All Things Digital

In the past year, Microsoft has spent $1.2 billion to acquire enterprise search outfit Fast Search & Transfer. The company spent more than $100 million on Powerset and its natural language search. And it spent untold millions on search-related R&D. Microsoft (MSFT) has even taken the rather extraordinary step of paying people to use its MSN/Windows Live search (”The Search That Pays You Back!”).

None of this has helped. None of it has bolstered Microsoft’s laggard search service, which continues to toddle along behind Google (GOOG) and Yahoo (YHOO)–a very distant third in the search market. In fact, MSN/Windows Live seems to be suffering from the company’s efforts. According to Nielsen Online’s MegaView search ranking for July, searches on MSN/Windows Live declined 2 percent month-over-month and 10 percent year-over-year. Its July 2008 share of the search market: 11.9 percent. Meanwhile, Google gained a share point from June to July, claiming 60 percent of the eight billion searches conducted during the month. And it posted 16 percent year-over-year growth, more than five times the overall growth in search.

Clearly, Microsoft’s efforts to draw users to MSN/Windows Live has yet to make much of a difference in the search share race. Nor have the efforts of other companies. Searches on Yahoo dropped 11 percent year-over-year, leaving the company with a 17.4 percent market share. AOL’s (TWX) fell 9 percent over the year, leaving it with 4.6 percent market share. And Ask.com’s (IAC) rose 13 percent, leaving it with 2 percent share, Nielsen said.

Despite their best efforts, Microsoft, Yahoo and Ask.com just can’t seem to narrow, even slightly, Google’s massive lead in online search.

Google’s (GOOG) share of the U.S. search market increased to 68.29% in May from 67.9% in April and 65.13% a year ago, according to market research firm Hitwise. Meawhile, Yahoo’s (YHOO) share fell to 19.95% from 20.28% a month ago and 20.89% a year ago. Microsoft (MSFT) didn’t fare much better. Market share for its search service fell to 5.89%, from 6.26% in April and 7.61% a year ago.

Clearly, the search wars are over–at least for the time being. If search is a natural monopoly business, then Google would appear to be its presiding monopolist.

Coming as it does after news of Microsoft’s plan to bribe consumers to use its search engine, reports of Google’s (GOOG) continued dominance in search aren’t all that surprising. Google’s share of the U.S. search market in April grew to 61.6%, up from 59.8% in March, comScore announced today. And it grew at the expense of rivals Yahoo (YHOO), Microsoft (MSFT), AOL (TWX) and Ask.com (IACI). Yahoo’s share dropped 0.9 percentage points to 20.4%, Microsoft dropped 0.3 to 9.1%, AOL dropped 0.2 to 4.6% and Ask dropped 0.4 to 4.3%.

A pretty dismal showing for the other four “major” search engines, which apparently bleed and sweat search market share. As noted here last week, the IT industry used to say that IBM (IBM) wasn’t the competition; it was the environment in which you compete. Today the adage seems equally applicable to Google, which dominates the search market just as IBM once dominated the computer industry.

Ask.com (IACI), the little search engine that can’t, but someday hopes to, is committed to becoming a viable competitor in a market overwhelmingly dominated by Google (GOOG) and Yahoo (YHOO).

It has not, as CEO Jim Safka vehemently points out in an interview with Forbes today, ceded the search battle to anyone. “It’s horses–t,” he told Forbes.com. “It’s categorically not true. We’re more committed to our algorithm and engineers than ever. While Yahoo and Microsoft are paralyzed by trying to figure out what’s happening to their companies, we’re trying to figure out what’s next in search. You’re going to see more innovation coming out of Ask then ever before.”

The first evidence of that “innovation”? Ask’s acquisition of that paragon of innovation Lexico Publishing Group LLC, the owner of Dictionary.com, Thesaurus.com and Reference.com. With Lexico’s properties in its pocket, Ask expects to expand its audience to more than 145 million unique monthly users–an increase that the company claims would make it the ninth-largest Web property globally. Whether the company means among all users or just married women primarily living in the South and the Midwest remains to be seen …

Turns out Ask.com isn’t as intent on getting in touch with its feminine side as was previously thought.

Company spokesman Nicholas Graham tells Search Engine Watch that an Associated Press report that claimed the little engine that can’t was retooling itself as a search engine for married women primarily living in the South and the Midwest was erroneous.

“The idea that we’re going to become a women’s site is just plain wrong. We know that a sizable group of our core user base is women, and we know they come to us for a certain kind of search: to get answers, often in areas of reference, health and entertainment,” Graham said. “We recognize that we can’t be all things to all people, so we’re focusing on our core group of users. We want to build up the kinds of answers those users are looking for, while at the same time remain a strong search site.”

Looks like that big shake-up at Ask was so violent it muddled the brains of the company’s executive leadership.

This morning the company announced plans to retool itself as a search engine for housewives. Seems Ask.com believes its core demographic is married women living in the American South and Midwest looking for information about health, hobbies, family matters, children’s homework, recipes and entertainment–i.e., married women who already use Google.

“If we can do a better job of understanding who these customers are and answering their questions, we will grow,” newly installed CEO Jim Safka told Reuters. “What this means is everything we do will be put through this strategic filter.”

Sounds like search outfit Ask is having a bit of, ahem, engine trouble. Employees tell Valleywag that the company is buzzing with talk of layoffs. And now come reports that Ask proprietor InterActiveCorp (IACI) may soon scrap Teoma, the engine that powers the company’s search. “There is indeed a big shake-up coming,” a company insider told Silicon Alley Insider. “A new Ask. Some think a reduction in workforce is likely. There are no sacred cows, Teoma may be sold or simply abandoned, which is hundreds of engineers who work on the core search engine, in place of just using Google’s search with our special brand of user interface.”

No sacred cows, huh? If that means Ask is a student of the Jerry Yang School of Corporate Turnarounds, well … maybe Microsoft will have a little money left over after it swallows Yahoo.

UPDATE: PaidContent has confirmed that some 100 Ask employees will be sacked come April.

Barry Diller may have managed to turn Fox into a legitimate fourth major broadcast network. But he hasn’t had much luck doing the same thing with Ask.com in search. Despite Diller’s best efforts, Ask’s share of the search market dropped to 4.6% in November from 5% in November 2006, according to comScore.

“We have certainly not bitten an inch out of the hide of Google,” Diller said earlier this week. “I’ve been daunted by the progress of that. … The challenge of the year … is to get people to try [Ask], experiment with it and then adopt it.”

With that in mind, Diller’s making some changes. Ask.com Chief Executive Officer Jim Lanzone–who claimed the CEO spot in April 2006 when Steve Berkowitz took a job at Microsoft–is leaving the company in a management shake-upr that will see former Match.com CEO Jim Safka take his place.

News of the leadership change comes as Ask parent InterActiveCorp prepares to spin off its HSN (Home Shopping Network), Ticketmaster, Interval International and LendingTree properties. “These changes are intended to strengthen and streamline the operating structure at IAC, both leading up to our intended spin-offs, and beyond,” said IAC CEO Diller.

Well, we’ll have to see about that. Certainly, Safka seems like a worthy candidate for the job. As CEO of Match.com from 2004 to 2006, he grew the site’s membership and revenues substantially. That said, Lanzone is also a very smart guy. If he wasn’t able to turn Ask into a legitimate player in the search market, one wonders if anyone can.

This morning Ask.com became the Internet’s least intrusive search engine. Too bad it’s also one of least used. Because with a 2.9% share of the search market, few are likely to pay much mind to the title.

That said, “AskEraser,” which allows users to delete their search queries and related data (IP address, user ID, session ID) from Ask’s servers, is a stride for consumer privacy on the Internet–especially in these days of Facebook Beacon and the AOL data Valdez. “Anywhere that you log into, anywhere where you put in personalized information, there should be a way–an easy way–to control how that information is used and retained,” Doug Leeds, Ask.com senior vice president, told The Wall Street Journal. “We are giving users the ability themselves to take control of their privacy.”

Well, some control, anyway. Ask.com recently signed a five-year sponsored search and advertising agreement with Google, so it sends user data to Google even in cases where it’s been deleted with the AskEraser function. So while Ask might not retain its users’ data, Google does. But then Google probably already had their data anyway, right?

So while AskEraser might be a nice gesture, it’s not really a grand victory for consumer anonymity on the Web. And because of that, critics say it’s not likely to be much of a selling point. “My gut tells me that basically it is not going to be a competitive advantage,” Larry Ponemon, chairman and founder of the Ponemon Institute, an independent research company, told the New York Times. “I think people will look at it and see it as a cool thing, and they may use it. But I don’t think it will be a market differentiator.”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns next Monday.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Google U-Store-It: The online search leader is prepping a service enabling users to store on the company’s computers any files (text, music, video) kept on personal-computer hard drives, reports The Wall Street Journal. The password-protected system would allow Internet access to the files from any computer or mobile device.
2. Verizon Opens Wide and Says ‘Yah’: In a sign that “U.S. phone carriers’ iron grip on the wireless industry may finally be loosening,” (according to The Wall Street Journal) Verizon Wireless will open its network to wireless devices, software and applications not offered by the company. Verizon plans a conference to detail “the standards and get input from the development community” about how so-called “BYO phones” will be allowed on its network early in 2008.
3. MySpace Feeds You and Your Friends: The social-networking giant will unveil on Thursday “Friend Updates,” its news-feed feature. Michael Arrington of TechCrunch explains it all for you.
4. InterActiveCorp to Activate China Web Site: IAC/InterActiveCorp plans to invest $100 million on an Internet start-up in China, shipping its Ask.com search engine to that hot market as well, according to The Wall Street Journal.
5. Intuit Grabs Homestead: The financial software firm has paid $170 million for the small-business Web service provider, a move Eric Eldon of VentureBeat posits will help the aging Intuit “stay relevant to the growing number of businesses that rely on Web-based services.”
6. Reduce the Price, and They Will Buy: Deep discounts in its PlayStation 3 video-game console reaped high sales for Sony post-Thanksgiving. The 245% jump in North American PS3 units sold, according to Bloomberg, reflects price cuts Sony initiated to boost the console’s competitive edge against Microsoft’s Xbox 360 and Nintendo’s Wii.
7. NBC Universal Sees the TiVo Light: The broadcaster announced today that it had signed a deal to become the first of the major TV networks to use TiVo’s viewership research and interactive ad products, according to The Wall Street Journal.
8. Yahoo Flubs Cyber Monday: Outages plagued the online company yesterday during heavy holiday traffic on Cyber Monday, the first Monday after Thanksgiving when many online merchants offer discounts to woo consumers. Tech Check’s Jim Goldman says Yahoo scrambled throughout the day to fix the problem, but thousands of merchants were adversely affected.
9. An End to Coal in Our Lifetime? Google is mobilizing its considerable resources to eliminate one resource: coal-generated electricity. The initiative, known as RE<C, will focus on solar, wind, geothermal and other potential breakthrough technologies. But there’s no guarantee Google’s push to develop electricity from renewable energy resources, says Doug Caverly of WebProNews“will have more luck than however many corporations and inventors have already tried their hands at this sort of thing.”
10. Tiffany Miffed at eBay: The renowned retailer of fine jewelry has accused the online auctioneer of abetting the sales of counterfeits, reports the New York Times. Tiffany’s lawsuit seeks to force eBay to change its auction procedures, which, if successful, could jeopardize eBay’s business model.

–posted by Associate Editor John Sullivan