Sunday, August 3, 2003

Google targeted by search engine rivals

By Michael Liedtke
The Associated Press

SAN FRANCISCO - In five years, Google has blossomed from a nerdy college experiment to a mainstream sensation so ubiquitous that its goofy name is now synonymous with looking things up.

Millions of people turn to the Internet search engine every hour, trusting Google to speed through its index of 3 billion Web pages to find just about anything.

Google's seemingly mystical powers inspire awe and dread - reverence for the search engine's apparent omniscience, and fear about its Big Brother potential.

Google's influence is perhaps best measured by the 200 million search requests it processes per day, up from 40 million just three years ago.

The steady growth has made Google a target for some formidable foes. Both Yahoo! Inc. and Microsoft Corp. are searching for ways to steal Google's thunder.

Yahoo has committed nearly $2 billion to its Google counterattack. Microsoft is devoting an unspecified amount to building a better search engine.

Privately held Google isn't saying how it intends to protect its franchise.

The push to topple Google is being driven by new marketing approaches that have turned search engines into profit machines.

Advertisers spend big for prominent listings in specially marked search results - $2 billion this year, with robust growth forecast for the rest of this decade.

For now, at least, no one is better positioned to reap the rewards than Google.

Yahoo and Microsoft "are spending a ton of money to get something that Google has built from the ground up and has been fine-tuning for years," said Danny Sullivan, editor of Search Engine Watch, an industry newsletter. "That gives Google a great advantage."

Sullivan believes Microsoft might seek to buy Google. Neither Microsoft nor Google has expressed any public interest in a marriage.

Google would likely demand a hefty price. No one will know for certain what Google is worth until it makes an initial public offering of its stock - something insiders say won't likely happen until next year.

Google's revenue this year is expected to range between $700 million to $1 billion. Google has been profitable for at least two years, an advantage that has limited the number of investors since founders Larry Page and Sergey Brin started the company in their Stanford University dorm rooms in 1998.

Google's technology is built around a secret formula called "PageRank" that rates the relevance of Web sites based on the number of links from other relevant Web sites. The method has raised concerns that Google has created a caste system in which a group of elite Web sites largely determine the popularity of other sites.

But Web surfers have embraced the approach. "Googling" information has become so popular that attracts some of the heaviest traffic on the Web.

Google's reach also extends beyond its own Web site. The company licenses its results to a wide variety of other sites, including Yahoo and AOL.

Yahoo is expected to drop Google because it just bought two other search engine makers.

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