, self service advertisers through AdCenter, Yahoo owns sales with larger customers and will keep the lion's share of the revenue its site generates.

But when you start thinking about it, a lot of questions remain unresolved. To wit:

- What will become of all of Yahoo's efforts in search, many of which were, philosophically at least, quite promising? In particular, what becomes of Yahoo BOSS? Of Yahoo's philosophy of "open search," (witness SearchMonkey), which I find compelling? Does that all go away now?

- Related, the deal states that Yahoo is free to build its own user interface on top of Bing on its own sites. But Bing's interface is actually, to my mind, one of its core strengths. Will there be an open API and SDK for building innovative interfaces on top of Bing, or will this essentially fork between what Microsoft does on sites it controls, and Yahoo's approach on sites it controls? I for one think it'd be really smart to let a thousand developers bloom with Bing/Yahoo.

- Will the two companies work together to develop an alternative to AdSense? So far, it's a one company race in that world.

- What will happen to all the technologies (and people) related to Yahoo's current search platform? Will it be sold to a third party, retired, or continued on some other fashion?

- Will the combined companies go after other major distribution points like AOL, Ask, etc? Will they work together or will that be Microsoft's role alone, and does Yahoo have any say in how those deals might work, given it provides the majority of the distribution?

- Related, and critical, how will data be shared between the companies? What data will be shared, and to what end will it be used?

- Again related, but how will that data be used in each company's display platforms? Yahoo has "apt", Microsoft has aQuantive...both have exchanges, ad networks, and display infrastructure. Will they continue to compete, or might they find a deal, at least in "performance display"? In premium display, which is clearly where both companies will compete, how will search data be leveraged?

- The initial market response to the deal is that Yahoo looks weaker. How does Yahoo respond to that sentiment?

- Related, what is the vision for Yahoo now that it has exited the search business? What is the core mission and vision for the company - is it no longer a technology play? Pure media play?

- What about mobile search? Does this deal extend to mobile? Local (where I thought Yahoo always did best).

That's my first set of questions, I'll add more as you send em in to me...

UPDATE: Both Yahoo and Microsoft have been in touch about chatting further, and we hope to slate time later in the month (as I am on "vacation")....more as I have it.

NYT has a good story:

The terms of the 10-year agreement call for Microsoft to license some of Yahoo’s search technologies, and Yahoo will initially receive a lucrative 88 percent of search-generated ad revenue from Yahoo sites.

Cnet does as well. Many folks are noting Yahoo's shares slide at the open this morning. No "Boatload" of cash upfront...

More as morning coffee kicks in.

Update: YHOO is down nearly 10%, Wall St. no likey. Given the deal was already priced in, that's interesting. MSFT is slightly up.

The formal statement is here. A marketing website called "ChoiceValueInnovation" is now up too. Really.

Update 2: I am trying to slate some time to talk with the principals involved, if I do, I'll write it up here later. In short, though, watch two things: 1/How yahoo plans to "own" the UI on top of Bing - given Bing's UI is key to its differentiation, and 2/Who owns the data and how is it getting used to leverage competing display advertising platforms....

What I find most interesting in Twitter's homepage overhaul is the focus on search. I mean, it's all about search. That might confuse some folks who don't understand what Twitter really is. And there's no explanation of that on the home page...So...what do you all think?

Not my sources, of course, but it's all over the web now, including banking analyst notes, the WSJ, and elsewhere. Here's a Google news link for those who want to dive in.

...and by the Internet, I mean the *values* of the Internet, in particular, the values of a platform. When you build a platform that leverages the Internet, it strikes me you should act like a player in that space - IE, not acting like a monopolist, a bully, or in your own self interest at the expense of those who use your platform - like your customers and developers.

Such seems the case with Apple's refusal to allow two Google apps into the iPhone App Store. Yesterday's ban - on Google Voice - is easy to understand - at least if you are venal and driven by the same corporate interests as your partner, AT&T. Voice bypasses AT&T's networks and means less cabbage in AT&T's pockets.

But Apple also banned Latitude, a mapping application. Why? Might it be because Apple has designs on that category? Or does AT&T?

In any case, if Apple wanted to give Android a boost, it sure as hell has done it. Actions like this are totally contrary to the spirit of the Web, and I hope Apple loses, big time, for taking them. At the very least, it feels like it's time for Eric Schmidt to leave Apple's board.

(image )

Back in 2005, Google bought 5% of AOL for $1 billion. Today, Time Warner disclosed it had bought that 5% back from Google for....$283 million.

Ouch. But wait. There's a silver lining.

Back when the deal was done, analysts like...me... suggested that AOL was going to go public, and that Google was going to profit from that. Well, looks like AOL will go public...but not at the lofty valuation 2005 seemed to promise. Of course, Time Warner dithered for five years about whether to spin the damn thing out (I pleaded in a blog post in 2004 that they do this). Had they done in then, or even in 05 or 06, I'd wager Google would have looked pretty damn smart.   

Now, they've lost $717 million on the deal, but let's not forget, they did keep the AOL distribution for their search services, and that's certainly worth a lot. Not to mention, Google really owes AOL one for the solid that company did in giving their business to Google back in 2002. That deal pretty much set Google's table for a good seven year feast, one that was so rich, Google can afford to write down more than half a billion dollars. And as you may recall, the company already has. Looking at the math, Google wrote it down $726 million back in Q1. That means, if my math is right, Google in fact MADE $9 million on the deal. Whadya know?!

We've been talking about a search deal between Yahoo and Microsoft for so long (no, really, read this piece I wrote over two years ago) that it feels, to me anyway, like the deal's already been done. But it hasn't.

Today new details are coming out, thanks to a report in Ad Age (Ad Age? Breaking search news? I really must get back to reporting, eh?). While there's nothing particularly new in the report - Yahoo will sell ads on its own site as well as Bing.com, Microsoft will focus on the technology, and both will split revenues - what is new is the claim that the deal will be announced "as soon as this week."

I for one sure as heck hope it will, so we can move on from this slow motion train wreck of a negotiation. Valuable time has been lost - with clarity, both teams can focus on competing and winning, rather than arguing over a diminishing share while Google runs away with the game.

Which raises the question: "What *is* the game"? It's one worth asking.

It's very clear that Yahoo and Microsoft should partner on search. What I find more interesting is whether they will partner on display - both companies have major ocean-boiling platforms in development, and neither seems anywhere near where they should be. This is an area where Google is vulnerable.

What do I mean? Well, Yahoo bought Right Media and a few other ad network plays, and pre Bartz, was intent on creating a soup to nuts display marketplace. Microsoft bought Acquantive. Both did so in response to Google's purchase of Doubleclick. While the first wicket of the search game is over and Google has won, display is another beast entirely. Billions of dollars have been invested in owning display inventory and platforms, but it's not clear those dollars will return effectively. For now, they seem content to focus on what's called "performance display" - in other words, display ads driven by the same direct-response mentality as search.

There's certainly a good market out there for performance display, but it's not a game changer. The game changer is in building a platform which works for the other side of the marketing equation: branding. And as far as I can tell, none of the major players seem to be paying attention to that opportunity. They should be.

I'll be writing more on that topic in the coming weeks.

The world's abuzz this week with word that Twitter is getting serious about business - the proof point being Twitter's new subdomain "business.twitter.com" and the "Twitter 101" handbook currently living there, a white paper of sorts aimed at helping companies figure out how to leverage the sometimes befuddling service.

This all reminds me of Fall 2004. Back then, Google was coming on hard in search. And while the world viewed Google as an upstart stealing query share from the incumbent Yahoo, the real drama was happening on the business side. By the Fall of 2004, Google's AdWord and AdSense solutions were warranting serious attention from the same ecosystem of SEO/SEM that previously had focused on Overture's offerings.

In this Fall, 2004 thread on Webmasterworld, where SEO types hang out to talk shop, search marketers debate the relative performance and profitability of Overture compared with Google. Prior to that year, Overture was the undisputed king of paid traffic. But in '04, Google started pulling ahead, and since that time, it's never looked back. Why?

Well, there are myriad reasons: Google had a better consumer facing search experience than Yahoo (Yahoo bought Overture in 2003), and Google's AdWord service including a quality ranking score (as well as paid ranking like Overture), for example. But I believe something else was at work, an upward spiral of adoption by small business advertisers.

What do I mean by that?

Well, I was covering the search space pretty closely back then, and one of the metrics touted by both Google and Yahoo were the number of advertisers who were using their service. Google didn't publicly announce those numbers, but my sources inside the company did whisper them to me from time to time. Overture, on the other hand, touted their "active advertiser" numbers in their public filings. Its number of active, paying advertisers crossed 100,000 around the time of the Yahoo acquisition, and upwards of 200,000 a year later. Who were all those advertisers? That early in the search revolution, they sure weren't the Fortune 500, or even the Fortune 5000. They were SMBs - the lifeblood of the US economy, responsible for two thirds of jobs and the driving force of a nascent recovery from the 2001-03 recession. These businesses live on the edge of profit at all times, and they are always the first to find tools that might help them succeed. By '04, tens of thousands of them had found paid search.

As far as I could tell, Yahoo stopped disclosing the figure after the acquisition closed. And as I was strolling the halls of the first Web2 conference (October 2004), I got a phone call that might explain why. The call was from a source at Google, who wanted me to know that Google had eclipsed Overture in the number of total active advertisers. I couldn't confirm that number, nor could I get Overture/Yahoo to respond, so I dropped the story (can you imagine a blogger in the tech world not printing a story like that now? How times change.).

Anyway, I was reminded of this anecdote while reading through "Twitter 101" and it occurs to me that to really succeed, Twitter must be useful, really useful, to small businesses. It was those tens of thousands of small businesses who drove success at Overture, and then at Google. Search became an essential channel for lead generation, and Google became the dominant player in that channel.  

Billions ensued.

While a lot of the attention around business success on Twitter focuses on big brands like Comcast, JetBlue, or WholeFoods, the ecosystem that will really drive value, revenue, and profit for a TweetSense like execution will be the small business ecosystem. And absent a clear service like AdWords for Twitter, a user manual of sorts that explains why Twitter can help business makes an awful lot of ... tweetsense.

Just saw this story in my feedreader, and thought it worth a mention:   

An update downloaded by BlackBerry users of a Middle Eastern wireless provider contained spyware that secretly read and stored text messages and e-mails, Research In Motion confirmed. Etisalat, a cellular service company based in the United Arab Emirates, released a firmware upgrade to BlackBerry subscribers on July 8 telling them its installation would improve the device's performance and was required for continued service.

...BlackBerry maker, Waterloo, Ont.-based Research In Motion, said in a statement that it "did not develop this software application and RIM was not involved in any way in the testing, promotion or distribution of this software application." Etisalat originally issued a press release that referred to the software as an official BlackBerry upgrade.....RIM has since issued its own utility allowing users to uninstall the application.

I think any time a major tech brand takes the high road when it comes to potential government spying, the entire Internet gets better. While no one will confirm this, I am sure, it's likely that the update was included at the behest of a government agency of some kind. Kudos to RIM for doing the right thing, it reminds me of what Google did back in 2006, exposing the DOJ demands on search data.

Yahoo has redesigned its homepage, on the same day it announced improved profits (thanks in large part to the painful cost cutting of the past few quarters). Quite directly, Yahoo says "This new launch represents the most significant change to our homepage since the company’s inception."

That's quite a statement. I've spent some time on the page, and I'm not sure it lives up to that billing. The big deal, in short, is Yahoo's promotion of other sites that are not in Yahoo's immediate family - Facebook, Myspace, and eBay made the permanent list of integrated suggestions - you can get your updates on a customized Yahoo page (no Twitter, sorry) - and the first splash I got suggested - quite randomly - This Old House and a few others.

The parts of the home page that are not customized are overwhelmingly LCD (lowest common denominator) - very celebrity focused, for example. What to do? That's what binds us all, I guess.

I do think this is MyYahoo reborn and updated for the way the web works, but it can't be so random in its suggestions (kinda like Twitter is in its suggested users). In short, it has to go all the way - it has to become the ultimate aggregator for the "rest of the web" if it's going to work - and that means that the mass of Web users have to understand what that means. Given that most folks have no idea what an RSS reader is, and even more folks have no idea what TweetDeck is - this is going to be a challenge.However, Yahoo has a lot of data on what users are doing, and can tune those suggestions over time to create a good experience, should it chose to lean in there. But I like the direction. It strikes me as the right way to go.  

I don't write that much about core geeky search stuff here lately, but I still get a bit excited when I am reminded that once again, ACM's SIGIR is happening. It's always fun to take a look at the agenda and see who is speaking and presenting papers. And taking a look at the papers tells us something about what's up in search, who's adding value to the academic search community, and on what topics.

Microsoft has a stamp on this show, with, according to Microsoft, nearly 30% of all papers presented at the event.

Since vacation last week I've been on the road constantly, and unable to find much time to write. But this NYT Op Ed, by Robert Cringely, caught my eye, as it addresses something I've been watching closely for some time - the competition between Microsoft and Google. Clearly the two giants are circling each other's core revenue streams - Google announced a vapor competitor to Windows last week, and Bing is Microsoft's answer to Google search. (Disclosure: Both companies have sponsored this site in the past, and Bing is sponsoring it now (see BingTweets), and both companies work with FM, my business). (image credit)

So it makes sense that there'd be a fair amount of speculation on what it all means. But Cringely's take, validated as it was in the pages of the Times, struck me as worthy of thinking through. In it he 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.

I don't agree, to a point. I think it's true that outside of core search and advertising platforms, Google tends to throw a lot of pasta at the wall, in the hopes that some of it will stick. But Google is dead serious about cloud computing, and I very much doubt they'll abandon Chrome OS. And I've spent a fair amount of time with the team behind Bing, and I think Microsoft is equally serious about this effort.

Cringely continues:

What Google's chief executive, Eric Schmidt, has to fear more than anything else is that he'll awake one day to learn that the Google search engine suddenly doesn't work on any Windows computers: something happened overnight and what worked yesterday doesn't work today. It would have to be an act of deliberate sabotage on Microsoft's part and blatantly illegal, but that doesn't mean it couldn't happen.

The idea that Microsoft would do such a thing strikes me as patently ludicrous. Microsoft has learned its lesson with the DOJ, and it's not going to run down that alley again. I am certain there are many other things about the company that keep Eric Schmidt up at night, but this is not one of them.

Cringely continues with what struck me as a very misinformed statement:

The engineering teams for any of these products are, at most, 20 to 30 people....Bing hasn't a hope of toppling Google as the premier search engine and Microsoft knows it.

Wow! Did Microsoft really make Bing with a team of 20-30 folks?! And Microsoft is just doing Bing to keep Google on its toes?! I had to ask. Here's Microsoft's official response: "This is inaccurate. The Search and Advertising platform engineering team is in the thousands...(and) We are in the business to succeed long term."

Now, success doesn't have to be toppling Google, I think Microsoft would settle for gaining five to ten points of share this year, and continuing to show share gain over the next few years. The company posted some examples of early success earlier this week, and while Bing has its detractors, it's clear the new engine has had a pretty successful initial launch. It remains to be seen if that momentum can continue, and if the concept of search as an application can scale.  

The growth is back, impressive but slower than before, but it's probably quite a relief over at Twitter HQ to see no continuation of the trend from last month.

Update: As of this morning, the Compete chart does not show the growth for June yet, so here is a screen shot:

I'm on vacation this week, ostensibly, building a treehouse and taking time off. Hence the light posting schedule. But I've also been tracking Aardvark, the lightweight question answering service that uses your social graph, IM, and email accounts as a channel to intelligently route complicated questions to those who might best answer them, and as readers know, I'm intrigued.

So when Max Ventilla, Aardvark's CEO, told me he was finally integrating Twitter, I knew it'd be big news.

As explained on the Vark blog, using the service on Twitter is simple:

Now you can ask Aardvark a question via Twitter: Just include '@vark' and a question mark ('?') in your tweet Aardvark will find the perfect person to answer, and Direct Message you their response in a few minutes (Set up Aardvark to recognize your Twitter handle here: http://vark.com/profile/twitter).....Aardvark is all about providing the questioner with a magical experience of getting any question answered in about five minutes, and providing the answerer with a gratifying experience of helping someone out in a moment of need. We think asking questions via Twitter is a natural way to bring this experience to more people.

I feel the same way. I've used Vark on Twitter in private beta and it worked great. Now that the service is public, I have a feeling it's going to become one of the most useful applications on Twitter. Next step, Groups, and then watch out....

I like to do this exercise from time to time - asking how my predictions for the year are holding up given six months have passed since I posted them.  

Well, let's see, shall we?

1. We'll see an end to the recession, taken literally, by Q4 09.

I think most folks agree this will happen. I'm not saying it has, just that the consensus is we're on the way there.

2. The online media space will be hit hard by the economic downturn in the first half, but by year's end, will have chalked up moderate gains over last year in terms of gross spend.

Jury's out, hard to call this one, but my own experience indicates this has a good chance of happening.

3. Google will see search share decline significantly for the first time ever. It will also struggle to find an answer to the question of how it diversifies its revenue in 2009.

Ok, so is this significant?! Well, yes - it's the first share slip Google's had, and it happened this year, but it's tiny. Hey, it's a start. As for the answer to how it diversifies revenue? Well, the jury is out, but it's still all AdWords, all the time, so far. YouTube is struggling with a model, Google admits. Meanwhile, Facebook seems to have found one (in self service)...

4. Despite #3 above, Google stock will soar in by Q3-4 of 2009, mainly because demand will pick up, and when demand picks up, it's like rain on a field of newly sown wheat.

This is already starting to happen - GOOG has moved from below 300 in March to well over 400 now. But we'll see if it continues. Several analysts are predicting a return to 600 or 650, in fact.

5. Tied to #3 above, Microsoft will gain at least five points of search share in 2009, perhaps as much as 10.

I know, I'm crazy, right? But the company did release Bing just last month, already won two or so points of share, and has a 100mm marketing war chest, and its major distribution deals have yet to hit Comscore. Wait and see....

6. Yahoo and AOL will merge.

This one I may be wrong on, because first, AOL has to spin out. Or maybe it almost does but then combines with Yahoo this year....

7. ... in the second half of the year, Microsoft will buy its search monetization from the combined company.

Well...again, this takes longer to develop that this year, I'm guessing. I probably have egg on my face here.

8. Apple will see a significant reversal of recent fortunes.

Wow, I am so wrong on this so far. Even with Job's health issues, which are not what I meant when I wrote this. There is always the second half of the year.

9. Major brands will continue to struggle with the best way to interact with "social media."

True so far, but wow, what a great, great opportunity for folks who run companies in this space. Cough.

10. Agencies will increasingly see their role as that of publishers. Publishers will increasingly see their role as that of agencies.

I think this one has become obvious. I'll hope to prove it when I do my annual round up at the end of the year.

11. Twitter will continue its meteoric rise.

Remember, I said this back in January. Twitter was at 5.9mm uniques according to Compete. It's now broken 20mm there, and we all know it's way bigger than that. It took a pause last month, and we're all waiting to see what June's numbers look like....

12. Facebook will do something entirely shocking and unpredictable....As I think about it, it might be as simple as making Facebook Connect truly open, and changing its policies to make it drop dead easy to get data out of the service. Also, Facebook will build a Twitter competitor, but it will never leave beta and will ultimately be abandoned as not worth the time. Instead, Facebook will "friend" Twitter and the two companies will become strong partners.

Wow. They did it. At least the first part of it. We'll see about the second part.

13. Lucky #13 is reserved for my eternal mobile prediction: 2009 will see the year mobility becomes presumptive in every aspect of the web.

I think finally, this one will be true.

14. Lastly, I promise, I will have sold my book and will be hard at work on it.

Well, we'll see....

Thanks for keeping me honest!

I've been complaining that nearly no search engines surface real time data (for now, that's Twitter, but Facebook is coming soon enough, and there will be tons more). In fact, I complained to Microsoft about this well before the launch of Bing, and then complained some more when Twitter results were not surfaced in initial beta versions of the service. Man, I'm grumpy lately, eh?

Well, that's changing. Sort of. From a Bing blog post today:

There has been much discussion of real-time search and the premium on immediacy of data that has been created primarily by Twitter. We’ve been watching this phenomenon with great interest, and listening carefully to what consumers really want in this space. Today we’re unveiling an initial foray into integrating more real time data into our search results, starting with some of the more prominent and prolific Twitterers from a variety of spheres. This includes Tweets from folks from our own search technology and business sphere like Danny Sullivan or Kara Swisher as well as those from spheres of more general consumer appeal like Al Gore or Ryan Seacrest. Starting later today, when you search for these folks names in association with Twitter, you’ll see their latest Tweets come up in real time on Bing’s search results.

Oh boy! I wonder if maybe...I'm one of those folks? Sigh. No such luck. Although, to be honest, I can't seem to make it work for anyone, including Danny and Kara. Maybe it's not working yet in my area.

In any case, what DOES come up is my and everyone else I tested's Twitter account, at least when I add "Twitter" to the query. That's a major step forward from where Bing was even at launch. That said, there is NO reason to make folks put the word "Twitter" into the query. None. That is a failed use case. Commit, or don't commit, but don't ask users to specify Twitter to know what someone might be saying in real time. Better to indicate that the query has real time results, and offer them if a searcher wants them. Or figure out some other clever UI solution. Real time is here to stay, may as well design to it, and not ask users to do it for you.

After all, with the whole Websquared thing, we'll soon be leaving real time trails all over the globe, and we may well want them surfaced by our favorite search engine, no?

But good on ya, Microsoft, for dipping your toe into the water. Google, your ball.

UPDATE: It works now. I'm one of the chosen ones! Oh joy!