DuckDuckGo: The privacy search ruffling Google's feathers
Published 10/03/2014 | 07:29
It takes a certain degree of bravery for one man to go up against Google in anything - but taking the technology giant on web search? Some might regard that as just plain foolish.
After all, this is an area where even the goliaths of the industry have struggled to gain traction. Microsoft’s Bing search engine has less than 6pc of the global search market. Yahoo, whose search engine is powered by Bing, has around the same amount. Google, with a 71pc share, has sucked all the oxygen out of the room.
Yet go up against Google is exactly what Gabriel Weinberg did. In 2008, he launched his own search engine, DuckDuckGo, in the gloom of his Pennsylvania basement. The project started quietly, but over the last six months it has gained ground and is now starting to ruffle Google’s feathers.
Initially, it was a hobby. Weinberg, a laid back 34-year old, had already built a company - NamesDatabase.com - and sold it for $10m. He could afford not to work, and was interested in creating something else just for the sake of it.
However, as the project evolved, Weinberg found there was considerable demand for a different kind of service from the one Google offered. A sizable faction of consumers wanted fewer ads, what they deemed to be better quality answers, and – crucially – more privacy. They were wary of the big search engines collecting their data, and using it to target adverts to them based on their past behaviour.
DuckDuckGo tapped into this demand, by offering a service which does not retain any of their information. It does not download “cookies” onto people’s devices. It does not register the “IP address”, which pinpoints a users computer.
The only thing Weinberg knows about its customers, based on the servers requests are run through, is whether they are in America, Europe or Australasia.
“That is distinct from what other companies do. We are not anonymising the data. We actually throw it away - everything related to the user and anything that is personally identifiable,” Weinberg says.
DuckDuckGo’s other big selling point is the way it sources information from enthusiasts, in a similar fashion to Wikipedia, and therefore helping to deliver answers curated by people who know about a subject, rather than just a list of links.
The company makes money from selling adverts only in the most basic fashion. If users search for “car”, they see adverts for general cars, rather than cars chosen based on what the user was searching last week, or vehicles that are popular with people who like Top Gear and shop at John Lewis.
But whilst this all sounds very nice in theory, having almost zero information about customers is hardly a siren call to investors. Although Weinberg’s previous success helped him get meetings with venture capital firms, it was hard work persuading them to take a stake in the company that was launching in the face of fierce competition and had no silver bullet to make money.
“Most of them weren’t interested. They were like, 'Google owns this market. I don’t see anyone competing with them.’ We will probably never, ever be a market leader, but our approach was not to compete with them head on. We do the thing that they can’t do easily,” Weinberg says.
Eventually, Union Square Ventures took the bait, paying $3m for an undisclosed minority stake in 2011. Weinberg credits the fact that its founders had enjoyed so much success with their past investments – Twitter, Kickstarter and Tumblr among them – that that they had carte blanche to back pretty much anything they wanted. “They were intrigued. They’re politically pretty anti-monopoly and pro-competition. They also like the underdog thing,” he says.
Nearly three years on, it looks to have been a good bet. DuckDuckGo continued steadily for a few years, but it got a rocket boost last year when Edward Snowden revealed details about the spying tactics used by America’s National Security Agency and GCHQ in Britain. As consumers learned that many of the technology services they relied on were routinely passing their information to the US government, they turned to DuckDuckGo as a safe haven.
The website’s traffic has quadrupled over the last year, and last month it passed the milestone of 5m queries a day. It is hard to establish DuckDuckGo’s exact market share because, as Weinberg says, “apples to apples numbers are hard to come by”, but he says it is “closing in” on 1pc of all searches worldwide.
That might seem a small figure next to Google, but when you weigh it up against the fact that Microsoft has less than 6pc of the market, DuckDuckGo’s against-the-odds advance looks remarkable.
What’s more, Weinberg expects the growth to accelerate. So far, the privacy lobby has been led by people focused on users’ moral entitlement to use the internet unobserved. However, a new tranche of pragmatists might be tempted to take up the cause, once they realise that their search histories could be being used to push up the cost of airfares and hotels, or establish their credit ratings.
“Before, it was the 'I have nothing to hide’ argument, but now they are starting to see other day to day changes and they don’t like it. If the data exists, and can be used to increase profits, it will be, because that is what [public] companies are supposed to do,” says Weinberg.
Union Square probably does not have its hopes pinned on an exit any time soon. “I don’t see it happening,” says Weinberg. He is keen for the company to remain private, and knows that it would be hard to find a buyer willing to keep to the website’s original principles.
“We have no interest in being shut down or having our terms of service changed,” he says. Instead, Weinberg argues, the business is focused on improving the service – it will roll out a new look in the second quarter – and steadily gaining more users.
It is the kind of answer technology start-ups trot out all the time as a coquettish code for “come and buy us!” - but Weinberg seems sincere. Besides, if he is trying to flog the company, he isn’t going about it very well. Asked how much DuckDuckGo is worth, he says: “I honestly don’t think we’re that valuable, at least until we have more users.” The company does not disclose its finances, although it is understood to be profitable.
DuckDuckGo doesn’t behave like a typical tech start-up in many ways. Whilst its rivals favour glassy constructions on the West Coast, Weinberg’s company offices look like a family house, and a rather strange one at that. A plaster angel adorns the outside brickwork, perched above a gold starfish and a lion’s head. “The landlord is an architect,” says one of Weinberg’s colleagues, by way of explanation.
Its location, in the small, nondescript town of Paoli, also seems an eccentric choice, but Weinberg got there in a very logical fashion. He and his wife, a New York-born statistician, were looking for somewhere they could work and raise a family. They narrowed their search down by crunching census data to find a place with good weather, but that also has an “educated population”, was prosperous and had good schools.
It is telling about the way Weinberg’s mind works. It has also helped to shape DuckDuckGo’s culture. Weinberg says he misses the ambitiousness of the West Coast – he feels Pennsylvania has far more in common with Europe than Silicon Valley when it comes to entrepreneurship – but he and his colleagues also enjoy being outside the “feedback loop” that comes with it.
Most of the staff work remotely in different countries around the world, but the handful of them who do sit around the meeting table in Paoli obviously enjoy being in a place where people have jobs in industries that do not involve apps.
Whilst San Francisco’s hoodied technologists obsess over multi-billion dollar deals, and rollercoaster valuations, Weinberg is focused on growing the slow and steady way. When he is not working on his own project, he is an angel investor in other people’s, and is realistic enough to regard a $50m exit as a grand success, rather than fixating on deals like WhatsApp’s $19bn sale to Facebook. “Those cases are the outliers. The likelihood that that is going to happen is very small,” he says.
However, he also believes that a bidding war between the industry’s goliaths will steadily drive up tech valuations. “Software, I believe, is eating the world,” he says, referencing the theory put forward by investor Marc Andreessen: “You have five companies which are leading the tech industry, and who are encroaching on all these other industries.
Their market capitalisations keep going up and up and up, whilst other industries go down. But now they’re competing with each other, and their huge market caps mean they can buy things for huge sums without really blinking.”
As is the case with the WhatsApp deal, a lot of these transactions are defensive. Major players are opening their chequebooks simply to neuter those hot new companies that could become threatening in the future.
If DuckDuckGo continues growing at its current pace, Google could start to view it in a similar light. The California technology giant has yet to make an offer, but Weinberg and his cohorts have certainly piqued Google’s interest. “We have been in touch with them over the years,” he says. “They seem to notice everything that we do.”