The threat from Microsoft's Bing search engine has even lit a fire under Google's icy, hypercompetitive search chief Marissa Mayer, according to the Wall Street Journal:

In recent months, Ms. Mayer has repeatedly pushed her team to better understand and compete with Bing, according to people familiar with the matter.

Mayer is hardly alone in her obsession. In June, the New York Post reported that Google co-founder Sergey Brin was "rattled" by Bing and personally led a "team of search-engine specialists... to determine how Bing's... search algorithm differs from" Google's. The bloated and insular company should focus that fanatically on its users and customers; Bing's market share is stalled at 9 percent, and Google's biggest threat will probably end up being a startup no one has yet heard of.

(Pic: Adam Tinworth)

Google has a plan to extend its dominance in search and online advertising into every part of the information economy. It's no secret — it's in the company's mission statement. But antitrust cops look askance at efforts to use market power in one field to move into another.

When Obama appeared at the Googleplex in November 2007, his candidacy was far from preordained. Gullible techies hailed his platform as "Google-friendly." Sure, Google will be helped by support for faster broadband connections. And cofounders Larry Page and Sergey Brin share a cleantech obsession with Obama.

Schmidt was so lackadaisical about courting Obama that he only endorsed him in the waning days of the campaign, threw an inaugural ball, and got rewarded with a token appointment to a science council. For those obviously halfhearted gestures, he didn't get what he wanted: a free pass on antitrust issues.

When it comes to enforcing competition laws, the White House sees Google as just another big, overweening corporation. Assistant Attorney General Christine Varney, appointed last month, mused about Google as the next big antitrust target last summer.

And sure enough, Google is facing two antitrust cases already: one about book search, and another about its board's overlap with Apple. They come after antitrust cops unexpectedly shot down a search deal with Yahoo last year.

The investigation into Apple's board, half of whom are either Google board members or Google advisors, really has to do with the mobile-phone industry. Google makes an operating system for mobile phones, but it's free, so it's hard to argue that, say, T-Mobile's G1 Googlephone competes with Apple's iPhone. But that's a red herring.

The real problem is the potential for collusion in mobile search. Google used to brag about how much search traffic the iPhone generated for it — 50 times more than any other handset, Google executives said last year. One hasn't heard Google trotting out those kinds of statistics lately. Why make it easy for government antitrust prosecutors to see the connection between Apple's iPhone sales and Google's mobile search traffic?

Google executives seem deluded about the company's antitrust risks. In a video interview with BusinessWeek, Dana Wagner, Google's top antitrust lawyer, refuses to use the word "antitrust" to describe what he does. He calls himself a "competition counsel."

Who's going to get Google out of this mess? Not its outside lawyers, Wilson Sonsini. They prepared an analysis of the kind of board conflict Google faces with Apple, which concluded that there was a high risk of collusion. When John Paczkowzki of AllThingsD called to ask questions about it, the document got yanked off of Wilson's website, and deleted from Google's cache curiously fast. Conveniently, Microsoft, which has hired the lobbying firm where Eric Schmidt's ex-girlfriend works to stir up antitrust trouble for Google, still has a copy in its search engine's cache.

The only thing anyone can agree on was Amazon.com PR's complete mishandling of the situation, once people noticed that gay and lesbian books were getting marked as "adult" titles, which Amazon.com omits from its sales rankings and search results. Top flack Patty Smith didn't do much better with her latest excuseplanation:

This is an embarrassing and ham-fisted cataloging error for a company that prides itself on offering complete selection.

It has been misreported that the issue was limited to Gay & Lesbian themed titles – in fact, it impacted 57,310 books in a number of broad categories such as Health, Mind & Body, Reproductive & Sexual Medicine, and Erotica. This problem impacted books not just in the United States but globally. It affected not just sales rank but also had the effect of removing the books from Amazon's main product search.

Many books have now been fixed and we're in the process of fixing the remainder as quickly as possible, and we intend to implement new measures to make this kind of accident less likely to occur in the future.

Thanks for checking in. Best regards -
Patty

In other words, it happened and they're fixing it. That's worse than nothing. So here are the rumors that have crossed our inbox:

Blame France! An Amazon.com alumnus tells us this story about "how it went down":

guy from Amazon France got confused on how he was editing the site, and mixed up "adult", which is the term they use for porn, with stuff like "erotic" and "sexuality". That browse node editor is universal, so by doing that there he affected ALL of Amazon. The [customer service] rep thought the porn question as a standard porn question about how searches work.

It's the Conficker worm! A source who claimed to work at Amazon.com told me that internal logs revealed a massive wave of automatically created accounts shortly before the incident, apparently using machines infected with the Conficker worm.

We don't have concrete evidence that it was Conficker, but a few days before the incident, there was a mass registration of accounts on Amazon. We're talking MASSIVE. I don't have an exact number, but from the regions the accounts were registered from, it looked like it followed a trend. There were quite a few from India, eastern United States as well. According to my coworkers who have done more research into it, the regions that the registrations were from followed a strong trend with the regions that Conficker has most affected.

The hacker did it. That brings us back to the claim by Weev, a well-documented website prankster, that he's responsible — a claim which Smith, the Amazon spokeswoman categorically denies. ("No," she said, in response to a series of direct questions asking if Weev was involved. Smith is quite possibly the least verbose director of corporate communications in the world.)

In his detailed explanation of how he allegedly pulled off the stunt, Weev says he hired third-world workers to break Amazon's "captcha" security, which displays a random set of numbers and letters in an effort to block hackers who attempt to mass-register accounts using scripts. Might he have hired a third party which then used a Conficker botnet to create accounts which then flagged gay and lesbian books on Amazon as inappropriate? Or is this all part of an elaborate attention-getting stunt to take credit for an Amazon employee's mistake? Either way, it's a masterstroke to tie together the month's two big Internet memes.

More than anyone, Google popularized the notion that free websites could be supported by advertising, touching off the insane Web 2.0 boom that led self-promoting social media marketers to overrun San Francisco and drove venture capitalists into fits of expensive madness. If Google could give away its Web searches, why couldn't, say, Ploorkle monetize its users' ploonks?

Google didn't just serve as an example. It actively funded the free-everything boom with its AdSense ads, matching keyword buys from advertisers with every last blog and Web app.

The Google-spread delusion of "free" as the perfect price infected such lofty minds as Chris Anderson, the editor of Wired who penned first a cover story and now a book due out in July on the subject.

What does it mean for the freetards, then, that Google is starting to charge left and right?

The latest and most notable price hike came today on Google Checkout. The credit-card processing service for online merchants will soon match PayPal's fees, which run as high as 2.9 percent of a transaction.

When Checkout launched, it offered free processing for stores which spent heavily on Google ads, with the notion that free payments would lure vendors away from Amazon.com and eBay. Google is eliminating the AdWords discount, making Checkout just another PayPal clone.

Google has also raised prices on its once-free hosted computing services for startups which don't want to bother running their own servers.

The hikes have mostly hit Google's business customers. But how long before Google will raise prices for, say, extra Gmail storage? How long before it spackles ads on services previously kept pristine, as it's already done with Google News?

The advent of ads to Google News is notable. Just last summer, Google VP Marissa Mayer argued that Google News made $100 million a year from the Web search traffic the site generated, and therefore didn't need its own ads. Looks like she lost that battle with the green-eyeshades brigade. YouTube, too, is burying its videos in every imaginable form of advertising.

Google is widely expected to announce disastrously bad results for its first quarter. Industry trade groups have cut their forecasts for search advertising, Google's mainstay. Rumors of layoffs are sweeping Google's Mountain View campus. And even Google's Pollyanna CEO, Eric Schmidt, admits that the economic situation is dire.

Far more than a temporary belt-tightening, the cutbacks are a far-reaching change in mindset. It's no longer okay to invent something new and figure out how to pay for it later, as Google cofounders Larry Page and Sergey Brin once did. At today's Google, products must pay their own way, and with actual receipts, not business-model whiteboarding.

Who cares that that's not how Larry and Sergey did it? The billionaire founders are flying around the world somewhere on their private jets. The rest of Google has a business to run. And their paychecks don't come free.

Grandiosely ambitious, and grandiosely inexplicable. Put simply, Wolfram Alpha, due to launch in May, will "compute" answers to questions, where Google and other search engines merely trawl the Web for pages which might hold the answer.

To do this, Wolfram has had a small army of researchers working on systematically analyzing and structuring the corpus of human knowledge so that a computer might be able to answer questions with concrete answers, such as, "How far will the Earth be from the Sun tomorrow?", a question Google completely fails to answer.

The blogosphere has exploded in a jargongasm, with normally sane reporters pretending that sentences like this are English:

Notably, the engine is not built using standard semantic web languages such as RDF, OWL and Sparql, in part because these ontologies are too difficult to build and curate for such a wide field of knowledge.

Whatever. What's important to note here: Where Google's founders have long assumed that computers were the best tools to "organize the world's information and make it universally accessible," Wolfram thinks that humans can actually do the job.

In the tradition of the great French encyclopédistes of the 18th century, his Wolfram Research has employed in stealth dozens of brainiacs translating specialized databases into machine-computable form. His approach is a riposte to both Google's idolization of algorithms and the fetish for crowdsourcing that swept Silicon Valley in the middle of this decade. Sometimes the best way to get an answer is to ask someone really smart. Like the Wizard of Oz, Wolfram's researchers lie behind the curtain of the answers Wolfram Alpha will provide. How comforting: What the babbling geeks are calling the next great leap in human knowledge actually has a human side.

Mayer is in charge of Google's core search engine, which was famed for its incredibly rapid innovation ten years ago. But now? The 20,000-person Internet conglomerate has become as glacial in its development as Microsoft or IBM. For example: When will be able to search the words spoken in YouTube videos? "Five years, maybe ten," says Mayer. And searching images? "Ten years, maybe fifteen." When did Google become a company where that pace of invention was tolerable? Perhaps around the same time Mayer started dabbling dilletantishly at cross-country skiing and marathon running, where she's consistently placed in the back fo the pack.

And yet Mayer is pityingly dismissive of Google's main competition, Yahoo, saying they've "lost a lot of good people." When Rose presses on whether she'd want to see Microsoft buy Yahoo — a move which would arguably strengthen the combined entity's search market share, she demurs. "We really think an independent Yahoo's better for the Web," says Mayer. Translation: She wants a Yahoo that's providing just enough competition to keep Washington's antitrust cops off of Google's back — but not enough that Google might have to innovate at a pace faster than 10, maybe 15 years.

A user on eBaum's World, a site which posts pictures and invites often profane discussion, suggested his peers search on a string of icons — "✈ ▌▌" — and thereby launch it onto Google Trends, the search engine's tracker for swiftly rising Internet phenomena.

The trick worked; Google's algorithm declared the glyph's rise "volcanic." And despite a surge of protests about its tastelessness, the Googlers have yet to censor the term, as they've been known to do with other offensive searches which show up on Google Trends, like a swastika symbol which showed up last summer.

Officially, Google says it has robots which take care of this: "The algorithm also filters out spam and removes inappropriate material." In reality? The 9/11 hack shows how easy it is to fool Google.

I've been wondering when this generation of Web companies would come up with an answer to Flooz and Beenz, the made-up Internet currencies of the dotcom bubble. How foolish of me not to realize that Calacanis, who has recycled so many other ideas (Web directories, wikis, crowdsourcing) in his failed quest to create a successful Web business, would be the one to revive this failed idea.

If you don't recall Flooz and Beenz, they were made-up currencies that websites could use to reward users, who would then spend them on real online purchases. Both went under in 2001, leaving their means of exchange worthless.

Mahalo Dollars have a more limited purpose: People with questions they're too lazy to Google can buy Calacanis's fake money with real coin, and then pay freelance Internet researchers to answer their questions.

The pay-to-search business is a lousy one. Google, which tried a similar scheme with real money, gave up on it last year. ChaCha, a Midwestern startup pursuing a similar idea, has had no apparent success.

I'm sure Calacanis will make some money in the short term by skimming currency-exchange fees from the suckers he gets to sign up. Eventually, the currency will collapse faster than the Indonesian rupiah did in the '90s. But by that time, he'll be on to some other scheme.

Need more examples? Here are commercials from MSN, Yahoo, and Ask.com. (I found them using Google and YouTube, a Google-owned video-hosting site.) Do any of them articulate a reason to switch search engines?

You have to admire how Schmidt bats the question aside: Google engineers have thought long and hard about this, and concluded that protecting users' privacy would make pages load too slowly. What he doesn't mention is that this is a problem because the slower pages load, the fewer Web searches we make; and the fewer Web searches we make, the fewer ads Google can sell. Google could make the Web safe for our secrets, in other words — its whiz kids know exactly how to do it — but it would just take too long. The king has spoken.

If so, Microsoft may have gotten Yahoo's search business on the cheap. Our tipster writes:

Today is the end for Yahoo Search. Sean Suchter just left for Microsoft. Everyone in the office is shocked. I've been on the Yahoo Search team for a while and he is the one key executive that it all depends on. If Microsoft has convinced him to leave and join them, they won't need to buy Yahoo Search. We will just all join Microsoft anyway. I am definitely going to send him my resume.

Rumor has it that Yahoo already lost a search executive, Qi Lu, to Microsoft; but Suchter commanded the loyalty of many within Yahoo's search group. These names may not mean much to anyone outside engineering circles in Silicon Valley, but they amount to this: If Microsoft has recruited Suchter, it has gotten the heart of Yahoo's search technology without the fuss of actually buying it.

That will please many on Wall Street who want Yahoo to get out of search; the company could save billions of dollars a year in expenses by dropping the business altogether, and serving up search results from Microsoft or Google's index of the Web instead, as sites like Facebook and AOL.com do today. Yang had an expansive vision of Yahoo as a one-stop shop for advertisers where they could buy both search and banner ads. But he dealt the image of Yahoo's search a blow when he tried to do a deal with Google to have the search giant sell some of the ads that appear on Yahoo's search results. Regulators in D.C. blocked the deal, but the damage was done.

Engineers like to be on a winning team — or at least one that's fighting the good fight. Microsoft may be an underdog in Web search, with a pitiable market share which keeps shrinking, but its top executives are obsessed with beating Google — and they seem more secure in their offices than Yang. Microsoft still has an unsavory image in Silicon Valley, but for coders who have been dealt a drubbing for years by Google, it's an adequate revenge vehicle.

Here's the memo on Suchter's departure:

From: Tuoc Luong
Date: 11/18/08 3:43 PM
To: Yahoo Search Team

Hi Everyone,

Unfortunately, I have to give some bad news to you. Sean Suchter has resigned. Sean’s last day will be December 19th.

Some of you will find this news shocking given that Sean has been a Gibraltar rock at Yahoo and in particular for the Search team. . I understand this.

I will point out that we’re on a good trajectory. We’ve released some good products and capabilities and the industry is beginning to take notice. We’ve closed the gap in Algo relevance and making great strides in building the next generation differentiated search experience and step function in relevance – not to mention infrastructure overhaul that prepares us for the future.

I came here to take on Google because I believe Yahoo above all is best positioned to take the battle to Google. I think we’re on the right path to changing the tide and would love to see everyone make the journey but I respect Sean’s personal decision. I’m committed to continue the battle against Google as long as Yahoo positions Search to be competitive (and I believe we are). I hope each and all of you feel the same way and stand with me to battle Google.

I’ve asked Arnab to step up and take over Sean’s role as head of YST. Just as Sean has been a strong arm for me, Arnab has been a strong arm for Sean. Although Sean casts a large shadow, I believe Arnab will step up to fill the hole with your support. Arnab will cast his own shadow as the new leader of YST and it’s the same YST team that has deliver great products like Search Assist, Secure Scan, SearchMonkey, BOSS, numerous MLR and QRW release to close the GAP in core relevance.

Sean and Arnab have been communicating to the YST leaders about the changes. Arnab has been thinking and discussing the new organization with people. He will send out an e-mail describing his organizational thoughts and plan for YST soon. I believe with the support of other leaders (myself, Bharat, Yongdong, Nam, ..etc), Arnab will fill the void and continue the battle with Google. I urge everyone to support Arnab in his new endeavor.

Tomorrow, I’ll be holding an all managers meeting to discuss the changes and Q&As.

Please wish Sean the best in his future endeavor and congratulate Arnab in his new role.

Thanks

Tuoc

(Image via donquijote.cc)

A dozen years ago, Microsoft broke Sun's run-anywhere Java technology, which was supposed to make operating systems irrelevant for most applications. The Windows version of Java changed one function call, in a way that seemed trivial. It made many apps written for Windows not work on other operating systems. Sun sued, cementing the company's has-been status. Microsoft eventually paid a token settlement for having cock-blocked Java in favor of its own buggy, security-violation-breeding ActiveX technology. I'm sure Bill Gates considers it the best $20 million he ever spent. Where was I? Oh yeah: Sun has been reduced to bundling a non-Java Microsoft toolbar with every Java download, to pick up a few extra bucks. I can only hope the Sun staffers involved are too new to be humiliated.

Remember the Google Video Marketplace? Exactly. Launched months before Google bought YouTube, the video store required cumbersome copyright protections and was a nonstarter with consumers. Google closed the store last year, enraging the dozen or so people who'd actually bothered to buy videos.

And Google's Book Search operations are a disaster, overseen by Ramsey Allington, an unqualified IPO lottery winner who joined Google at the right time to get valuable stock options and social connections. He has made a mess of his department, driving out qualified female employees by being a sexist boor. Publishers would do well to steer clear of Google until he's gone.

Even if Google Book Search is placed under competent management, I doubt it will succeed. Google lacks a merchant's sensibility, trusting algorithms over salesmanship. But most people do not walk into a bookstore knowing what they are looking for. They seek serendipity — a quality that Googlers, with their overplanned vision of the world, hope to eliminate. There is beauty in an untidy stack of books. But a Stanford MBA's spreadsheets will never capture that.

(Photo via Paris Parfait)