War of the search engines

Microsft’s failed attempt to buy Google is another sign of the growing popularity of the privately-owned king of search engines.

In just five years it has become one of the world’s most recognised brand names, its name synonymous with searching. “To Google” has now become the equivalent of “to search” on the internet.

But much larger and richer Yahoo and MSN.com are spending heavily to catch up, recruiting hundreds more engineers to develop the algorithms and programs which underlie search functions.

In addition, in July Yahoo paid $1.6 billion to take over Overture, the leader in placing targeted, search-related advertisements on websites.

Google, the California-based firm whose quirky name has become synonymous with on-line searches, has now moved towards a long-awaited initial public stock offering.

It is expected to raise at least $2 billion in the offer early next year that some analysts believe will be used to defend its place as the Internet’s favourite search engine.

That is believed to have pushed cash-rich Microsoft to sound out Google over a buy-out.

Microsoft rebuffed

The New York Times reported last week that Microsoft’s overture for a partnership or buyout was rebuffed by the much smaller Google.

Google is the most popular search engine for internet users

But Microsoft recruited more experts to build its own engine, and is thought to be eyeing smaller search engine companies, analysts said.

Google’s plan to go public is seen by some experts as an effort in part to shore up the company against this challenge.

The internet’s three titans – Yahoo, America Online and Microsoft’s MSN.com – are all pushing hard to develop their own search functions to snatch market share from Google.

At stake is the hot market for targeted advertisements which accompany search results.

With about 500 million online searches taking place daily, the targeted ad business is predicted to generate more than seven billion dollars annually within four years.

Search engines that allow users to dig through billions of internet pages for a specific topic have been around for a decade and web advertising has existed for nearly as long.

But only in the past two years have the two come together.

Advertisers like the mechanism because the ads reach only their target audience and they only pay a fee when the user clicks on their ad. For each click-through ad, the advertiser pays the search engine website from 15 cents to $50.

Both Yahoo and Google are developing their own shopping sites with comparative pricing functions in a bid to muscle in on the market, while Google has launched a test of its shopping search tool, called Froogle.