Google Worried? Yes.

One of the things that struck me the most about talking to all the folks at Google was this principle: the closer you got to the core, the more you heard the word "Microsoft." Eric Schmidt spent most of his career fighting (and losing to) Microsoft. Ram Shriram worked…


One of the things that struck me the most about talking to all the folks at Google was this principle: the closer you got to the core, the more you heard the word “Microsoft.” Eric Schmidt spent most of his career fighting (and losing to) Microsoft. Ram Shriram worked at Netscape, as did Omid Kordestani. John Doerr – enough said. The folks who are closest to Larry and Sergey are very, very worried about Microsoft, as well they should be.

Today’s NYT has a piece which provides some details on what Google is doing about that concern. From it:

With a $10 billion advertising market at stake, Google, the fast-rising Internet star, is raising objections to the way that it says Microsoft, the incumbent powerhouse of computing, is wielding control over Internet searching in its new Web browser.

Google, which only recently began beefing up its lobbying efforts in Washington, says it expressed concerns about competition in the Web search business in recent talks with the Justice Department and the European Commission, both of which have brought previous antitrust actions against Microsoft.

The new browser includes a search box in the upper-right corner that is typically set up to send users to Microsoft’s MSN search service. Google contends that this puts Microsoft in a position to unfairly grab Web traffic and advertising dollars from its competitors.

Web 2 aside, most folks use IE, and it’s still a critical distribution channel for Google. With Microsoft increasingly seen as the underdog in all things Internet, it’s not surprising to hear that Google is actively reminding the world of Microsoft’s virtual monopoly on browsing, nor is it a surprise to see how active Google is in promoting Firefox.

Again from Lohr’s piece:

The focus of Google’s concern is a slender box in the corner of the browser window that allows users to start a search directly instead of first going to the Web site of a search engine like Google, Yahoo or MSN. Typing a query and hitting “Enter” immediately brings up a page of results from a designated search engine.

That slice of on-screen real estate has the potential to be enormously valuable, and Microsoft is the landlord. Internet Explorer 7 is the first Microsoft browser to have a built-in search box, while other browsers like Firefox, Opera and Safari have had them for some time. Google estimates that the boxes, when available, are the starting point for 30 to 50 percent of a user’s searches, making them a crucial gateway to the lucrative and fast-growing market for advertisements that appear next to search results.

Read to the end to get the kicker: PC makers can change the default engine in IE7 – selling it to the highest bidder. Now do you wonder why Google is in bed with Dell?

25 thoughts on “Google Worried? Yes.”

  1. Strangely enough, when I downloaded the toolbar, the default was set to Yahoo.

    Microsoft’s consumer control argument will prove true in this instance. Not as control-friendly is, if you try to lower the security settings, a bar that keeps telling you you’re at risk. Microsoft admits you can’t turn that off no matter what.

    Meanwhile, an interesting angle on the search options in IE7: it includes sites such as ESPN, Wikipedia, Target, CNET, and USA Today. Everyone’s in the search business.

  2. The Firefox and Opera browsers come with Google set as the default, but Ms. Mayer said Google would support unfettered choice on those as well.

    She can say that, but a bunch of Firefox developers are on her payroll so it isn’t exactly like Firefox is an unbiased browser. Opera has huge financial ties to google too. I’m not one to defend Microsoft but this whining is a load of BS.

    Is Google done making a better service and better experience? Are they now just going to whine, lobby and litigate?


  3. Not sure who to cheer for here. As much as I am not a big supporter of MSFT, it only makes sense that they put their search engine first as an option in their browser. What does Goolge want — a coin toss to determine it? I can see why Google is worried, but they have to find a way to engage users on this, besides looking to the Gov for help.

  4. Most of MSN searchers are currently casual searchers. Many just use the “search the web” form at the top of the default MSN homepage. There searches are relatively simple – and the sponsor links together with the majority of the oage one SERPs are quite adequate.

    Few if any of those would change that default setting. The Google or Yahoo users would go the extra distance and change it.

    It is possible that those who are already using MSN default homepage search bar – would be the ones to use the embeded featurei in IE7.

    Also, Google itself has been attempting to become the WEB SERVICE version of the MICROSOFT desktop.

    Microsoft is just being proactive.

    Many once-big companies lost their status by being passive and not learning from history.

    During the early days of Google…….Yahoo and MSN both had ample opportunity to develop themselves.

    Neither, even became a real search engine until a couple of years ago!

  5. To David U – I think we Google shareholders would expect nothing less than a nasty brawl on the issue (in addition to constant innovation!). To let up on the pressure against Microsoft (or any other serious competitor) is akin to letting the steam out of the kettle… you don’t get it back in.

  6. The question we should be asking is if this wasnt Microsoft would anyone care as much? I choose to use IE therefore I am ok with whatever features intergrate.

  7. G’day from far-off Straya.

    I reckon my searches are split fairly evenly between “the web” and “pages from Australia”. This means that I want that option right there in front of me, just like it is on the Google Australia and Yahoo Australia homepages.

    I’m sure there’s a way to add Aussie Google to the toolbar search in Firefox and IE, but I haven’t bothered. Instead, Google Australia and Yahoo7 Australia are the first two items on my bookmarks toolbar. When I want to search, I hit the button. I never use toolbar search.

    If a good proportion of other non-US searchers do something similar, I’d say that the fuss over the 30-50% number is less relevant outside the good ole US of A.

    Just my Australian 2c.

  8. As Google gives toolbar away and comes pre-built into other free browsers, I think MSFT might be able to claim unfair pricing competition. IE7 has to be purchased as part of their operating system. I think they can claim costs to develop and sell IE7 are part of the total Windows package. Google very actively chooses to give toolbar away free, in light of the cost to develop it and partners with others giving browsers away free. It can’t cost NOTHING to develop this software, so giving it away free is done to intentionally disrupt a market (and no where does Google promise Toolbar will always be free…) Should MSFT really come under attack for pointing their own browser at their own search engine I’d suggest they discuss racketeering charges regarding these pricing policies with the DoJ.

  9. Google is more concerned about Vista then IE. Vista may have a search box next to “start” button, Vista may display search result right on desktop, and Vista may integrate office suite and email program all have search default as MSN. Google needs to complain about IE so as to warn Microsoft not to integrate search into Vista. However, I think Microsoft has already integrated desktop search function similar to Google Desktop into Vista. This maybe a part of the reason why Vista is delayed. This is why Google is paying billions to get on Dell’s desktop.

  10. Google may also be giving misdirection while they are quietly and quickly building a distributed operating system that aims to undermine MSFTs market position.

  11. aaron’s comment is getting closer to the truth

    1. Microsoft’s plans to embed search into IE7 and Vista have been obvious for more than 12 months.

    2. Anyone who thinks that Google is surprised by this disclosure needs to read some books on competitive intelligence.

    3. Google is building lots and lots of search hooks around the edges of Windows … the Dell relationship is an example, the WiFi activities are another, the Google toolbar is another.

    4. However, other than the One Laptop Per Child project, we are yet to hear anything beyond the rumors regarding Google’s efforts to seriously promote (directly or indirectly) an alternative operating system platform.

    5. While ever Microsoft controls the underlying OS, it is in the drivers seat. It seems inconceivable that Google would be merely content to work on the edges (that provides a bandaid solution), and not be working on the most fundamental weakness that comes from an OS controlled by your biggest competitor.

  12. Google should be smart enough to do what Yahoo does on, when it detects a FireFox user – the site serves a message at the top of the page urging the audience to ‘choose Yahoo,’ and provides instructions on how to change the default on the toolbar search from Google to Yahoo.

  13. John,

    IMHO, having a notion of initial default search engine and letting OEM set it for consumers is a major bargaining position for consumers. This way every search engine would pay money to OEMs to get themselves as initial default. OEMs in hyper-competitive PC market would pass the buck to the end users to make their PCs cheaper. Consumers win!!!

    Who would be able to offer the highest money to OEM? The best search engine. So this is pretty much like any successful business you see around yourself. Companies compete on value too not only on quality.

    Google wants to compete on quality only. Let us say that Google assumes that it has currently the best quality search engine.

    Value of a product means, its worth to a consumer minus the price a consumer pays for it. So sometime even the best car could have a lower value than a not-so-good car. I won’t be surprised if Toyota gives more value to customers than Lexus by being cheaper.

    In the search engine market, since the price of using the search engine is paid by advertisers and not the consumers, the value of a search engine is its worth to a consumer plus the subsidy the search engine provides for consumer to buy a computer (or other things like wifi!)

    Companies remain on cutting edge only when they compete on value too not on the quality alone. That also forces the companies to pass the buck eventually to end consumers.

    A currently leading search engine may not like this. It does not want to give consumer a bargaining power. It may prefer to simply play evil.

    Assume that a leading search engine has the best quality. In that case the leading search engine could pass the maximum bucks to the consumers. That way the leading search engine not only keeps its market share but could also become default on numerous computers. Who wins? Consumers. Who loses? Nobody. Profit of the leading search engine may suffer, but not the market share or consumer choices. The profit suffers not unfairly but fairly. Because the current profit margins are fat because currently there is no value competition.

    PS: The commentator is a Microsoft employee. The thoughts are his own. The commentator would encourage a game theorist to independently do an economic analysis of the situation to see whether consumers benefit by having an initial default search engine set by somebody else in order to get search engines compete for consumers.

  14. This gets to be the same story of world domination (internet that is).

    Microsoft has never been a fan of being OPEN in the past and they are still doing the same control of their operating system, (same old same old).

    Now it their product, they paid the R&D, cannot make it how they want. They are not forcing you to buy it.

    What is an alternative operating system to compete with windows???

  15. Not to be forgotten is the quality of search results. To date, MSN has not been able to compete with the relevancy of Google’s results, which is why users sought out Google in the first place.
    For years now, MSN has said ‘quality search just around the corner.’ Where are they? At Web Master World’s Pub Con in Boston two weeks ago there was much talk of how easy it is to spam MSN. Distribution is important, but it’s not the only part of the equation.

  16. This may sound like Google whining, but Microsoft’s use of the OS/Browser to gain market share in Search is the very definition of an Anti-trust violation.

    Anti-trust law forbids using your monopoly in one market to gain market share in another market. That is exactly what Microsoft is trying to do.

    On the other hand, it is perfectly legal for Google to do deals with browser makers to be the default home page or search engine for that browser. Google doesn’t have a monopoly on anything. Neither do the browser makers.

  17. >>Anti-trust law forbids using your monopoly in one market to gain market share in another market. That is exactly what Microsoft is trying to do.

    Firefox’s default search engine is google , is Big G trying to get a monopoly ?
    Microsoft is #1 in Browser/OS – Google is #1 in Searcheingines so what`s the matter ?

  18. John,

    Many people asked me that other search engines have to pay to the OEMs to get themselves as initial default whereas MSN does not have to.

    If you analyze this, this is effectively not the case. This is because OEMs are free to change to whatever initial default they want to offer. You could think of it in one of the following two ways.

    1. Microsoft conveys to an OEM. “You could set it to any default but in our opinion MSN search is the best. If you do not agree please feel free to change it.”

    2. An OEM runs an auction to set the initial default. Microsoft “bid” for making MSN as initial default is included in the price of the Windows. Let us say that it is zero cent and by being the first bidder gets to be the initial default unless somebody beats it. Another search engine could easily beat that bid and get itself as the initial default. If MSN wants to remain as the initial default then it has to bid higher in the future and compete just like other search engines. Fair enough. In other words, MSN has slight advantage only when other search engines do not care of being the initial default. As soon as they start caring about the initial default, MSN slight advantage goes away.

    You do not see MSN’s bid for being the initial default. This is very similar to the fact that when Google advertises on its own AdWords program, you do not see Google’s bid. Although there it might be unfair to advertisers because Google gets the top position and loses the revenue of the last position. (This last sentence is for people who understand auction theory. I must add that it is not difficult to learn its basics.)

    Note that Microsoft could have run this auction itself. This way Microsoft would have benefitted from the bids of other search engines and still have played fairly. I think letting OEMs run this auction is a consumer empowering move. If OEMs want they could even be more explicit in passing the monetary benefit of search engine box to consumers. For an example, on the Dell computer ordering page, Dell could show the bids from other search engines. Choose Yahoo [-$50], choose Google [-$100], and choose MSN [$0, the current choice]. What will a rational user choose? Which search engine could afford the highest bid?

    Note that buying initial default setting is like buying customers. All other businesses buy customers. Google is in the business of selling customers. When businesses try to buy customers, customers win by getting great benefits, e.g., free web-search!

    When it is Google’s turn to buy customers, Google should just do that instead of complaining to malign Microsoft’s name. If it does not choose to buy customers then later on it should not blame Microsoft for its own failures. Besides buying customers from OEM, Google could also choose to advertise. Advertising on TV means buying customers from TV channels instead of OEMs. This way Google could keep in check the amount OEMs demand for selling customers.

    If Google thinks, people won’t be inclined to change the initial default then it should try to convince people by marketing its search engine. Google could show TV ads, newspaper ads, MSN-search ads to tell how great its search engine is and how easy it is to change the search-box default – that is visiting and pressing a button.

    I respect Google’s choice to remain a company which likes to do things differently than ordinarily done. But sometimes, the ordinary method is tried and tested. Winning customers by marketing and advertising is one such method!

    Note: The commentator is a Microsoft employee employee. This comment is his own personal opinion.

  19. Karmal you are funny. I can see you in 5 yrs giving this speech to a glazed-over jury. The “bottle of pepsi in a six pack of coke” joke is circa 1998 and was tired then.

    Ironically, I’m on your side. Google needs to sweat. But I’d eat worms before using MSN.

  20. I don’t know about you all, but my prefered search utility is Dogpile! IE7 doesn’t allow me to select it at all as a default search, something that was supported in previous versions. Instead of arguing who has the default, why have only certain search vendors been included?

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