Google: Mathematical Logic or Opportunism
October 5, 2008
Beta News posted a prescient article by Scott M. Fulton, III “Was the Yahoo/Google Deal a Ploy to Weaken Yahoo?” You can read this article here. The hook on which the article hangs is Google’s deal with Yahoo to sell ads for the Stanford-spawned America Online clone. Mr. Fulton does a good job of summarizing the original plan, the recent Department of Justice skepticism about competitors cooperating with money at stake, and the effort Yahoo has made to explain its side of the story. For me, the most significant passage in the write up was:
Google made the deal in bad faith, as an anti-competitive measure to maintain Yahoo’s subordinate position in the marketplace.
I have no enthusiasm for online advertising. The way the for-fee messages are presented reminds me of early Sunday morning cable TV in Kentucky or the wacky ads on Sirius Radio’s NFL channel for colon cleansers. Distasteful regardless of format and presentation.
My mind seized on Mr. Fulton’s comment and allocated a few senior moment time slices to these ideas:
- Was Google gambling with little or no forethought, acting out of a spirit of goodness and a touch of Google Yahoo against Redmond? After disrupting to some degree the Microsoft bid for Yahoo, were Googlers trying to help Yahoo or put the company in a position from which escape would neutralize the firm’s strength? After all, if Yahoo’s ad system worked, Yahooligans wouldn’t need Google?
- Was Google implementing an opportunistic series of unrelated tactical moves, roughly similar to going through the standard moves in a chess game until the more interesting end game begins to take shape? Would Google view its deal with Yahoo as a game, ultimately indifferent to the outcome even though the path leading to the outcome was a useful learning experience?
- Did Google apply mathematical logic to the Yahoo deal? Was Google able to assign values to certain variables and then run the numbers in order to determine that [a] if the deal went through, Microsoft would be even farther behind than it now is, [b] Yahoo was sufficiently desperate to overlook the fact that Yahoo’s own ad inventory would be subject to Google indirect influence and thus out of the control of Yahoo’s own semi-tarnished wizards, and / or [c] once the deal was inked Google could turn the dial on ad algorithms and starve Yahoo a basis point at a time?
I am on the fence. What’s your take? Google the Good, Google the Greedy, or Google the Godzilla? Bring facts, not just opinions, to your post on the Comments section for this Web log.
Stephen Arnold, October 5, 2008
An Exceptional Rumor: MSFT to Buy Yahoo AOL Combo
September 26, 2008
I saw this post on Venture Beat here. Then I saw a follow on story on Peter Kafka’s write up for Silicon Alley Insider here. I am delighted to point out that these writes up do not a done deal make. I find the notion fascinating, and I hope it comes to pass. Google will probably buy another dinosaur skeleton, reinstate day care, and design more lavish housing for the NASA Moffett Field Google Housing Units to celebrate. Please, read these two posts. The plan, as I understand this speculation, is that Yahoo gobbles up the wheezing AOL. I presume Yahoo will be able to work its technical magic on AOL’s infrastructure just as it did Delicious.com’s. Yahoo took two years to rewrite Delicious.com’s code, thus allowing other social sites and bookmarking services to flourish. Once the dust settles from that MBA fueled explosion, the Bain consultants will shape the package so that Microsoft can swoop in and snap up two hot properties, solve its search and portal problems, and catch up with Googzilla and chop off its tail.
When I worked at Booz, Allen & Hamilton, we called the Bain consultants Bainies. I can’t recall if we used this as a term of affection or derision. I like Bain and the work it did for Guinness just about 20 years ago. You can refresh your memory of that project here.
Let’s walk through the search and content processing implications of this hypothetical deal. I promise that I will not comment about SharePoint search, Live.com’s search, Outlook search, SQL Server search, Powerset search, or Fast Search & Transfer search.
- AOL has search plus some special sauce. At one time Fast Search & Transfer was laboring in the AOL vine yards. Teragram, prior to its acquisition by SAS, was also a vendor. Two vendors are enough for Yahoo to rationalize. Heck, Yahoo is relying on Fast Search technology for its AllTheWeb.com service last I heard. The Teragram technology might be a stretch, but the Yahoo technical team will be up to the challenge. The notion of becoming part of Microsoft will put a fire in the engineers’ bellies.
- AOL has its portal services. Granted these overlap with Yahoo’s. There’s the issue of AOL mail, AOL messenger, and AOL’s ad deals with various third parties. Google may still have a claw in the AOL operation as well. I haven’t followed Google’s tie up with AOL since word came to me that Google thought it made a bad decision when it pumped a billion into the company.
- AOL has a cracker jack customer service operation. Yahoo has a pretty interesting customer service operation as well. I am not sure how one might merge the two units and bring both of them under the Yahoo natural language search system that doesn’t seem to know how to provide guidance to me when I want to cancel one of my very few Yahoo for fee services. Give this a try on your own and let me know how you navigate the system.
I am delighted that I don’t have to figure out how to mesh Yahoo and AOL and then integrate the Yahoo AOL entity with Microsoft. Overlapping services are trivial for these three firms’ engineers. No big deal. If the fix is to operate each much as they now are, I anticipate some cost control problems. Economies of scale are tough to achieve operating three separate systems and their overlapping features.
I think that when I read the stories in my newsreader on Monday, September 29, 2008, I will know more about this rumor. I am still struggling with how disparate systems and the number of search systems can be made to work better, faster, and cheaper. Maybe the owner of the Yahoo AOL property will outsource search to Google. Google is relatively homogeneous, and it works pretty well for quite a few Web users, Web advertisers, and Web watchers. Watch this Web log for clarification of this rumor. For now, the word that comes to mind is a Vista “wow”.
Stephen Arnold, September 26, 2008
Microsoft Yahoo: Woulda, Coulda, Shoulda
September 21, 2008
Hindsight is 20 20. Actually hindsight is what college professors do. I’m no academic, but I write “woulda, coulda, shoulda” reports now and then. These are easy to do. The facts are right there, and I can almost always develop a nifty timeline. With a bit of math magic, I can output “what if” results. I have even sold some of these spreadsheet fever reports to investment banks and rich people with more money than the average Roman patrician who is a pal of Augustus Caesar.
I thought about “woulda, coulda, shoulda” when I read the well written essay “Yahoo Should Have Sold Search to Microsoft”. You can read Henry Blodget’s analysis here. I liked Mr. Blodget’s argument. My thoughts shifted away from “woulda, coulda, shoulda” to “it is what it is”. I snagged a notepad and jotted down three “it is what it is” points.
First, the Yahoo search is a clunker in my opinion. Now I know there are some people who do work for me who love Yahoo search. I don’t like it at all. When the Cluuz.com front end is slapped on Yahoo, I like Yahoo a lot better. Why? Yahoo does not deliver useful results without including some clunkers in each hit list. Whatever Cluuz.com is doing, Yahoo becomes more useful to me. Why doesn’t Yahoo improve its search? The company is trying to do too many things. No focus translates to search results that I avoid. Maybe I’m wrong, but when a tiny Canadian company can make Yahoo a lot better, I think the problem resides within the Yahoo search team. Bad management plus an aging search engines aren’t going to close the gap between Yahoo and Google. If Microsoft bought another clunker, it is what it is–a clunker.
Second, Microsoft is not making progress despite the reorganizations, the acquisitions, and the pay for traffic ploys. Why? Users have had a decade to get used to Google’s being “good enough”. Some people think Google’s great. I don’t. Much of Google’s success comes from having competitors who don’t know what to do to leapfrog Google. Instead of going for the jugular with privacy and usage tracking as the business end of a marketing sword, Microsoft has too many chiefs or cooks. Whatever these managers are, they are not able to respond to Google after years of trying. So if Microsoft buys Yahoo search what difference will it make? Not much. Google touches about two thirds of the searches in North America. Buying the aging Yahoo will be like the purchase of Fast Search, Powerset, and Ciao.com–too little too late. In short, it is what it is.
Third, I track 52 search vendors. I have a list of 300 or so companies competing in search and content processing. Know how many can compete with Google? Two. Why doesn’t Yahoo buy one of these outfits? Why doesn’t Microsoft? The answer is that neither company takes time from their busy meeting filled days to sit down and think about Google’s vulnerabilities, which technologies are able to out Google Google in some key area, and do a head-to-head analysis that considers significant issues, not older stuff like Fast Search’s number of customers or Yahoo’s nifty banner advertising system.
The “it is what it is” analysis is sorely needed at a number of companies, not just Microsoft or Yahoo. Google has been running free for a decade. Buying yesterday’s notions of great technology won’t do the job now or in the next six to nine months.
I agree with Mr. Blodget’s analysis, but I prefer the “it is what it is” approach. Getting real about Google is the first step toward a search response to Google.
Stephen Arnold, September 21, 2008
Google and Government Content
September 19, 2008
In the furor over Google’s growing share of the search market and the GOOG’s decision to move forward with its Yahoo ad deal, I can’t fault anyone for overlooking this Federal Computer Week article. “The Search Mandate” by FCW’s John S. Monroe is a brief but important comment about Google. You can read the September 15, 2008, item here. Google, according to Mr. Monroe, does a better job of indexing US government information than the US government. For those unaware of the Government Information Locator Service or GILS, this 1994 initiative was supposed to market it easy to find US government information. The National Institutes of Standards and Technology (NIST) is killing the program. The reason is that Google and other commercial search engines do a better job than the US government. For most people, the idea that a service like Google’s government search here or the Microsoft-Vivisimo service here or even the little known Yahoo service available by limiting the query to the Dot Gov domain here are better than the Federal government’s home grown GILS is obvious.
For me, this announcement triggered several thoughts. I want to outline these so I don’t have them slip away, and you may want to comment on my opinion about this GILS dead end.
- The scope of the Google government index, based on my test queries, seems broader than the indexes of either Yahoo or Microsoft-Vivisimo. Even queries run on the Department of Energy Web site, indexed by a third party engine, perform less well for me than the same queries run on Google’s government index. Try it yourself. Among my test queries were “ECCS”, “nuclear fuel pool”, and “SWU”. Let me know what you find out.
- The bread and butter of high end professional information services is indexing content from various courts, government agencies, and related sources such as routine documentation about specific programs. Companies generating revenue by indexing public information and adding metadata include LexisNexis (a British Dutch outfit) and Thomson Reuters (Canadian and American). These outfits could witness an increasing erosion of their revenue as knowledge about the usefulness of ad supported or free search services’ ability to offer the same data without the big price tag.
- Useful tools such as those available from Yahoo, for example, make it easy for savvy developers to integrate government information with other services. These mash ups may create more useful ways to look at Economic Research Service data, the reports available from the Department of Commerce, and procurement needs of local, country, state, and Federal entities. Such services would have broader ripple effects than making it easier and cheaper for an attorney to locate a court document.
I have not figured out how important or unimportant the GILS decision is. My hunch is that unless Microsoft and Yahoo can do a better job of indexing US government information, Google may well dominate this information sector as it now dominates Web search. With advertisers and newspapers pawing the ground about the Google Yahoo deal, perhaps some folks smarter than I might want to consider the implications of Google being the primary way to locate government data. A server glitch in such circumstances might make it tough for government workers or citizens to find what they are seeking. The Library of Congress, the individual executive agencies, and various quasi-government organizations seem unable to make their content available and searchable in a comprehensive and timely way. There may be enough Federal employees to print out documents and go through them by hand. A fine kettle of fish is that scenario.
Stephen Arnold, September 20, 2008
Google: Voice to Text
September 19, 2008
For me, the question was, “What took so long?” The person who invented some of Google’s voice to text technology is Sergey Brin. If you love reading Mr. Brin’s prose, check out US7027987 here. Once again, I am late to the Web log orgy of posts about Google’s announcement that it would process spoken text, index it, and make the text an adjunct to Google’s video search services. You can read the Google “official” Web log post here. The most important point for me in the short article was this statement:
As with all things in Labs, we will continue to experiment with new features.
The eternal beta is the bane of Google’s competitors. I expect Microsoft and Yahoo to jump into the fray as well. In the rush to emulate Google, the BBN Technologies pioneering work in this field will be overlooked. “What’s a BBN anyway” will be the rejoinders from 20 somethings intent on reinventing the wheel, fire, and suspenders. One bottleneck for voice to text has been the lack of sufficient reservoir of computing horsepower to crunch the data. Another issue is having a sufficient knowledgebase to make sense of the variants in pronunciation. Google, I surmise, believes that it has both of these issues in hand. I will keep you posted on the other horses in the voice to text search horse race.
Stephen Arnold, September 17, 2008
AT&T: Ma Bell’s Giving the Internet Another Go
September 18, 2008
I need a scorecard to keep track of the “new” Ma Bell’s Internet initiatives. Disclosure: I worked on AT&T projects when I worked at Booz, Allen & Hamilton. I was a vendor to Bell Laboratories and several units of the pre-break up AT&T. I worked on a programming job at Bell Communications Research, and I was involved in the USWest Yellow Pages Project. I even have a couple of pals who are former Bell Labs’s wizards. Therefore, when I say, I’m confused it’s almost like hearing this from a real Bell head.
The story “AT&T to Link iPhone to U-Verse Video, Internet”. You can read it here. The hook for the story is AT&T’s effort to extend its reach into the Google-verse. Oh, sorry, I meant “Internet world.” I don’t want to go through the history of AT&T’s different efforts in different incarnations in the Internet. Some of them are truly amazing. The split between the “real” AT&T and the separate “hosting” outfit in year 2000 and 2001 were inspired. Then there was the buy out of IBM’s Internet service that became AT&T’s dial up Internet service. Then there was a deal with Yahoo for DSL which was pretty darned amusing. I could go on but won’t.
Now the “new” AT&T is creating a U-Verse to get a piece of the video action. Never mind that AT&T has changed directions more times that my mother when she was fiddling with which figurine went on which shelf. The notion that AT&T is going to glue together its new mobile search service (I think the partner is Yahoo now), the independent Steve Jobs (the dominant force in digital audio and video for money), and an AT&T designed high speed Internet services.
Right.
The traditional telcos can win in the US because the companies can bill people. Elsewhere, life is not so good. Furthermore, Google is a crafty beast, and it has already reached a truce of sorts with Verizon. (Chortle, ha, ha). Here’s what will happen:
- The new service will appear and AT&T mobile customers will get a deal–for a short time. Then the fees hit.
- The partners–Apple and Yahoo–may grumble. AT&T will try to put these outfits in a thumb screw and legal eagles will flap.
- Digital video will remain volatile, a money sink, and contentious.
- AT&T will reload and try again.
If you see another outcome, educate me. Just wear your Young Pioneers’ ball cap and t shirt. If you don’t know what these are, don’t bother writing me. You are uninformed about the way Ma Bell operates.
Stephen Arnold, September 18, 2008
Yahoo Open: Why the Odds Don’t Favor Yahoo
September 16, 2008
When we started The Point (Top 5% of the Internet) in 1993, our challenge was Yahoo. I recall my partner Chris Kitze telling me that the Yahoo vision was to provide a directory for the Internet. Yahoo did that. We sold The Point to Lycos and moved on. So did Yahoo. Yahoo become the first ad-supported version of America Online. The company also embarked on a series of acquisitions that permitted each unit to exist as a tiny fiefdom within the larger “directory” and emerging “ad-supported” AOL business. In the rush to portals and advertising, Yahoo ignored search and thus began its method of buying (Inktomi), licensing (InQuira), or getting with a buy out (Flickr) different search engines. Google was inspired by the Overture ad engine. Yahoo surveyed its heterogeneous collection of services, technologies, and systems and ended up the company it is today–an organization looking to throw a Hail Mary pass for the game winning touchdown. That strategy won’t work. Yahoo has to move beyond its Yahooligan approach to management, technology, and development.
The ArnoldIT.com and Beyond Search teams have had many conversations about Yahoo in the last year. Let me summarize the points that keep a lid on our enthusiasm for Yahoo and its present trajectory:
- Code fiddling. Yahoo squandered an opportunity to make the Delicious bookmarking service the dominant player in this segment because Yahoo’s engineers insisted on rewriting Delicious. Why fiddle? Our analysis suggests that Yahoo’s engineers don’t know how to take a hot property, scale it, and go for the jugular in the market. The approach is akin to recopying an accounting worksheet by hand because it is just better when the worksheet is perfect. Wrong.
- Street peddler pushcart. Yahoo never set up a method to integrate tightly each acquisition the company made. I recall a comment from a person involved in GeoCities years ago. The comment was, “Yahoo just let us do out own thing.” Again this is not a recipe for cost efficiency. Here’s why: The Overture system when acquired ran on Solaris with some home grown Linux security. Yahoo bought other properties that were anchored in MySQL. Then Yahoo engineers cooked up their own methods for tests like Mindset. When a problem arose, experts were in submarines and could not really help with other issues. Without a homogeneous engineering vision, staff were not interchangeable and costs remain tough to control. The situation is the same when my mother bought a gizmo from the street peddler in Campinas, Brazil. She got a deal, but the peddler did not have a clue about what the gizmo did, how it worked, or how to fix it. That’s Yahoo’s challenge today.
- Cube warfare. Here’s the situation that, according to my research, forced Terry Semel to set up a sandwich management system. One piece of bread was the set of technical professionals at Yahoo. The other piece of bread was Yahoo top management. Top management did not understand what the technical professionals said, and when technical professionals groused about other silos at Yahoo, Mr. Semel put a layer of MBAs between engineers and top management to sort out the messages. It did not work, and Yahoo continues to suffer from spats across, within, and among the technical units of the company. It took Yahoo years to resolve owning both Flickr and Yahoo Photos. I still can’t figure out which email system is which. I can’t find some Yahoo services. Shopping search is broken for me. An engineer here bought a Yahoo Music subscription service for his MP3 player. Didn’t work from day one, and not a single person from Yahoo lifted a finger, not even the one tracked down via IRC. I created some bookmarks and now have zero idea what the service was or where the marks are located. It took me a year to cancel the billing for a Yahoo music service a client paid me to test. (I think it was Yahoo Launch. Or Yahoo Radio. Or Yahoo Broadcast. Hard to keep ’em straight.) Why? No one cooperates. Google and Microsoft aren’t perfect. But compared to Yahoo, both outfits get passing grades. Yahoo gets to repeat a semester.
When I read the cheerleading for Google in CNet here or on the LA Times’s Web log here, I ask, “What’s the problem with nailing Yahoo on its deeper challenges?” I think it’s time for Yahoo to skip the cosmetics and grand standing. With the stock depressed, Yahoo could face a Waterloo if its Google deal goes south. Microsoft seems at this time to be indifferent to the plight of the Yahooligans. Google is cruising along with no significant challenge except a roadblock built of attorneys stacked like cord wood.
Yahoo is a consumer service. The quicker its thinks in terms of consumerizing its technology to get its costs in line with a consumer operation the better. I’m not sure 300 developers can do much for the corrosive effects of bad management and a questionable technical strategy. Maybe I’m wrong? Maybe not? We sold The Point in 1995 and moved on with our lives. Yahoo, in my opinion, still smacks of the Internet circa 1995, not 2008 and beyond.
Stephen Arnold, September 16, 2008
How Yahoo Will Catch Google in Search
August 25, 2008
Here’s an interview you must read. On August 25, 2008, the Financial Express (India) here published an interview with Yahoo’s super wizard, Prabhakar Raghavan. Dr. Raghavan is the head of research at Yahoo, a Stanford professor, and a highly regarded expert in search, database, and associated technologies. He’s even the editor of computer science and mathematics journals. A fellow like this can leap over Google’s headquarters and poke out Googzilla’s right eye. The interview, conducted by Pragati Verma, provides a remarkable look inside the plans Yahoo has to regain control of Web search.
There were a number of interesting factoids that caught my attention in this interview. Let me highlight a few.
First, Yahoo insists that the cost of launching Web search is $300 million. Dr. Raghavan, who is an expert in things mathematical, said:
Becoming a serious search player requires a massive capital investment of about $300 million. We are trying to remove all barriers to entry for software developers, who have ideas about how to improve search.
The idea is to make it easy for a start up to tap into the Yahoo Web index and create new services. The question nagging at me is, “If Web search is $300 million, why hasn’t Yahoo made more progress?” I use Yahoo once in a while, but I find that its results are not useful to me. When I search Yahoo stores, I have a heck of a time finding what I need. What’s Yahoo been doing since 1998? Answer: losing market share to Google and spending a heck of a lot more than a paltry $300 million losing ground.
Second, Google can lose share to search start ups. Dr. Raghavan said:
According to comScore data, Google had a 62% share of the US search market in May, while we had 21% and MSN 9%. Our prediction models suggest that Google could lose a big chunk of its market share, as BOSS partners and players come in.
My question is, “Since Google is vulnerable, why haven’t other search systems with funding made any headway; for example, Microsoft?” The notion that lots of little mosquitos can hobble Googzilla is not supported by Yahoo’s many search efforts. These range from Mindset to InQuira, from Flickr search to the deal with IBM, etc. Chatter and projections aside, Google’s share is increasing, and I don’t see much zing from the services using Yahoo index so far.
Finally, people don’t want to search. I agree. There is a growing body of evidence that key word search is generally a hassle. Dr. Raghavan said:
Users don’t really want to search. They want to spend time on their work, personal lives and entertainment. They come to search engines only to get their tasks done. We will move search to this new paradigm of getting the task done….
My question is, “How is Yahoo with its diffused search efforts, its jumble of technologies, and its inability to make revenue progress without a deal from Google doing to reverse its trajectory?” I wish Yahoo good luck, but the company has not had much success in the last year or so.
Yahoo lost its way as a directory, as a search system, and as a portal. I will wait to see how Yahoo can turn its “pushcart full of odds and ends” into a Formula One racer.
Stephen Arnold, August 25, 2008
Efficient Frontier’s Startling Data about Online Advertising
July 21, 2008
M2, the UK news outfit, reported on a news story that appeared in Telecomworldwire. I tried to get the nested links to work and ran into latency issues. You will want to read the M2 story here. The key point in the item in my opinion was this statement:
According to the report, for every new dollar (USD) spent on search advertising in Q2 2008 versus Q2 2007, Google received USD1.10, while Yahoo! lost USD0.09 and Microsoft Live Search lost USD0.01. Google accounted for 77.4% of total search engine spending in Q2 2008, an increase of 2 percentage points over the previous year. Yahoo! lost nearly 2 percentage points of search engine share in that period, accounting for 17.8% of total spend, while Microsoft Live Search’s share remained relatively stable at 4.8% of search engine spending.
I had seen some of these data elsewhere. But this paragraph underscores the challenge Microsoft, Yahoo, and others in the online advertising game face in their “close the gap” efforts with Google.
Stephen Arnold, July 21, 2008
Google and Yahoo: Alleged Conspirators
July 15, 2008
Marketwatch reported that Brad Smith, a Microsoft executive, asserted that Mountain View’s most interesting search companies conspired against the Redmond giant. The venue was a hearing before the U.S. Senate Committee on the Judiciary. The scope of hearings begins with one issue and then wanders to and fro.
Jeffry Bartash wrote “Microsoft Takes Aim at Yahoo CEO”, and you should read the full story here. The Joseph Weisenthal reported about the hearing in which the assertion was made. You can find the gory details via PaidContent.org on the Washington Post’s Web site here. Both write ups agree on the escalating war of words in the Microsoft-Yahoo matter. You can find other summaries of the hearing in Google News and news aggregator sites.
The most interesting comment to me about this war of words comes from Mr. Bartash:
One thing that seems clear is that the traditional corpus of antitrust law isn’t well suited for this market.
Yes, and that’s why nothing particularly constructive or informed will come from high-tech companies’s executives, lawyers, and elected officials mixing it up in a cavernous room with aides passing notes, photographers crawling on their knees, and the Senate elite asking questions prepared by an group of 20-somethings with Potomac fever.
Assume that the hearing results in a decision that triggers a legal matter. The outcome enters the unusual world of litigation. Normal rules don’t apply, and the decision can often baffle those involved in the process.
I like Microsoft’s approach. Cut through the technology, the talk of online ad methodology, and marketing. The accusation, if indeed a real accusation, simplifies Microsoft’s position. Making something simple is a key skill. In my view, Microsoft has seized the high ground. Now Google and Yahoo have to take the hill.
Stephen Arnold, July 15, 2008
Update: July 15, 2008, 5 pm: My news reader cheerfully delivered Erick Schonfeld’s “Google’s Talking Points for Today’s Antitrust hearings”: The Only One Who Won’t Like Our Yahoo Deal Is Microsoft”. Pretty useful information because TechCrunch provides an insight into Google’s attitude. The comments to the base essay are also helpful. I liked SteveR’s comment that Microsoft is now on the flip side of “an anti trust case”.
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