A number of technology companies are being funded based on the fact that they can leap-frog Google as the best search engine technology platform. It won’t happen.
According to The New York Times, venture capitalists have put $350 million into 79 search engine start-ups since 2004.
When Google took on Yahoo! and Microsoft in search five year ago, both of the big internet operations were in the process of becoming portals, much like AOL. Search was a fraction of their service to online customers. MSFT and Yahoo! assumed that internet users wanted to go to one destination for everything from news to personals to email. Both were, in a sense, wrong. At least in terms of making money. Search, and the ability to match advertising to targeted web behavior, became the most valuable activity online.
Habits are hard to break, even in terms of which search site consumers use. It took years for Google to catch Yahoo! in search share and audience. It has taken years for Yahoo! to get back in the ad targeting search game with Panama. And, with all of Yahoo!’s resouces, it may well not work.
It is also very safe to assume that Google is improving its own search technology. Perhaps the company will be cruelly competitive and introduce Google 2.0 right after Panama goes live. Without question, Google must put hundreds of millions of dollars a year to improve its own base technology.
The next Google? VCs are throwing money down a rat hole.
Douglas A. McIntyre can be reached at email@example.com. He does not own securities in companies that he writes about.