This article was updated on May 26, 2022, with clarifications on the role of node operators in the Presearch decentralized search engine.
Advertising-based businesses are under serious scrutiny lately:
Snap Inc. (NYSE:SNAP) just warned that Q2 revenues and earnings from its Snapchat app aren’t ringing up as it previously projected – and it’s being treated as a “canary in the coalmine” for the whole group of stocks. Google (NASDAQ:GOOG), for its part, is still expected to see 15% revenue growth in Q2, with earnings roughly flat.
But Google has its own problems, in the form of the U.S. Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights.
Senators are preparing an antitrust smackdown for Google. Their new bipartisan bill – supported by the likes of Sen. Amy Klobuchar and Sen. Ted Cruz – is called the “Competition and Transparency in Digital Advertising Act.” And as The Wall Street Journal reported on Thursday, it would “likely require Google to divest significant portions of the digital advertising business it built.”
“When you have Google simultaneously serving as a seller and a buyer and running an exchange, that gives them an unfair, undue advantage in the marketplace, one that doesn’t necessarily reflect the value they are providing,” as subcommittee chair Sen. Mike Lee told The Wall Street Journal. Under this bill he introduced, Google can no longer “wear all these hats simultaneously.” (And neither can the Meta Platforms (NASDAQ:FB) formerly known as Facebook.)
At this point, most of Google’s business operations are being targeted by trust-busters:
Nearly every state’s attorney general – plus more Congressional bills – are going after Google’s search-engine practices, for being self-preferential, as well as the Google Play store. Antitrust bills on those topics are “very close to becoming law, likely by the end of the summer,” Vox reports. So, why not this new one to break up Google’s ad business entirely?
For the first time in 20 years, we can let ourselves wonder: What could it be like if Google wasn’t our only gateway to the internet?
Enter Presearch (PRE-USD)
Small businesses often rely on Google Ads for their marketing these days – but they certainly don’t want to find themselves on Google’s bad side. That’s what Colin Pape found as CEO of ShopCity.com: an e-commerce network to connect local businesses with their community.
As a guest on Untold Stories, hosted by Charlie Shrem of our Crypto Investor Network, Pape recounted how ShopCity had started working with business owners, journalists, and the local government of Mountain View, CA. (Yep, Google’s hometown!)
Then: “We ended up waking up one day in July 2011 and all of our websites were somehow on page 8 of Google.” How often do you even look at page 2? It was a death sentence for ShopMountainView.
Luckily, a prominent antitrust lawyer named Gary Reback took up ShopCity’s case, Pape explained. “We ended up getting a resolution, thankfully, through Google – but realized how much market power they had, and how much control they had over the internet as a whole.”
Presearch launched on its “testnet” in late 2020. Tomorrow, Presearch moves to “mainnet” with 3.8 million registered users. The project offers a search portal, Presearch.com, plus mobile apps for iPhone and Google Play, where your searches are private – and you earn PRE crypto for making them.
Below we see how the launch event has PRE bouncing strongly off of its lows from the Terra (LUNA-USD) crypto disaster:
“Obviously Google has done a tremendous job, from a product standpoint. A lot of people use Google products and love them,” says Colin Pape, but there’s “a lack of accountability. A lack of community involvement.”
And because Google holds a monopoly worth $250 billion a year already, they don’t want to rock the boat and actually innovate to keep up with the changing times. “There might be different paradigms for search that just aren’t going to get explored, because they’ve got a huge vested interest in not, right?” Pape argues.
To fill that gap and provide a better alternative, Presearch operates as a community – not a traditional company. Anyone can come and build a new widget to help Presearch display the type of results they want to see.
Blockchain data, for one, is notably missing from Google. You’ve got to know which site can give you what you want: Etherscan, CoinGecko, CoinMarketCap… But on Presearch, data from these sites are already built-in to your search results. The result page won’t be dominated by advertisements… And the more you use Presearch, the more you’re rewarded with PRE crypto.
Google, for its part, has made some small gestures toward the crypto future, like encouraging Web3 developers to use Google Cloud… But incorporating cryptocurrency directly into Google seems very unlikely after Mark Zuckerberg’s failed efforts with Libra. Regulators really don’t want Big Tech getting into the crypto game – and clearly, Google is fighting regulatory battles on enough fronts already.
Meanwhile, Presearch operates through a native cryptocurrency all along. And because its users, developers, network operators, and business partners are all PRE tokenholders – their interests are all aligned.
You can read all about the “tokenomics” here. But the key aspect is: You have to stake PRE in order to advertise on Presearch, just like if you want to become a node operator (and earn PRE by helping power its decentralized search engine).
With Keyword Staking, you choose a search term and place a bid to advertise on Presearch’s result page for that term. Whichever advertisement has the most PRE staked behind it will “win” that term and display in the ad box. And because advertisers just “lock up” their money – rather than spend it – they have more flexibility to try different campaigns.
So, everyone gets their share of the value they create as Presearch grows. More users (who earn crypto incentives) should attract more advertisers to Presearch, and given how the business is structured, more demand for PRE.
Presearch’s business model and the utility of its crypto were just featured in the cover article for Wired’s June issue. “Will this work? Perhaps not,” writes the crypto-skeptical journalist. “But it’s not a Ponzi scheme.”
“In theory, that distributed structure should prevent anyone from pushing Presearch in any shady or exploitative directions,” the Wired article goes on, quoting Colin Pape, who notes: “If we try to extract too much value from users, and they get pissed off, the value of the token goes down.”
While Presearch isn’t decentralized yet in terms of governance, it has attracted 62,600 node operators to earn PRE crypto while providing computing power for Presearch. So, the network itself is impressively decentralized, and growing across the world.
And Presearch certainly promises real-world value: Its whole model of a better search/privacy experience is legitimately exciting. It’ll be a project to watch now that it’s past its “dress rehearsal” phase and officially stepping into the limelight.
On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.