| TheMotleyFool.com, Google Shores Up Search
By Alyce Lomax (TMF Lomax)
March 28, 2006
Despite rivals' best efforts, Google (Nasdaq: GOOG) has increased its share of the search market, widening its lead in the space. It's clear that Google has made itself the brand in search, and other companies hoping to step up their own search efforts haven't made too much of a dent in Google's cache. However, despite the good news, the challenges Google faced yesterday are still here today.
According to ComScore data for February, Google increased its market share to 42.3%, from 36.3% on a year-over-year basis. High-profile rivals Yahoo! (Nasdaq: YHOO) and Microsoft (Nasdaq: MSFT) both dipped. Yahoo!'s search share fell to 27.6% from 31.1%, while MSN's share dropped to 13.5% from 16.3%. In an interesting aside, IAC/InterActiveCorp.'s (Nasdaq: IACI) Ask.com increased to 6% from 5.3%. (Ask.com recently dropped long-time gentleman's gentleman Jeeves and has embarked on a TV ad campaign entreating folks to give its search tools a whirl.)
The data certainly represents good news for Google, considering a few recent challenges, not the least of which has been its skirmish with the U.S. Department of Justice. Indeed, the fact that Google stood up to the government's demand for data when rivals caved might have helped uphold its image.
The search wars have been a hot topic for quite some time, predating Google's IPO madness and subsequent stock spike. However, despite the news that Yahoo!'s search share dipped, I stand by comments I've made before: That Yahoo! is quietly working towards its strengths. For example, Yahoo! does have that huge user base and has been directing some attention to user-generated content like mashups and social content, all of which should help it capitalize on what one might imagine are the intellectual riches in its own Internet ecosystem. (Of course, speaking of Yahoo!'s portal elements, Google Finance has been yet another recent aggressive volley, given the popularity and high profile of Yahoo! Finance.)
As for Microsoft, I have no comment -- well, other than the fact that I've made it clear in the past that I'm a bear, so why beat a dead horse. Although I have colleagues who think highly of Microsoft's efforts to step up its search features, its rep for being an innovator -- or even for being particularly on time with its products -- isn't too hot. Needless to say, the Vista delay hasn't helped in that department.
The news, of course, is good for Google -- but is it surprising? Not really. Google investors should certainly be grateful for indications that the company is defending its territory, but it doesn't change the fact that the search giant will have to find new revenue channels, a point the company has already stated. That part of the equation hasn't changed, so it's clear that Google's search is far from over.
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