Google Widens Search Lead As Growth Slows

Google increased its market share lead over search competitors Yahoo, MSN, and Time Warner Network, even as it issued a warning that its growth was slowing.

Internet audience measurement service comScore Networks said Google's share of the search market reached 41.4% in January, up more than 6% points from a year earlier. Meanwhile, Google CFO George Reyes warned of slowing growth for his company at a Merrill Lynch investment conference in New York Tuesday.

Yahoo, MSN, and Time Warner Network all lost market share during that period, according to comScore. Yahoo saw the number of searches conducted on its network decline 3.1%, leaving its search market share in January at 28.7%. MSN lost 2.3%, leaving it with 13.7% of the search market. Time Warner slipped 1.7% to 7.9%.

Ask Jeeves, which recently ditched its fusty butler mascot, rebranded itself Ask.com, and rolled out new search technology as part of an ongoing effort to improve its standing, managed to attract more searches, gaining 0.5% to reach 5.6%.

Interestingly, Google and Yahoo are neck and neck when it comes to searches that originate in browser tool bars. Some 49.5% of toolbar searches went to Google in January, while 45.5% went to Yahoo. MSN's toolbar generated only 3.1% of toolbar searches in January. Of those 5.48 billion searches in January, 646 million of them came from toolbars.

But comScore's report does confirm the assertion by Reyes that growth in the search market is slowing overall. Although Americans conducted 11% more searches in January 2006--5.48 billion of them- than they did the previous year, that's significantly less of a rise than the 42% growth reported by comScore between January 2005 and January 2004.

Nonetheless, Dr. Magid Abraham, president and CEO of comScore Networks, offered an optimistic assessment of the slowdown. “The good news for search companies is that the utilization of search queries for advertising purposes continues to increase," he said in a statement. "In December 2005, 57.2% of search query results included a sponsored advertisement, up from 49.1% a year earlier."

Pointing to 34% growth in searches internationally, Abraham said, "Search revenue growth will significantly outpace search query growth."

For Google, as Merrill Lynch analyst Lauren Rich Fine suggests in a research note, that means increasing reliance on new products like Google Base and Google Video to drive growth. For Yahoo, MSN, Time Warner, and Ask.com, the challenge is similar, but as the growth in search queries slow, they're all certain to be looking for ways to win market share back from Google.