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I never understood farming out their search engine to Bing in the first place. Google literally prints money with their adwords search business. Seems instead

I never understood farming out their search engine to Bing in the first place. Google literally prints money with their adwords search business. Seems instead of attempting to innovate they just threw in the towel and gave up? I just find it hard to believe that Google is the only way you can run a successful search engine.

lmm 11y ago
Google's search engine runs at a loss to support their advertising business, and haven't had any serious competition in that sector since they bought Doubleclick (which looks a bit antitrusty in my eyes but what do I know). Yahoo doesn't have much of an ad business so there's not a lot of value in running their own search. They're good at their core business of being a portal, with some parts implemented themselves and some parts external (or semi-external e.g. Flickr) integrations.
- morgante 11y ago
  > Google's search engine runs at a loss to support their advertising business What? I have never heard that AdWords runs at a loss and find it incredibly dubious.
  - grobbles 11y ago
    I believe their argument is "if you ignore the sources of revenue, it runs at a loss", for what that's worth (which is little). The search engine runs ads, and is enormously profitable.
  - xyzzyz 11y ago
    You're misreading what he wrote. It's the ads that bring revenue, and not search. Search is what helps to get people to see relevant ads. Google is not that much in the business of charging people money to provide search services.
  - christophilus 11y ago
    I think he's saying search itself runs as a loss-leader to get people into their hugely profitable AdWords product. In other words, they spend money in search in order to make money via ads. But yeah. The two go hand in hand, so I'm not sure I'd say search is a loss-leader.
    - empath75 11y ago
      That would make any media company a loss-leader for advertising, basically.
    - morgante 11y ago
      Apologies for taking so long to reply. I've seemingly been banned from replying. I'll just say that's a convoluted definition of a loss-leader. If a revenue line requires an expense, that expense is not a loss-leader, it's just a cost. That's like saying that having a website is a loss-leader for Amazon, since they really make their money on selling products.
- AznHisoka 11y ago
  That's perhaps the most twisted/obtuse definition of "running at a loss". Without their search engine, there is no advertising business.
  - morgante 11y ago
    > Without their search engine, there is no advertising business. They do have significant advertising businesses beyond search (AdSense, gmail, etc.).
  - lmm 11y ago
    Yes there is. A lot of Google's advertising business is selling ads on other people's sites, and they use the information from their search engine to target that; they could run the ad business without it (using data from Google Analytics and elsewhere) - after all it ran as an independent business when Doubleclick owned it. My understanding is that if search and ads were separate businesses and ads paid search for search result ads at market rates then search would not be profitable (similarly for e.g. Gmail). (In reality if search were an independent company then it might be able to be profitable by selling information to ads in addition to direct advertising revenue - OTOH the legal barriers to selling information to a third party might make that impractical, whereas conveniently they're not an issue while Google remains a single company)
    - argonaut 11y ago
      Where is this understanding coming from?
    - jknightco 11y ago
      According to their 10K [1] 76% of their advertising revenue and 68% of their total revenue comes from advertising on Google properties. Reducing their revenue by 76% surely wouldn't allow them to "run the ad business without it." [1] Page 24, https://investor.google.com/pdf/20141231_google_10K.pdf https://investor.google.com/pdf/20141231_google_10K.pdf
      - BinaryIdiot 11y ago
- ctdonath 11y ago
  A cost center doesn't "run at a loss", it performs something critical to supporting the profit center. Advertising is what customers pay for; search makes that advertising worth the price. No search = no advertising. Google's core is "know everything, to maximize advertising revenue". Yahoo's core is...well, it became famous because it provided a curated index to the then-unsearchable Web, but now that's moot and Yahoo is, um, yeah seems that's the problem.
- ulfw 11y ago
  By your definition ANY media company runs at a loss. "NBC runs at a loss to support their advertising business", "CNN runs at a loss to support their advertising business", "New York Times runs at a loss to support their advertising business and subscription businesses" etc
deleted 11y ago
[deleted]
castell 11y ago
Exactly. Yahoo had the largest Hadoop cluster in 2009. They used it for their search engine. They were the driving force and sponsor of Apache projects like Lucene and Hadoop. Then suddenly they outsourced their search engine business to Microsoft Bing. Last time I checked meta search engines like DuckDuckGo rely on Yahoo's BOSS API to access Bing's search engine.
- sirkneeland 11y ago
  Outsourcing the software heart of your business to Microsoft is a surefire win. Just look at how well Nokia did when they outsourced their phone OS business to Windows Phone. (I do wonder if iterations of this pattern panned out better when paired with not-Microsoft)
BinaryIdiot 11y ago
You seem to imply that because they used Bing they couldn't still make money from ad revenue with searching. The truth is they most certainly could and probably do (they display Google ads on their result pages). Outsourcing to Bing allowed them to, supposedly, focus on more core business related functions. Whether that was a mistake or not (or ultimately didn't matter) I don't know if we have the data to show.

lmm 11y ago

Google's search engine runs at a loss to support their advertising business, and haven't had any serious competition in that sector since they bought Doubleclick (which looks a bit antitrusty in my eyes but what do I know). Yahoo doesn't have much of an ad business so there's not a lot of value in running their own search. They're good at their core business of being a portal, with some parts implemented themselves and some parts external (or semi-external e.g. Flickr) integrations.

morgante 11y ago
> Google's search engine runs at a loss to support their advertising business What? I have never heard that AdWords runs at a loss and find it incredibly dubious.
- grobbles 11y ago
  I believe their argument is "if you ignore the sources of revenue, it runs at a loss", for what that's worth (which is little). The search engine runs ads, and is enormously profitable.
- xyzzyz 11y ago
  You're misreading what he wrote. It's the ads that bring revenue, and not search. Search is what helps to get people to see relevant ads. Google is not that much in the business of charging people money to provide search services.
- christophilus 11y ago
  I think he's saying search itself runs as a loss-leader to get people into their hugely profitable AdWords product. In other words, they spend money in search in order to make money via ads. But yeah. The two go hand in hand, so I'm not sure I'd say search is a loss-leader.
  - empath75 11y ago
    That would make any media company a loss-leader for advertising, basically.
  - morgante 11y ago
    Apologies for taking so long to reply. I've seemingly been banned from replying. I'll just say that's a convoluted definition of a loss-leader. If a revenue line requires an expense, that expense is not a loss-leader, it's just a cost. That's like saying that having a website is a loss-leader for Amazon, since they really make their money on selling products.
AznHisoka 11y ago
That's perhaps the most twisted/obtuse definition of "running at a loss". Without their search engine, there is no advertising business.
- morgante 11y ago
  > Without their search engine, there is no advertising business. They do have significant advertising businesses beyond search (AdSense, gmail, etc.).
- lmm 11y ago
  Yes there is. A lot of Google's advertising business is selling ads on other people's sites, and they use the information from their search engine to target that; they could run the ad business without it (using data from Google Analytics and elsewhere) - after all it ran as an independent business when Doubleclick owned it. My understanding is that if search and ads were separate businesses and ads paid search for search result ads at market rates then search would not be profitable (similarly for e.g. Gmail). (In reality if search were an independent company then it might be able to be profitable by selling information to ads in addition to direct advertising revenue - OTOH the legal barriers to selling information to a third party might make that impractical, whereas conveniently they're not an issue while Google remains a single company)
  - argonaut 11y ago
    Where is this understanding coming from?
  - jknightco 11y ago
    According to their 10K [1] 76% of their advertising revenue and 68% of their total revenue comes from advertising on Google properties. Reducing their revenue by 76% surely wouldn't allow them to "run the ad business without it." [1] Page 24, https://investor.google.com/pdf/20141231_google_10K.pdf https://investor.google.com/pdf/20141231_google_10K.pdf
    - BinaryIdiot 11y ago
ctdonath 11y ago
A cost center doesn't "run at a loss", it performs something critical to supporting the profit center. Advertising is what customers pay for; search makes that advertising worth the price. No search = no advertising. Google's core is "know everything, to maximize advertising revenue". Yahoo's core is...well, it became famous because it provided a curated index to the then-unsearchable Web, but now that's moot and Yahoo is, um, yeah seems that's the problem.
ulfw 11y ago
By your definition ANY media company runs at a loss. "NBC runs at a loss to support their advertising business", "CNN runs at a loss to support their advertising business", "New York Times runs at a loss to support their advertising business and subscription businesses" etc

deleted 11y ago

[deleted]

castell 11y ago

Exactly. Yahoo had the largest Hadoop cluster in 2009. They used it for their search engine. They were the driving force and sponsor of Apache projects like Lucene and Hadoop. Then suddenly they outsourced their search engine business to Microsoft Bing. Last time I checked meta search engines like DuckDuckGo rely on Yahoo's BOSS API to access Bing's search engine.

sirkneeland 11y ago
Outsourcing the software heart of your business to Microsoft is a surefire win. Just look at how well Nokia did when they outsourced their phone OS business to Windows Phone. (I do wonder if iterations of this pattern panned out better when paired with not-Microsoft)

BinaryIdiot 11y ago

You seem to imply that because they used Bing they couldn't still make money from ad revenue with searching. The truth is they most certainly could and probably do (they display Google ads on their result pages). Outsourcing to Bing allowed them to, supposedly, focus on more core business related functions. Whether that was a mistake or not (or ultimately didn't matter) I don't know if we have the data to show.