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Monday, January 24, 2005

AOL Follows Well-Worn Path: Smoke, Fire, and the Google Threat

AOL is releasing a revamped search interface and is evidently auditioning a few new vendors of search technology, including Vivisimo and FAST.

We've seen this pattern before. Yahoo and MSN have been inveterate tire-kickers when it comes to third-party search technology. In both cases, it finally resulted in taking the project in-house for good. Does this mean that AOL's experimentation is likely to spell the end of its partnership with Google Search and Google AdWords? Hard to say. Given everyone else's need to take Google down a peg in the earnings department, AOL has some good reasons to follow suit. But the changes might be gradual.

The hard part at this stage is to determine whether the process of "getting serious about search" that AOL is belatedly following is more akin to a Rostowian economic takeoff (on the cusp of "breakout") or a stale sitcom getting ready to jump the shark. Yahoo and MSN appear to have done well by redoubling their focus on search, but it's early days yet. What makes it harder for AOL is that all this auditioning of vendors and tweaking of features is being done for a steadily-declining user base. Its search market share, according to recent comScore reports, puts it firmly in fourth place, and falling. Once that share drops below 10%, you can enhance it with magic mushrooms if you like -- it won't be that interesting a story.

We're old-school enough here to still believe there are portal wars, and to still believe that "fourth portals" are on the bubble. Lycos was once a "fourth portal." Google rocketed out of nowhere to its current destination status; Yahoo and more recently MSN have fought to maintain their position.

An interesting question -- although less so in light of AOL's #4 standing -- is whether Ask Jeeves is one of the vendors AOL might be auditioning. (Note the wording of the spokesman's comments -- '“Users are searching because they want answers. The new AOL Search will get users to better answers, faster,” he said.' And the reporter repeats it: '"Part of its strategy is to develop a service focused on providing more detailed and tailored answers to users' questions. It is expected to be a key feature in the relaunch of the AOL.com portal later this year."')

Teoma and other Ask Jeeves technology would no doubt be fine as replacements for the "Google-enhanced" web index currently employed by AOL. If AOL were to acquire FindWhat.com, it would have a head start on running its own pay-per-click ad auction, too. Of course all of this strategy might be a little hot and heavy if users have decided to simply use Yahoo or Google instead. It's not easy being fourth.

Posted by Andrew Goodman




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