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Its curious why it took so long for Yahoo Inc. to discover that it was nurturing an adversary during all of the years that it hosted Google Inc.s search engine.
Long before Yahoo finally switched search engines in February, Google was adding features to its own site designed to challenge Yahoos position as a popular home of Web searches, news, shopping and community groups.
Its hard to believe that Yahoo would have remained committed to the Google search engine for four years if it had realized early on that Google would not be content to remain quietly in the background as Yahoos search engine.
Now, Yahoo—and for that matter America Online Inc., the Microsoft network and the rest of the online services industry—is dealing with an increasingly vigorous competitor that is going to battle tooth and nail for market share. Web surfers have nothing to lose in this battle as Yahoo, Google and the rest try to outdo each other by offering new online services to retain users loyalty.
Yahoo has gone to considerable pains to show that it wont miss Google search after making the switch to the Inktomi search engine, with its emphasis on product and technology Web searches. But when it comes to Web searches, Yahoo still lags far behind Google, which accounts for about 79 percent of U.S. search activity, according to Searchenginewatch.com. In comparison, Yahoo accounted for 27.7 percent even when Google was still its search engine.
Yahoo also revamped its news search by implementing an index that combines content from 100 news partners and 7,000 Web sources, which it says will let users access a wider array of content. Its earlier news search gathered information from 4,500 Web sources as well as its direct news partners.
While this seems impressive on the face of it, one has to wonder whether users are able to discern a difference in the quality of the content they retrieve when faced with a veritable avalanche of information, especially when most of the information is coming from the same set of sources.
Local search has emerged as the new competitive battleground for Google and Yahoo. But it remains to be seen whether it will prove to be a major new channel for advertising revenue, even if it proves to be a boon to users.
At first glance, local search doesnt seem like such a new or innovative idea. People have been able to do yellow-pages searches of local businesses and attractions for years.
But new features such as Yahoos SmartView let users pull up maps highlighting the locations of businesses and attractions such as hotels, restaurants, theaters, sports arenas and bank ATMs. The maps display icons that users can click on to get additional information such as directions, prices, Web addresses, schedules or restaurant menus.
Next Page: Google, Yahoo are pouring big money into local-search race.
Local Search Race
Google is currently testing local-search features based on its main search index of more than 4 billion Web pages. The company created a specialized local-search algorithm that users invoke whenever they enter geographic information including city, state, zip codes and addresses.
Users are sure to value search capabilities that give them a wide range of data within the context of a basic map. Many people on vacation or traveling on business in an unfamiliar city have encountered the frustration of trying to find an ATM close to their hotel or on the way to a restaurant. Local-search capabilities also would come in handy when youd like to find a good sushi bar within walking distance of your hotel without puzzling over paper maps or the verbal directions of a hotel concierge.
Whether these searches will generate robust new advertising revenues for Yahoo, Google and others remains an open question. Small and midsized businesses have limited advertising budgets, and they regularly get pitches from a phalanx of traditional advertising channels–local newspapers, telephone directories, guidebooks, direct mail–not to mention radio and television.
But many business owners may be willing to contribute part of their advertising budgets to lock in prominent placement in a local Web search. In the meantime, the upfront investment by Google and Yahoo both in technology and in advertising sales support is massive. A check of the Yahoo and Google Web sites internal job postings show they are continuing to build up advertising sales staff across the country and globally. Their national and local sales campaigns will have to be an unqualified success to justify this investment.
But the development of local search hardly comprises the majority of what Google is doing to challenge Yahoo on its home turf. Googles latest move is to announce a free e-mail service to compete directly with Yahoo, MSN, AOL and the rest.
The Google “Gmail” service reportedly will allow users to archive and search every e-mail theyve ever sent or received. Google plans to sweeten the offer with 1 GB of free storage, far more than what Yahoo and other free e-mail services offer. Yahoo, for example, offers 4 MB of e-mail storage for free. Users have to pay for additional storage capacity.
With this powerful addition, Googles spare and uncluttered interface could prove an irresistible draw for Internet users, even those who have made Yahoo their default home page since the early 90s.