John Battelle's Searchblog

Danny argues that Google is unfairly dominating the Firefox toolbar. I think he's right. Microsoft is not even among the choices, and Google is the default. Google, of course, represents the majority of Mozilla's revenues (Mozilla is the company behind Firefox).

Danny's most interesting point is how hard Google fought to keep Microsoft from making Live search the default in Internet Explorer. But Google's actions with Firefox are making it increasingly likely Microsoft will act to change that stance. That's what I meant when I said Microsoft is "lying in the weeds" a few months ago.

It happens - the phenomenon of similar ideas all hatching at the same time. The latest seems to be synchronous web experiences. I've heard about three or four of them in the past few weeks, the latest being Microsoft's Search Together. From a page explaining the research project:

Search, of course, has become ubiquitous for enabling users to find Web content, but existing search engines have been designed for use by an individual. Search interfaces don’t support collaborative search. Collaborating on search generally means one person at a keyboard while another makes suggestions, or two people using instant messaging or a phone while each is viewing a Web browser. It can work, but it’s not optimal.

While using SearchTogether, though, users can collaborate locally or at different locations, working in tandem or at different times.

Cool idea, but you have to use all Windows and MSFT stuff (Messenger, Live ID, etc) to make it work.

Om reports:

YouTube’s head of monetization, Shashi Seth, has now left the company to become the chief revenue officer of Menlo Park, Calif.-based startup Cooliris.

Om continues:

Despite being the largest video-sharing web site, YouTube is still finding it hard to make money. My sources say that YouTube made around $80 million in 2007, a number that could grow by more than 50 percent this year to around $125 million. A Bear Stearns report estimated YouTube revenues at around $90 million for 2008. I’m not sure if $120 million-$125 million is going to make Google CEO Eric Schmidt, who has been publicly talking about YouTube and its money-making potential, happy.

What stands between YouTube and money is the lawsuit by Viacom, as it makes owners of legitimate content a tad nervous.

It's true that the Viacom suit is a major issue. But I don't think it's the only one. I think looming even larger is the culture inside Google, one that does not support traditional approaches to supporting brand marketing. In other words, YouTube is a very large branded media play inside a massive engineering/direct response machine. YouTube is a major conversational media platform. But unlike MySpace, which reports into a media culture at Newscorp (Rupert Murdoch made this point at D last week), YouTube reports into a technology culture. I think it makes a difference.

The company Shashi is going to looks like a competitor to Microsoft's Photosynth and Silverlight (not directly, but it looks like a market implementation of those two technologies). It just announced a deal with YouTube. Interesting!

Wikia launches features on its poorly reviewed but theoretically interesting search engine that allow folks to hack the results and share them with everyone. More at Cnet. For now, this is pretty much a test, as it's only on about 30 million results.

Microsoft announced this today:

Microsoft Corp. today announced that it has won a key distribution deal with HP, the world’s largest PC manufacturer, to install a Live Search-enabled toolbar on all HP consumer PCs planned to ship in the United States and Canada, beginning in January 2009. As part of this deal, the default search engine setting in the browser on all HP consumer PCs will also be set to Microsoft Live Search.

I think this is a very big deal for Live search. It's the only way to win share. Google has owned Dell and Firefox, this is a way to fight back. I am sure it cost a pretty penny....

Mike makes a good point here in response to Tim's point of view, and Tim counters here. It's a very interesting debate, one between two folks I've partnered with for some time (Mike's TechCrunch is part of FM, and Tim and I have partnered on any number of things, including Web 2, Make, and several sites that are also part of FM). So I'm a bit conflicted as I watch these guys debate.

However, one thing I will assert: Search is more than a subsystem of Web 2, as Tim puts it. I think search has become the interface to Web 2, and so I agree with Mike that Microsoft should not abandon it. It's how we navigate the world of knowledge, and it's way too early to say we're done with the evolution of that navigation. But as Tim also points out: "a platform beats an application every time". Damn right! That's why I think Microsoft (or Yahoo) should innovate in search, as I pointed out here and here. If Google were to open its platform up, man, then it might well be game over. An open platform that has near monopoly share? Now that's something to ponder.

As promised, I've posted some thoughts on Microsoft's Cashback program over at Thomson's Future of Search site. From the post:

....In essence, Microsoft has taken the affiliate model - where merchants pay channel partners for leads which turn into sales - and turned all of us into potential partners. If it sounds like a crass play to buy your search allegiance, well, it is. But Goto.com was crass too, and it turned into a multi-billion dollar market, the ultimate expression of which is Google. So before you judge it, it's worth thinking about a bit more deeply.

There's no doubt that with Cashback, Microsoft is attempting to disrupt the search marketplace. But there are only a few axes around which you can do that. One, you can disrupt the presentation of search. This is very hard to do, but it's happened before, and will happen again. Secondly, you disrupt the business model of search. And third, you can disrupt how search is created (ie, the secret sauce of relevance). There are startups along every one of these axes of disruption. But with last week's news, Microsoft is focusing on the second one (business model). Unless, that is, you read between the lines. That's when we see the beginnings of disruption along lines one and three as well. ....

.... Lost somewhat in the analysis so far, I think Farecast is a key part of Microsoft's strategy - it's a disruption along the first axis of search - how search is presented. Those of you who have read Searchblog for a while may recall my initial post on that site: Rip Me Off No More. It really struck a nerve, I had more comments on that post than nearly any other in the history of my site. Turns out, people really like a search engine that promises to 1. help them find the best price and 2. does it in a trustworthy, intelligent, and timely fashion. .....

... Is disrupting the business model by paying search customers when they buy something a good idea? I think it is. But it's not going to work unless we trust the search results in the first place. That's where Farecast comes in. In the short term, Cashback will probably goose Mircosoft's user loyalty numbers, which should also boost its share of searches overall. But longer term, the key to winning will be the integration of Farecast-like innovations into Microsoft's offerings. I'd look for these to come in the next year, if not sooner.

Let me know your thoughts...

Wish I could tell you all about it, but the announcement is set for later this morning when I'll be on a plane to a meeting back in the Bay Area. So watch the NYT, the feeds, and here's a story with some details (but no analysis) on PC World or the Seattle PI. I spent a fair amount of time talking about this with execs up there and there's more than just a cash back angle to this story. More this weekend....when I have time to write. Suffice to say, Bill Gates is going to be on stage, a swan song of sorts. This is a big deal for the company, the start of something.

I will be up at Microsoft this week, meeting with Kevin Johnson, President, and others during the company's Advance 08 conference. I am particularly looking forward to hearing what news comes around search, as Kevin has promised in a note to staff:

"On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model."

I will post what I learn by Weds. midday.

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Yahoo's Search Monkey is released today. Not a moment too soon. My one word summary of what Yahoo needs to do to win: Open. Nothing new there, this is the rallying cry of Yahoo's senior leaders. But perhaps I should add another word: Open faster.

Today Search Monkey, where developers can take Yahoo results and rejigger 'em, opens to the world. It's a good idea. But it's not enough.

I think Yahoo should be far more radical. Yahoo should let folks play behind the curtain. It's one thing to give folks a feed of results and let them mash it up. It's quite a different thing to let folks play with the machinery that produces the results.

No. Way. In. Hell....will Google ever let you do that.

Which is why Yahoo should.

Yep, Yahoo should open the entire works to the world. Let anyone tune the way results are proffered. Now that's open.

I'm late on Powerset (I just don't have time to do the briefings anymore), but Mike has coverage here and Danny's is here.

What I find interesting about Powerset is the refinement, which Danny covers well. The interface (in particular the response to query) is much more grammatical and conversational. That's where the entire web is going, and it's cool to see an example of it.

Maybe only when it has to create products in response to market demand (ie new features for enterprise Google Apps), as opposed to engineer delight. Philipp has an interesting post/thread here.

Something going on here. And here. Always like to see Steve pondering things. And then the search driven queries in Matthew's post are great:

love:
working with Canadians
margaritas for lunch
when i know exactly what to do
buttered popcorn jelly beans
Trent Reznor’s lyrics
having lunch with my mom
the rain
my foster parents
Twitter

hate:
nitrogen
talking to my insurance company
airports
when i’m all itchy and stuff
those robotic voices
my work computer
deja vu
the Red Wings
Twitter

feel:
so lost
like i am cramming for a final
like i am being followed
bad but not guilty
extremely safe
old
like i’m on drugs, minus the high
a little lost
sick
exhausted

wish:
i were going to the ballpark
i was still asleep
i was outside
michigan had more job openings
i knew what bit me last night
i was never born
i could go back and punch myself
i was in nashville
people would do their jobs

Remember when I said this:

Expect display and video ads on the home page of Google very soon.

Well here's a summary from a Bloomberg story via IWantMedia:

Google May Run Display Ads With Searches

Google is considering running display advertisements alongside the results of Web queries for pictures, moving beyond text-based ads. "There's lot of potential for advertising revenue there," says VP Marissa Mayer. Google is seeking new revenue sources as its growth slows.

Danny and I have contracted with Thomson Reuters, a sponsor of Searchblog, to write a series of posts on the future of search. They've given us no guidance, just asked us to ponder the topic. This is my first post, "A search is not just a search," longtime readers will find it familiar, if updated. From it:

In the past few years, a significant new feature has crept into the results portion of this otherwise predictable interface. Called “universal search,” the idea is to incorporate more than simple HTML pages into the results. A search for “London restaurants”, for example, might bring up maps and local results, as well as videos, images, organized reviews, and of course web pages. Every major search engine, from Google to Ask, has incorporated some kind of universality into its search results.

But while universal search points the way toward a new approach to getting you the answers you seek, it’s a half step at best. The results change, somewhat, but the process is pretty much the same. You enter a query, you get a set of results. Not particularly new.

What I find interesting are entirely new approaches to the interface of search.

We'll be writing one post every week or so for the next six weeks. I hope by the end it'll be an interesting body of work, it certainly will be if you give me input on what to think about, and critiques of what I've written. Thanks!

Ah, Simplicity. What do you think? Methinks it looks familiar, as all have since Alta Vista days.

Posting what I was just sent:

Microsoft Withdraws Proposal to Acquire Yahoo!

REDMOND, Wash. — May 3, 2008 — Microsoft Corp. (NASDAQ: MSFT) today announced that it has withdrawn its proposal to acquire Yahoo! Inc. (NASDAQ: YHOO).

“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,” said Steve Ballmer, chief executive officer of Microsoft.

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

“We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners. While Yahoo! would have accelerated our strategy, I am confident that we can continue to move forward toward our goals,” Ballmer said.

“We are investing heavily in new tools and Web experiences, we have dramatically improved our search performance and advertiser satisfaction, and we will continue to build our scale through organic growth and partnerships,” said Kevin Johnson, Microsoft president for platforms and services.

Below is the text of the letter from Microsoft CEO Steve Ballmer to Yahoo! CEO Jerry Yang.

May 3, 2008


Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089


Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week’s conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

· First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

· Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.

· In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.

· This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.

· It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,
/s/ Steven A. Ballmer

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

Interested in the advertising biz? Love search? This should be a tool for you. Via WP:

A new search engine called Yureekah launched this week to help ad agencies and advertisers find where competitors are advertising and determining the best options for future brand advertising.

Devaraj Southworth, one of its creators, said the idea stemmed from his own company's needs. He runs a small creative agency and a media planning firm, and it often took several weeks to put together an online ad strategy because he had to manually go through Web sites, ad networks and portals to figure out where his client should be visible. Southworth said he's even had to cancel a campaign because finding that information was too labor-intensive to meet the deadline.

One of my musings from more than a year ago makes more sense to me now, given that Yahoo is trying to fend off Microsoft with search monetization from Google:

One of the longer bomb predictions made by a number of analysts and pundits in the past 12 months has been the following: Microsoft will take its pile of cash and massive market valuation and buy Yahoo. Hell, I even suggested it. The logic goes something like this: Combine the two companies' reach and search share, their CPM advertising businesses and various other plays, and you have a behemoth that can take on Google.

Fine, except I don't buy it anymore, mainly because I think both companies are not well positioned to deal with a successful merger. And, I think there might be a better way. Now, those of you who read regularly may recall my LiveSoft post a year ago, in which I suggested that Microsoft set its Internet businesses free. Well, thanks to many folks who work in the industry (and one in particular who will remain anonymous for now), my thinking has evolved. I no longer think Microsoft should spin out LiveSoft, nor do I think it should buy Yahoo. Instead, it should roll out a new company that focuses on one thing: Search monetization. But it shouldn't do it alone. Instead, it should be a joint venture with Yahoo.

My pal Dave Pell's new Web hack is up: Addict-o-matic. It's a fun approach to indexing the live web.