Few graduate students’ experience the kind of technical and financial success that Larry Page and Sergey Brin found at Stanford in the late 1990s. Google was actually launched on Stanford University servers in 1996, but by 1998 the two founders had to move operations to a garage in Menlo Park, CA. Their bandwidth needs had completely outstripped the University’s equipment.
How It Works
As most people know, Google is a search engine, but how that search engine works remains a mystery for many. There were search engines before Google. Both Lycos and AltaVista were already popular and had gained large user numbers, but there searches were not accurate. That’s where the opportunity for Google to leapfrog past well established search engines existed. Provide a better strategy for search and get a bigger, more dependable audience. Larry Page designed an algorithm called page rank (pun on his name) that was built with linear algebra.
The idea behind Page’s algorithm was that the most significant web pages would have the most viewers linking to them. The algorithm he and Sergey Brin designed rested on a weighting of hyperlinks to any single page. So, page rank is at least partially measured by counting and evaluating incoming links to a page. Answers to search quires could be prioritized, at least partially, by the number and authority of incoming links to any page. The title and content of the page would be matched to the search “keywords,” or the words the searcher enters into the search window and the order of the many answers would be arranged by evaluating the links of all appropriate pages.
Computers are fast. Doing a search is an incredible computation by filters that are built on linear algebra to evaluate millions of pages in thousandths of a second. Page and Brin’s idea was first presented as an academic conference paper in 1998. The paper was titled, “The Anatomy of a Large-scale Hypertextural Web Search Engine.” That paper explained how hyperlinks allowed them to devise an algorithm that could consistently deliver the most relevant results as the top hits to a search query.
That’s a little bit of the back-story about Google and as you can tell, at this point it’s a sixteen year old story. A lot has happened since the first algorithm was developed, but that algorithm is still at the heart of Google’s business. Search is uniquely linked to marketing. When a person does a search he or she has already conceded she is open to suggestions. So along with the ranked answers the algorithm delivers, Google also adds some paid search advertisements on another part of the results page. Some people use those advertising results because they are also matched to the keywords. These additional paid search results make Google billions of dollars a year.
Google’s biggest challenge is to maintain its control of search. There are other search engines that compete with Google search, but none of them controls anywhere near the market share of search that Google does. The last time I looked Google controlled about 70 percent of all online searches. There are other places around the world where Google doesn’t control such a hefty percentage of the marketplace, but that is mostly due to language differences. In Russia, Yandex is the search engine that controls the biggest part of the marketplace, but the marketplace isn’t as lucrative because e-commerce isn’t as well developed. In China, Baidu is the search engine that controls the biggest part of the marketplace and China is now the biggest e-commerce marketplace in the world, so Google has competition in some places.
Google’s competitor search engines, however, are “me too” operations. They all use there own iteration of the Google search strategy built on links. No one has come up with a superior foundation strategy, so Google has an advantage in being the original and still most innovative developer of search algorithms. Google tweaks their algorithm many times every day. They make small changes to gain accuracy of search based on ongoing big data collection from their servers all around the globe. They also make changes to fend off marketers who attempt to game the system and beat the Google search algorithm.
There are ways to pad the number of links that arrive on any particular web page and make that page seem more significant than it really is. The practice is known as SEO, or search engine optimization. Google is constantly adjusting their algorithms to suppress SEO efforts. After all, as SEO succeeds to get web pages to the front page of a Google search, it distorts the accuracy of Google’s results and that makes their usefulness to online search efforts less valuable. You can’t blame them for protecting their niche, but it will continue to be an ongoing effort because getting a web page into the top of a Google search can be worth huge amounts of money.
For example, depending on the keywords involved, some searches are made to find products to be purchased. These keywords are hugely valuable. A keyword like “nfl jersey” is called a buyer’s keyword. A large percentage of those people who are searching for a National Football League jersey (nfl jersey) are about ready to buy that jersey. In a month that keyword may generate millions of sales. If you could hijack the search results so you could get your pages to show up when a searcher looks for an NFL jersey, you would stand to make a lot of money. That’s at the center of Google’s business operations. They have to control their search results as best they can.
Algorithm adjustments are one ongoing strategy to protect their business interests, but Google is far more aggressive about their niche than merely seeking control of search results. What if one company could control an entire collection of online tools so they could collect all kinds of information about their consumer marketplace and the individuals who use that marketplace. That’s the big picture approach to controlling a niche; go out and control all the niches that have anything to do with the marketplace that your primary business is involved with.
Google has the money, the reputation and the first in marketplace advantage all favoring their efforts to play big. They buy up other online companies that are of interest in their marketplace. The list of companies acquired by Google is long, but an example of their acquisition strategy shows up in their 2013 purchases of several companies that develop software for Android cell phones. Google was interested in making certain that as people move away from desktop and laptop computers towards cellphones, the Google search engine would continue to dominate as people do more and more searches from cell phones.
Google’s big picture strategy was characterized by Steve Faktor, the CEO of IdeaFaktory innovation incubator, as a four step process that defends its core business. The first step is Earn. Google makes 95 percent of its money from advertising so keep that first and foremost. The second step is to entice people to use more online services that will ultimately provide space where Google can deliver more ads or collect data to improve the targeting of how and where they deliver ads. The third step is to expand internet usage. If you’re online more then Google will have more opportunities to deliver ads to you and you will be more likely to use those ads sooner or later. Finally, the last step in the process is to be experimental. The experimental part is about staying at the cutting edge. By looking at all kinds of new ideas and playing with them Google stays in touch with what’s out there and what is likely to impact their market.
For now Google is on top of their game. They still are the big dog in the search engine niche and the search engine niche is probably the most lucrative niche in the digital world. Are their any weaknesses in Google’s game? The fact that they aren’t able to control China’s search market or Russia’s search market are significant indications there are challenges in global search. Still, Google controls search because every other search engine follows Google’s lead in algorithm development.