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Can Google’s Monopoly Be Disrupted?

Despite dozens of ongoing lawsuits and billions of dollars in monopoly fines paid, Google still reigns as the number-one search engine.

A concept image of a transparent search bar over a photo of a person using a cellphone.

Source: Monster Ztudio / Shutterstock.com

It’s estimated that the tech giant processes over 60,000 search queries per second!

But there are major concerns about the way Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Google’s parent company, does business…

There are serious concerns about the way they treat user data… and the company’s monopoly over parts of the internet. That’s why there are more and more startups building alternatives to Google’s services.

First, let’s take a step back and define the problem.

Consumer Data is Big Business

We live in a connected world.

The smartphone that never leaves your side is the gateway for companies to learn a lot about you. Your phone tracks where you go… where you shop… your searches … even who you are with…

It’s a big business.

It’s estimated that in 2018, Facebook (now Meta (NASDAQ:FB)) made $56 billion from user data.

While Google claims it does not “sell” user data, the company leverages your data to the tune of $147 billion in its advertising business.

It can be unnerving. So it’s no surprise that one of the biggest concerns people have when using the internet is their privacy. They want to know what user data companies are storing and how those companies use it.

And governments are stepping in.

In 2018, the European Union (EU) General Data Protection Regulation (GDPR) went into effect. The law not only allows the people to know what information is being collected about them, but it also limits the data companies can save and how that data is used.

In 2020, the California Consumer Privacy Act went into effect. It was the first law in the U.S. to protect consumer data. Other states are following suit… Colorado and Virginia have passed consumer privacy laws. And at least six other states, including New York and Massachusetts, have pending laws.

While these laws affect companies both big and small, Big Tech companies like Facebook and Google seem to be the main targets.

If governments around the world continue to step in to regulate big tech, it’s highly likely that these startup competitors will see some huge wins.

Searching for the Next Google

Take DuckDuckGo. I personally use it all the time.

DuckDuckGo is a search engine that doesn’t store IP addresses or user information. This makes the search results more consistent… the results aren’t tailored to the user’s past behavior. (Google, on the other hand, is accused of exploiting past behavior by showing filtered search results that vary by user).

As more internet users seek to protect their data, DuckDuckGo is growing. Just look at the daily query growth since they started in 2010:

A chart showing the average queries on search engine DuckDuckGo from 2010 to the present.

Private investors are seeing more value in DuckDuckGo’s anonymous search platform. DDG just revealed that it closed more than $100 million in investment last year from existing investors. The company plans to use these funds for increased advertising.

DDG generates over $100 million per year in revenue mainly through ad revenue. The company claims to be a profitable private company, but it isn’t the only company taking on search…

Other startups, like You.com, are also raising capital to build better search platforms. You.com is an ad-free platform that says they will never sell your data to advertisers. Led by the former chief scientist of Salesforce, You.com summarizes the internet with useful content for the user.

What does that mean exactly?

It separates the results into buckets. These buckets could be organized by source, like the New York Times, or by medium, like video. Instead of having to leave the original search page to see the buckets individually, you can see them all at once.

Earlier this month, You.com announced that it raised a $20 million seed round and plans to build a better search experience.

Remember, seed round investing is the earliest stage of private investing. A seed investor typically “seeds” a company with startup capital. This stage of investing carries the most risk. An average seed round is typically less than $1 million. Raising $20 million in a seed round means investors see a lot of potential.

Our search for data privacy is only going to grow as we get more connected. Governments have already started to step in. Companies working to provide a secure way for us to use tech applications we love are going to win big.

With private money already piling into companies like DuckDuckGo and You.com, we’d be crazy to ignore this trend.

Stay tuned! Here at Venture Capital Digest, I’ll keep you updated on this breakthrough trend…

Regards,

Cody Shirk
Editor, Venture Capital Digest

P.S.  One more thing before I go…

InvestorPlace offices, including customer service, will be closed this Thursday, Nov. 25, and Friday, Nov. 26, in observance of Thanksgiving. We’ll also be taking a break from Venture Capital Digest Thursday.

Happy Thanksgiving to you and your family! I’ll see you back here next Tuesday!

On the date of publication, Cody Shirk 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.

By focusing on megatrends that will shape the future, Cody Shirk uncovers generational wealth in the private investing space. To make sure you never miss Venture Capital Digest, click here to subscribe.


Article printed from InvestorPlace Media, https://investorplace.com/venturecapitaldigest/2021/11/can-googles-monopoly-be-disrupted/.

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