June 12 (Bloomberg) -- Even as Internet users fret more about online privacy, upstart search engines that promise data security are discovering it’s tough to get users to abandon Google -- and harder to rack up big profits without selling customer data to advertisers.
“Privacy has a price regarding user-friendliness,” said Alexander van Eesteren, head of sales for Ixquick, a search provider that stopped recording user information in 2009 and whose data policy is endorsed by the European Commission. “We know we could make more money by using targeted advertising.”
The European Union’s top court last month ruled citizens have a “right to be forgotten” online, meaning people can ask search-engine owners to remove personal information and request that a court step in if the company doesn’t comply. Google Inc. says it has since received more than 40,000 such requests.
Privacy is the biggest concern of Internet users around the world, ahead of freedom and accessibility, according to a poll by Mozilla Corp., maker of the Firefox browser. That has helped spur an increase in daily searches over the past 12 months at Paris-based Qwant, Ixquick and its sister site StartPage, and DuckDuckGo Inc., based just outside Philadelphia.
Changing user habits, though, is difficult. While Google’s share of world Internet searches dropped to 55 percent in March from 66 percent a year earlier, according to researcher ComScore Inc., that wasn’t due to the rise of privacy-focused sites. Instead, it reflects the growing popularity of search engines from China’s Baidu Inc. and Qihoo 360 Technology Co., both of which collect user data.
Google and Microsoft’s Corp.’s Bing and online retailers including Amazon.com Inc. make money from showing ads tailored to each individual’s interests. To do that, the sites collect data about users -- a strategy that has helped Google amass a cash horde that tops $16 billion. With their privacy pledge, the upstarts need to find other ways to create revenues.
“Google, in search, at one point became too stagnant and too invasive,” said Jean Manuel Rozan, 60, who co-founded Qwant, the biggest of the privacy-focused upstarts. “Google’s strategy created the need for search-engine alternatives.”
Unlike many smaller providers that aggregate results from other search engines –- Ixquick, StartPage, Qwant and DuckDuckGo all say they do this at least part of the time -- Google says it needs to utilize user data to cover the cost of operating and refining its service.
And Google offers what it calls incognito browsing for its Chrome software, which erases histories and deletes cookies after closing the program. Rival Ask.com had a similar feature called Askerase that deleted search activity in most cases, though it discontinued that service in January because few people used it.
Consumers are readily using technologies that reveal personal data, but take few actions to protect their privacy, EMC Corp. said in its 2014 Privacy Index survey. A third of respondents said they don’t customize privacy settings on social networks, and 62 percent don’t change passwords regularly, according to the survey.
“The topic of privacy is fraught with hysteria,” said Google spokesman Klaas Flechsig. Google keeps a person’s full Internet address for nine months then truncates it to make it anonymous but still distinguishable from others. Google also says it maintains cookie information for 18 months to help it determine whether queries are coming from automated software rather than humans, which can skew search results.
Qwant, by contrast, boasts a no-tracking, no-ads policy. The company makes money by taking a percentage from sales it helps generate at websites like EBay Inc. and TripAdvisor Inc. Qwant gets as many as 10 million searches per day and predicts it will handle more than 1.2 billion this year. Google, by contrast, saw 111 billion searches in March alone, while Baidu, the No. 2 site, had 31 billion, ComScore reports.
The French company says it’s profitable and forecasts full-year sales of more than 3.5 million euros, up from 1.5 million euros in 2013. Still, it’s a dwarf compared to Google, which generated revenue of $37.3 billion from its websites last year. Qwant has raised 3.5 million euros ($4.8 million) from private investors and gets tax breaks and some financing from the French government.
Qwant is betting a combination of focused results and a suite of privacy-oriented services will help lure users away from the giants. The company offers a dedicated shopping column in its results to help direct people to stores with goods they want, and it plans to launch encrypted e-mail this month.
“Teaching people that the Internet doesn’t just happen through the Google search bar is a challenge,” said Qwant co-founder Eric Leandri, 42.
At DuckDuckGo, searches tripled to an average 5.3 million per day last month from a year earlier. CEO Gabriel Weinberg says growing concerns about security have helped attract users, but that the real focus of any of the newcomers must be on quickly helping people find information online. DuckDuckGo, for instance, has open source technology that encourages users to suggest the best sources for answers to specific queries.
“Privacy is a great reason to try us out, but if we can’t deliver you great results then we don’t expect you to stick around,” Weinberg said in an e-mail.
Weinberg insists his company can prosper without tracking users. Most of the money in search, he says, is from selling ads linked to keywords such as “cars” or “shoes,” and not from data linked to individual users.
“It is a myth that you need to track people to make money in Web search,” Weinberg said.
Ixquick, which opened in 1998, the same year as Google, and five-year-old StartPage, which is aimed at Americans, are run by Surfboard Holding BV, a closely held company in the Dutch city of Utrecht. Ixquick and StartPage, profitable for the last five years, say their daily queries rose from less than 1 million a day in 2011 to about 5.1 million in May.
“We were sitting on all this search data, and were unsure what to do with it,” said Ixquick sales chief van Eesteren. “We decided pretty soon that we should make data protection our hallmark, so we started deleting it.”
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