If you live outside the Czech Republic, you’ve probably never heard of the search engine Seznam. But for many Czechs, as the company likes to say, “Seznam.cz is synonymous with the internet.”
Seznam is an internet search company whose algorithms are built on the Czech language. It launched in 1996 in Prague, with about 50,000 Czech koruna (about $2,200) in funding. Early versions of Seznam.cz displayed a list of popular Czech sites—seznam means “list” in Czech—as well as a summary of Czech news.
That was two years before Larry Page and Sergey Brin started Google in Palo Alto. As Google gobbled up most of the global search market over the next decade, Seznam’s unique Czech identity made it the rare local player that held its ground in search. Seznam also expanded into other free services like maps, email, and price comparison.
By 2008, Google dominated the market for general internet search in 30 of the 31 European Economic Area (EEA) countries. The exception was the Czech Republic.
But sometime in the past decade, Google came for Seznam too. The EU believes Google overtook its Czech competitor around 2011. Data from ad marketing agency eVisions shows Seznam still held a majority share of the Czech search market at the start of 2014, but that Google pulled ahead in the second half of that year. The latest data from eVisions put Google’s share of search on the Czech internet at 74% as of the end of 2018, nearly three times Seznam’s 26% share. Google’s share of mobile search was even higher, at 81%.
The defeat of Seznam on its home turf demonstrates just how difficult it is to compete with Google in its core business of search. Former Seznam CEO Michal Feix, who now consults for the company, says that Seznam first noticed Google gaining rapidly around 2010, as search traffic shifted from desktop to mobile. The change was particularly notable at the Christmas holidays, he said, as consumers unwrapped new Android mobile devices that came pre-loaded with Google search apps.
“That was the moment when these people changed their habits and transferred from desktop to a mobile device where the Google services were preinstalled,” Feix said. “It was much more complicated to go to anything else like Seznam, and these users started to simply disappear from our radar.”
Google owns the Android mobile operating system that the majority of smartphones run on globally. Android software is open source, meaning anyone can modify it, but in practice Google has barred device makers from crucial Google apps, like the Play Store, if they developed or sold a device running on a version of Android not approved by Google, known as a “fork.”
Google has also required Android device makers to preinstall its search app and Chrome browser to license the Play Store. In July 2018, the European Commission fined Google a record €4.3 billion ($4.7 billion) for Android practices it deemed illegal and harmful to competition.
From 2008 to 2014, Seznam sought to preinstall its search app on Android devices that it hoped to sell in the Czech Republic. Seznam later told the European Commission (pdf) that “all our efforts generally grind to a halt with the oral off-the-record statement: ‘we are unable to change mobile phone firmware for licensing and financial reasons.’” In June 2013, Seznam filed a complaint with the EU over Google’s Android practices. A few years later, it joined a similar complaint lodged by lobbying group FairSearch.
How Google stays on top
Google spends heavily to maintain its dominance in search. Last year, Google parent Alphabet spent $12.6 billion, or 13% of its revenue from search and other Google properties like Gmail and YouTube, on traffic acquisition costs paid to “distribution partners” who make Google search and services available. Such partners include mobile carriers, software developers, and device manufacturers. Goldman Sachs estimates Google paid Apple $9.4 billion in 2018 to be the default search engine on the iPhone, and could pay it as much as $12.2 billion this year.
Marc Al-Hames, managing director of Cliqz, a privacy-focused browser and search engine based in Munich with a couple hundred thousand monthly active users, says he likes to ask politicians why a company with a good product and near-total market share spends so much money on distribution partners. “It cannot be to grow, because they have the market,” he said of Google. “It can only be to shut it down to everyone else.”
Google didn’t respond to multiple requests for comment.
Berlin-based Ecosia is also trying to carve out space against Google. Christian Kroll founded the search company in 2009 to fight deforestation. A certified B Corp, Ecosia donates up to 80% of profit from search ads to partners that plant trees in high-need areas. It takes about 45 searches, or 25 cents, to plant the average tree, Kroll says. The company has more than 8 million active users and has planted more than 75 million trees to date, according to a running count on ecosia.org. Ecosia normally sees around 25,000 installs per day, but that spiked to over 250,000 in August as fires raged in the Amazon.
Ecosia is built on top of Microsoft search engine Bing. The company has approached Google “various times” about working together. “They say that they can’t work with a company like us because they claim that Ecosia users would click on advertisements more often than normal users and that would harm the advertiser,” Kroll said, adding that Ecosia has data to disprove this. The goal is to plant 1 trillion trees, something Kroll says Ecosia could achieve in 20 years if it were as big as Google. “If Google tomorrow would copy our model, then I would be super happy,” he said.
Along with the European Commission’s multibillion-euro fine last year, it ordered Google to cease illegal practices but left the manner of compliance up to the company. In August, Google announced it would implement a search “choice screen” with four slots—one reserved for Google—for new Android phones and tablets shipped in the EEA starting from March 2020.
To pick the three outside search providers to appear on the screen, Google asked companies to submit the amount they would be willing to pay Google each time a user selected their service. Google said slots would go to the three highest bidders, who would pay the amount of the fourth-highest bidder.
Google asked search providers to submit bids by Nov. 15 and said it would share the results of the auction the following week. Kroll told Quartz in early November that Ecosia was boycotting the process, “because fair competition shouldn’t be for auction.” Al-Hames of Cliqz said he couldn’t share details of the auction because of a nondisclosure agreement Google attached to it, but added that he didn’t think “any reasonable search engine should endorse their wrong doing by participating.”
The week bids were due, Feix was still wrestling with whether Seznam should take part. “I call it a pay-for-play,” he said, “because it means you have to pay a dominant player for a chance to compete.”