Searching for the Truth About Search Engines

It has been clear since the mid 1990s that search engines are central to the Internet and its use. The rise of Google as the bellewether Net company has made their pivotal nature even more apparent. But there has been surprisingly little formal analysis of the dynamics of this market.

Step forward Rufus Pollock, well known to readers of this blog as the main driving force behind the Open Knowledge Foundation:

Internet search (or perhaps more accurately ‘web-search’) has grown exponentially over the last decade at an even more rapid rate than the Internet itself. Starting from nothing in the 1990s, today search is a multi-billion dollar business. Search engine providers such as Google and Yahoo! have become house-hold names, and the use of a search engine, like use of the Web, is now a part of everyday life. The rapid growth of online search and its growing centrality to the ecology of the Internet raise a variety of questions for economists to answer. Why is the search engine market so concentrated and will it evolve towards monopoly? What are the implications of this concentration for different ‘participants’ (consumers, search engines, advertisers)? Does the fact that search engines act as ‘information gatekeepers’, determining, in effect, what can be found on the web, mean that search deserves particularly close attention from policy-makers? This paper supplies empirical and theoretical material with which to examine many of these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the possible regulatory interventions that policy-makers could utilize to address these.

It has a handy short history of search engines, and then some rigorous economic analysis if you're into that sort of thing. (Via B2fxxx.)