Monday, February 25, 2008

Next Time, Hal, You Can Just Post on Theory Bloc.

A question I submitted to the Freakonomics blog was honored with a response by eminent Google Economist Hal Varian.

Q: How can we explain the fairly entrenched position of Google, even though the differences in search algorithms are now only recognizable at the margins? Is there some hidden network effect that makes it better for all of us to use the same search engine?

A: The traditional forces that support market entrenchment, such as network effects, scale economies, and switching costs, don’t really apply to Google. To explain Google’s success, you have to go back to a much older economics concept: learning by doing. Google has been doing Web search for nearly 10 years, so it’s not surprising that we do it better than our competitors. And we’re working very hard to keep it that way!

I originally cringed at the response. (I *obviously* should have said "market entrenchment" rather than citing the narrow idea of network effects, which clearly don't apply here! What was I thinking!?) I was so taken by the mere acknowledgment of my question, I forgot to scrutinize the answer. Fellow commenter Kip, noting the response, accused Varian of dodging the question.

Perhaps Hal Varian anticipated the brief response would be inadequate, because he had already promoted my question to the spotlight on the Official Google Blog, providing an extended response.

Crooked Timber then reacted with further skepticism.

What do you think of Google's dominance?

(Far more importantly, what do you think of my new fame? I only ask because I care so deeply about all you little people, who helped me get where I am today. It's true there are Angels in this blogosphere!)