DuckDuckGo: Challenging Incumbents (Part 2)

The search market may be opening up to competition...

What if I told you Google’s very own founders - Sergey and Larry - hated the idea of ads? As a search company that did not have its own browser or homepage, options were limited. Investors were also becoming nervous - Sequoia’s Michael Moritz recalls the environment being pretty bleak, with a ton of doubt about the business model. That’s when the team turned their attention to advertising.

But Brin and Page hated the idea. They thought banner ads were ugly and distracting. Worse, banner ads took time to load, and Google’s founders possessed an almost religious devotion to efficiency and speed. 

And then came Google AdWords. Imagine a world where you had control over the ads you saw. When AdWords launched on October 23rd, 2000, that's exactly how it was! 

Users would sign up on a completely self-serve basis and set how much they were willing to pay per thousand impressions (or times the ad showed); whoever was bidding the most would appear higher up on the page.

In 2000 when they launched, AdWords was using a pay-per-impression model, meaning that marketers would be charged regardless of whether someone engaged with their ad or not. Change came soon. In 2002, Google introduced cost-per-click advertising options to compete with the highly successful competitor, Overture.

Google didn’t create this business model. Overture (GoTo.com) launched in 1998 with the radical idea of search being fueled by advertising. No organic results, just the culmination of the highest bidders of a certain keyword. Talk about a dystopia.

Creating Value

You know that one quote, “Nothing is ever free. Everything is paid for by somebody”? 

Last I checked, I never had to pay to use Google, Facebook, Instagram, or even YouTube. Going even further, I probably spend a 4th of my day online - using several Google and Meta services while I’m at it. For completely free. Or is it? What’s the cost of a free search? The obvious answer is - duh, it's free because they make money off you watching ads. But it's worth digging a bit deeper.

October 23rd, 2000 is significant for another reason. It was the day that our privacy became commoditized.

While diving into research for last week's post, I stumbled upon this feature that Google offers that allows you to download all the data they have on you. Google Takeout. Thanks to the California Consumer Privacy Act (CCPA), companies are legally required to hand over data they store about you. Neatly tucked inside their Data & Privacy page, Google allows me to download all my data. Figured I might as well give it a go!

There’s no harm in trying right? Now of course, since I have a Google account, naturally they store data about my emails, photos, documents I have on Google Drive, and other data I elect to store on Google services.

But the buck doesn’t stop there. All in all, Google had 16 gigabytes of data on me. You know how you’re always running out of storage because of photos? Well, 16 gigs of data is approximately 6,000 large photos. And it’s not like Google is storing your data in JPEGs or PNGs. Just plain text files. That's right, Google has 16 gigabytes of mostly JSON data on me.

The sheer intricacy of all of this is what blows my mind. Google splits up its data into each service it offers. Google Ads, Gmail, Google Flights, Google Play Store, Google Drive, etcetera.

16 gigabytes of data split into 6 folders. What you see above is just one of the sub-folders in the FIRST folder. I’m barely scratching the surface, but so far I’ve seen activity from every Ad I’ve interacted with, every search I’ve made, every IP that I have logged in from, every location Google has on me, every flight that I’ve searched and every time I’ve clicked through to the booking website, all data from Google Analytics.

Ad Saturation

Alright well, my privacy has fully been compromised. But more so, mine and our privacy on the internet has been commoditized. Our identities and data are being used to optimize the advertiser experience and increase the effectiveness of Google AdWords.

Just think about this. All that data I have is likely used for targeting me on a very granular level. Apart from the basic stuff I provide when I create a Google account - Age and Gender - Google knows my household income, my parental status, the device I use, my location, whether I own a home or not, and my education status.

And this is all binary data, called “detailed demographic data”. All my activity is also subject to placing me in “affinity buckets”. Categorizing me in segments such as Banking & Finance, Beauty & Wellness, Food & Dining, Home & Garden, and more.

But Ads have gotten saturated. Search results are filled with sponsored content and unrefined results. Take a search for “best dog food” for example. Every listing that appears in the main view is sponsored. If I’m looking for the best dog foods, I am much more interested in objective content on why one dog food brand is better than the other, whether it be nutrition facts, consumer reputation, or something else. 

Fortunately, all hope isn’t lost. As a community of Google users, we’ve resulted in a common heuristic. To get real and raw opinions from people, we resort to appending “Reddit” to anything we search. Just by changing my search query to “best dog food reddit”, I eliminate every sponsored result that shows up.

This isn’t just some observation I made. People are catching on! In this post, Dmitri Brereton breaks down exactly why this is. Google search is dying because of its optimization towards ads and subpar content. Google isn't a search engine anymore, but rather it's the result of hyper-optimizers taking advantage of its PageRank algorithm. Results that show up are just those of SEO junkies and sponsored listings.

Conclusion

I realize that the last post implied this would be a second DuckDuckGo piece and I have not mentioned the company even once.

Bear with me. The underlying theme in the search market is that Google’s search dominance is being challenged. DuckDuckGo is a direct competitor, but people also search on Yelp, Reddit, and other sites dedicated to industries like travel, jobs, and more. 

As consumers, we still prefer having one place to make an all-encompassing search. But we hate the ads and aren’t fans of the data collection. And that’s exactly what DuckDuckGo’s mission statement is. Google Tracks You. We don’t. That’s what it all boils down to. 

Sure, today DuckDuckGo only has 0.54% of the search market, but it's hard to look past people’s preferences. 61% of people believe that any effort they make to protect their privacy will not make a difference. Only 20% of people believe that those who hold access to personal information will treat it responsibly.

Yahoo’s data breach was by far the largest so far. But even this week, Evolve Bank reported a massive cyberattack that leaked personal data to the dark web. If you aren’t familiar with them, Evolve is the bank behind several Fintech companies including Affirm, Stripe, Mercury, and other smaller startups.

Change is for sure imminent. As data breaches become more common and consumers question the integrity of the products they use, a pro-privacy movement could be coming. DuckDuckGo may not be the one to lead the coming change, but it is the search engine that is so pro-privacy that even the government can’t get you. Why? Because it isn’t stored anywhere!

They can get to your Google searches, but if you use DuckDuckGo it’s completely encrypted between you and us. We don’t store anything. So there’s no data to get. The government can’t subpoena us for records because we don’t have records.

That’s all for this one folks! If you enjoyed this piece on the dominance of Google and the rise of internet advertising, hit the like button or drop a comment with your take. If you enjoyed reading, please feel free to share it with your friends. Reach out to us by replying to this email if you have any insider takes or leave a comment on our Substack page!