Online businesses compete by being the default. You want to connect with friends, so you default to Facebook; you want to waste five minutes, you default to Zynga; you want to talk about stocks, you default to Stocktwits.
Google is the Big Default. If you want to find something, but you’re not precisely sure what, Google is where you start. For about eight years, that’s where I’ve started, too. But recently, two sites have started to replace Google. And what’s especially dangerous about them is that they’re both encroaching on Google, starting at opposite ends of the spectrum of services that Google Search provides.
The first Google Threat I found is the DuckDuckGo search engine. It’s a one-person company, so it’s entitled to some quirks. But it’s also entitled to strong opinions on privacy, and that low overhead means they can be hostile to ads that are hostile to users.
DuckDuckGo’s founder has some complex ideas about what Google can’t copy, but the summary is simple: Google is at, or close to, a local maximum. Any change they make will, on average, make the typical user’s experience worse. If there’s a better way to search than Google, there are many worse ways to search between that and Google.
Which makes DuckDuckGo a great business: if they Get Search Wrong and only have a small core of loyal users, they can at least sell ads against those pageviews. But if they get it right, Google can’t afford not to buy them—why not marry Google’s Adwords team (and all their search data) to whatever search interface happens to work best?
What I’ve found is that for a specific set of queries, DuckDuckGo wins. Specifically, if you are sure that what you’re looking for exists, DDG will feature it more prominently. They hide ads, let you downgrade commercial sites, and highlight official sources. Basically, they’re a better user interface for a better Wikipedia.
On the other end of the spectrum, there are some things you would not expect to exist online. For those, your best bet is Quora, a smart Q&A site. They were invite-only until literally the day after I sent a bunch of people invites, so their userbase consists of people who are a few degrees of separation away from the founders. And since Quora’s founders came straight out of Facebook, that’s a smart group.
Quora is full of people who can answer the questions Google can’t. Questions like:
I wouldn’t bother asking Google. Quora has answers. Quora is targeting the longest possible long tail: pieces of content that at least one person can create, and that at least one person cares to read.
Quora doesn’t, however, have a business model (they have enough funding not to care). DuckDuckGo may or may not be profitable, but probably isn’t a huge business.
But they’ve both replaced Google as a default. And they did it for less than it would cost Google to take that default status back.
At 21X earnings, Google is not a short. There’s a lot they can do to diversify, and a lot they can do to get closer to DuckDuckGo and Quora. But all that will cost them something, so buying Google now is a tricky bet—that they’ll be able to change direction in time, before they end up being another Yahoo.