FT : Google’s Search Dominance Far From Complete

Wednesday, September 17, 2008

Google has made little headway against entrenched local search companies in a handful of countries around the world, in spite of making a concerted investment since the middle of the decade.  Indeed, some of the local players, having withstood the challenge and consolidated their position, are looking to capitalise on their success.  Yandex, which handles 46% of search queries in Russia, has been preparing since the spring for a listing on the US stock market. Seznam, which controls 63% of Czech searches, has been the subject of a number of buy-out approaches, according to two internet industry insiders.  Along with just three others, these represent the only local companies that have prevented the global search business from turning into “Planet Google.”  Baidu in China and Naver in South Korea each handle about 60% of internet searches in their respective countries, while Yahoo Japan claims slightly more than half of its local search market.  Some common themes lie behind these local success stories, internet veterans say: Google has played second fiddle to rivals who invested much earlier, perfected their technology to work with local languages and came up with innovations that Google is now having to copy.  These companies have since been able to consolidate their hold thanks to their well-known local brand names and a strategy that often relies on combining search with a range of other portal-like services to keep users on in-house sites.  When it comes to the most prominent of these markets, China, senior Googlers do little to disguise their frustration.  Baidu’s lead has much to do with regulations that have hurt foreign competitors, they suggest. 

Eric Schmidt, Google chief executive, said in an interview with the FT last month: “Because Baidu had such a head start largely because of the various bizarre laws that China has with respect to foreign media.  It will take a while, but we will eventually do well there.  “All of us should tell the Chinese that their local markets need to be open to foreign investment, they need not favour their local competitors.”  Yet similar complaints cannot explain other markets where the search juggernaut has been forced to play an unfamiliar supporting role. In these countries, Google has been kept at bay by locals who have turned their “first-mover advantage” into a lasting lead.  In Russia and the Czech Republic, Google was late to invest and did not initially match the locals in the quality of its local language results, admits Mohammad Gawdat, who oversees112 countries for Google as head of the emerging markets in Europe, the Middle East and Africa.  But he adds that investments made since the middle of the decade, for instance to adjust its algorithms to reflect the nuances of local language, have put Google’s search results on a par.  Quality alone may not be enough.  Having got ahead, the locals are proving hard to dislodge.  Baidu’s strong domestic brand, for instance, should enable it to keep its lead as new users come online, particularly in “third- and fourth-string cities”, said Dick Wei, an analyst at JPMorgan.  In Japan, a surge in Google’s market share has petered out as Japanese internet users have shown their preference for portals such as Yahoo over a pure search engine.  In the longer term, Google is relying on its ability to invest more in technology to give it an edge, particularly as the number of web documents in local languages explodes and local players find it harder to keep up, Mr Gawdat says.  It is also counting on its greater experience in delivering relevant advertising alongside search results to leapfrog locals.  For now, though, the instructions from senior management are clear, says Mr Gawdat: build the best service and don’t worry about market share.  “It may take more time, but who cares? The rest of the world is doing really well.”


In Google’s engineering-driven culture, algorithms rule.  But to compete in some countries where it is behind, Google has had to take a leaf out of the locals’ book by turning to humans rather than computers to answer questions.  A lack of content lies at the heart of the problem.  With relatively few local language web documents to search, Google’s search algorithms cannot prove their edge.  South Korea’s Naver and the Czech Republic’s Seznam both have successful services where users answer questions posed by others.  Google has copied that with a new service of its own, called Confucius.  Introduced in the emerging markets, it has been extended into Chinese and Thai, showing that Google is prepared to change its normal game plan to reflect local preferences, Mohammad Gawdat, Google’s head of emerging markets in Europe, the Middle East and Africa, says.  Although he does not refer to it, Google had a similar service in the US until two years ago but closed it after failing to make inroads against Yahoo Answers, the market leader.  In another attempt to attract more local language content, Google recently launched an Arabic version of Knol, a Wikipedia-like service designed to attract user-generated articles.  That was the first non-English language version of Knol and a sign of the importance Google gives to building a long-term presence on the Arab-language internet, Mr Gawdat says.

Reference : http://www.ft.com/cms/s/0/99d3e98a-8406-11dd-bf00-000077b07658.html

One Response to “FT : Google’s Search Dominance Far From Complete”

  1. Maureen Ridley Says:

    Perhaps it would help if their chief executive were not so arrogant as to suggest that Chinese laws are “bizarre” and remember the USA’s own protectionist policies and actions. What rank hypocrisy.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: