Integrated and Transactional Platforms: Search Platforms

Introduction

The qualitative research presented in this chapter aims to collect and analyze quality data regarding the current status and prospective evolution of search MSP. The analysis proposes classification and examination of the current status of global and local multi-sided search market, and possible ways of further evolution of search innovation technology and services.

Search platforms could be classified in one of the two platform type groups: integrated and transactional platforms (see Figure 1).

• Definition of the search MSP (Yablonsky, 2016):

Search Multi-sided platform (henceforth, SMSP) is an organization that creates value primarily by enabling direct interactions between two main (or more) distinct types of affiliated customers: web/mobile customers and advertisers.

Today SMSP usually has more than two distinct types of affiliated customers, including web/mobile surfers, advertisers, developers, enterprises etc., that form SMSP ecosystem. Today, the SMSP competition is on a much larger scale. It is a competition between vast SMSP ecosystems made up of hardware, software and online services.

The typical role of SMSP intermediaries is to:

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  Minimize transaction costs through matchmaking and audience making.

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  Minimize costs through the elimination of duplication.

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  Permit value-creating exchanges that would not take place otherwise.

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  Enforce innovation.

As well known, Google is the leading search MSP in the world, with a global share of search traffic around 70,8%. Google is the leader in search in every European country except for the Czech Republic and Russia. Traditionally the leaders in Japan and China have been Yahoo! and Baidu, respectively. Another large and growing Asian market, India, is however largely dominated by Google.

Figure 1.

Integrated and transactional platforms

As on any market, competition in the search is good and generally results in stronger products that benefit consumers. All search engines provide multiple results to any given query, but different search engines generally produce a different set of results and a different user experience. Search MSP customize their results to web users with different geographic locations and languages, but the extent, nature and impact of these differences on MSP’s success are unknown. However, the theoretical debate on the role of market leaders in multi-sided search markets is still limited: most of the literature on multi-sided search markets is focused on monopolistic pricing and symmetric competition between platforms, not on competition between a potentially dominant platform and its followers (Etro, 2013).

Search Platform Market

In particular, a wide interest has been focused on the market for search and display advertising that is created by search platforms. In 2014 this market was worth more than $50 billion in advertising. In most local markets, users have little real choice in search engines and search platforms. According to ComScore, Google and its affiliated websites comprise 67.6% of the search engine market share in the US, and, according to Netmarketshare – 66.44% worldwide. Though noticeable, Google is not the only search engine available. There are numerous other engines that provide various interfaces, search algorithms and other unique features. All search engine platforms provide multiple results to any given query, but different search engines generally produce a different set of results and a different user experience. In descending order, the remaining most popular search engine companies in the US, by market share, after Google, are Microsoft (18.7%), Yahoo (10.0%), Ask Network (2.4%), and AOL (1.3%), according to ComScore report.

There are mostly six big-scale SMSPs in the world, and very few countries where the landscape isn’t dominated by a single search player – Google, with a more than 90% market share:

Figure 2.

The search MSP building blocks