A lot of people scratched their heads when Apple bought Topsy, a social media analytics company, this week. Why would the maker of iPads and iPhones need a small company that culls data from Twitter?
The likely answer is that Apple needs help with something that is as old as the Internet itself: search.
For most people, “search” stopped being sexy more than 10 years ago, when Google proved that its search engine was pretty much the only one you needed. But Apple just dropped $US200 million on Topsy, likely in hopes of using Topsy’s data to improve recommendations when people search for apps and stuff in iTunes and the App Store.
There are billions of dollars at stake here.
Apple is interested in search for a reason. It’s part of a new war over search, and billions of dollars are at stake. Most interestingly of all, although Google is hugely dominant in traditional web search it’s not at all clear that it’s going to win out in new, niche areas of search where companies like Apple and Facebook believe millions in revenue lie untapped.
On Facebook’s Q3 earnings call CEO Mark Zuckerberg announced the company was developing its Graph Search product, extending it to a “Post Search” tool that has access to 1 trillion data points. Zuckerberg appears to believe that Facebook’s store of human likes and status updates could power a more intuitive, conversational search product that may one day compete with Google.
At Apple, iTunes and App Store revenue was $US16 billion last fiscal year. It makes more money from songs and apps than it does from selling iPods or Apple accessories. And the apps/iTunes revenue segment looks set to overtake MacBook sales (which are in decline) sometime in the future.
Getty Images/Justin Sullivan
Google CEO Larry Page
The new war over search.
Note that at $US16 billion, Apple’s “search” — i.e. song and app discovery — business is already worth about one quarter of Google’s pure search business (about $US60 billion), if you want to think about it that way.
And although Google supplies search services to thousands of third-party businesses, it has absolutely no access to Apple’s App Store. (In fact, the App Store competes with Google Play, the Android equivalent of the App Store.)
So even though Google may have thought it won the search war in the early 2000s, that was merely a battle. The larger war has simply entered a new phase.
This is the war over “semantic” search.
Here are some of the search skirmishes happening right now:
Facebook CEO Mark Zuckerberg
Facebook is developing an artificial intelligence and speech recognition business.
Ever wondered why search on Facebook is so weird, compared to search on Google? That’s because you’re doing it wrong. Google has trained you to punch in keywords that describe what you’re looking for. Facebook is hoping that its searches will answer more “latent” or abstract queries, where you don’t specifically know what you’re hoping to find, such as, “what are my friends’ favourite movies?”
Search is also becoming more conversational.
In the future, using a keyboard to operate a device will probably seem about as weird as punching in lines of BASIC code does now. We will talk to our computers, through the successors of products like Apple’s Siri, Google Glass, and Google Now, the Android voice assistant. Search requests will become more conversational and less keyword intensive — which is why creating algorithms that can handle the nuance of conversation rather than just dictionary definitions is so important. Google recently extended voice search to PCs.
Some people searching for info in the future.
Note that Apple acquired Topsy to improve its personal recommendations. The new search is more about guessing what you, personally, really want, rather than returning keyword matches. Google Now predicts what you want, such as warning you of Calendar appointments even if you have forgotten to ask it to. Facebook’s Graph Search is another example: It’s about “semantic” searches where there is no known, specific answer — the user just wants to uncover a trove of “abstract” information.
Google has launched a Wikipedia-killer.
You may have noticed that when you search for certain well-known topics in Google, you get a box of info at the top of the page with background facts about the thing you searched for. Much of the information is just text that Google has created — you can’t click on it to go anywhere. This is Google’s “Knowledge Graph.” Google is building a database of facts hoping that it can answer a large number of popular searches directly, without requiring you to click away onto another site. It’s a big threat to Wikipedia (even though it draws info from Wikipedia), because a lot of people could get their info from Google’s page rather than from the web site that generated the data in the first place.
Google has launched an internal app search product.
One front that Google is fighting fiercely on is mobile apps. Remember when people used to wonder whether the rise of the iPhone — and the fun apps it carries — would seal off the wild ‘n’ woolly web inside a walled garden where everything was beautifully (if boringly) organised for you? Well, Google has found a spyhole into that wall: A search product that indexes the inside of app content.
Google has made search more “social” with Twitter and Google+.
Because there are no cookies on Apple’s mobile iOS devices, Google’s search results are degraded — your search history is denuded. So Google is fighting back: Search results are now affected by your Twitter and Google+ activity.
Susan Bennett claims she’s the voice of Siri.
This is why Apple is persisting with Siri (even though iPhone users hate Siri).
If Google Glass takes off, it would be a huge competitive threat to Siri. Apple may have bought Topsy to make Siri more useful. The Wall Street Journal says:
Another possible application of Topsy’s technology is to refine the search feature in Apple’s Siri voice assistant in the iPhone and iPad. Siri already asks users to access their Twitter account to personalise search results. Apple has purchased at least one other startup with expertise in search. It paid more than $US50 million last year for Chomp Inc., a tool for searching mobile apps.
Amazon searches are a huge threat to Google.
Amazon CEO Jeff Bezos has made it no secret: He wants people to use Amazon to buy pretty much everything that Amazon could possibly sell, not just books and movies. But the key to that is whether you start your search on Amazon or somewhere else, like Google.
So Google recently began serving up “Product Listing Ads” when you make shopping-related searches. They’re little boxes with a photo of each product in them and a price underneath. They have turned into a big business for Google because they sit in front of Amazon’s results, and point to non-Amazon sites.
Amazon CEO Jeff Bezos
Smaller companies are experimenting with semantic search layers underneath Google.
A California adtech company called Adchemy — and its venture capital funders — has made a huge bet on finding a semantic layer of meaning beneath shopping searches on Google. Adchemy believes that if a company’s online product catalogue can be organised properly, it can auto-generate high-performing product listing ads on Google. But that requires an algorithm that re-interprets the original Google search into something more meaningful — a huge task.
And the winner will be …
Clearly Google has a huge head start, and vast resources to throw at the problem. You bet against “Don’t Be Evil Inc.” at your peril. But who would have thought, back in 2005, that a “directory” of student mugshots would turn into a $US6 billion business that siphons ad money from Google?
That’s how fast these things move.
We don’t know who will win the new search war. But there are clues as to how this might shape up. There may be room for a variety of search verticals.
Look at advertising: Increasingly, digital media companies are eschewing traditional banner ads in favour of “native” ads. These are unique ads that can only be bought on one property, like Facebook’s news feed ads or Twitter’s promoted tweets.
It’s not hard to imagine that Facebook, Apple and others might want native search, too.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.