2023 The Year of The "Search Wars" 🔎

Update 2023-03-09

• DuckDuckGo Launches AI-Powered Summarization Feature in Beta

• From Hyperlinks to Conversational Agents

• YouTube to Discontinue Overlay Ads

• Whistleblower Alleges TikTok Data Access Controls Weak, Hawley Vows Anonymity Protection

• Microsoft, Sony Reach 10-Year Licensing Deal in Activision Blizzard Takeover Dispute

• Stripe to Raise $6 Billion in Record-Breaking Funding Round

• Cloud Security Startup Wiz Reaches $10B Valuation After $300M Funding Round

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Big Tech and Startups

DuckDuckGo Launches AI-Powered Summarization Feature in Beta

Privacy-focused search engine DuckDuckGo has launched an AI-powered summarization feature called "DuckAssist" in beta which directly answers straightforward queries for users.

• DuckAssist draws on natural language technology from OpenAI and Anthropic to generate new text based on relevant sections of Wikipedia articles.

• The feature is enabled by DDG's active indexing of Wikipedia and other reference sites, plus it's own scanning technology to identify relevant chunks of text.

• All answers are labeled as not independently checked for accuracy and include links to the most relevant Wikipedia article for more info.

• Privacy protections include no data being shared with third parties and feedback reports sent only to DDG.

• More generative AI-assisted features are expected in the coming months.

📝 Cloudly quick take: This is an expected move by DuckDuckGo. The competitor Brave had a similar launch last week. The "AI" layer will be table stakes in a couple of months and something a user expects. What is highly interesting is the threat this creates to Google's ads business, as the ad format does not suit that well with the chat responses. We have seen some examples on Bing Chat's ad tests. It will be exciting to follow the development.

From Hyperlinks to Conversational Agents

Google Search has been a technological constant since the turn of the millennium and is the most used search engine worldwide. Now the search market is heating up.

• OpenAI's ChatGPT in late 2022 have caused tech companies to come up with their own conversational agents; Google's is called Bard.

• This would change how users search for information online, as instead of a list of links, they can ask questions to their interlocutor/informational concierge and cut to the chase.

• A conversation-based interface would radically differ from keyword-based systems like Google; it will offer synthesis, extrapolation, and iterative refinement through follow-up questions and dialog.

• Bing and Bard are offering the illusion of judgment, and can be dangerous due to the possibility of false information.

• The shift from hyperlinks to probabilistic relationships makes correcting mistakes or preventing harm harder without relying on kludgy filters/censorship

📝 Cloudly quick take: The most interesting part of the development in the search space is not that Google does not have the technology to do a better job than Bing or other upstarts. Their current business model is not well aligned with the chat interface. This boils down to the genial auction system that Google has built, which lets the user itself choose the ad that best suits their need, and with that data, they can optimize the ads even further. The new "Search Wars" is a classic "counter positioning" situation, explained by Hamilton Helmers in 7 Powers. The definition of counter-positioning is as follows:

"A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business."

The counter-positioning framework is directly applicable to the current situation for Google. It's not that Google can't follow due to technological hindrances. It's more related to the potential change to their current business mode.

YouTube to Discontinue Overlay Ads

YouTube is discontinuing the use of Overlay Ads on videos on April 6. This ad format obstructed the user's view of whatever they were trying to watch.

Video ads, as well as "view product" pop-ups and banners in the recommended video list will remain. Most creators are expected to not be negatively impacted from not having overlay ads available due to other ad formats that still pay out.

Whistleblower Alleges TikTok Data Access Controls Weak, Hawley Vows Anonymity Protection

A whistleblower has alleged to Senator Josh Hawley (R-Mo.) that TikTok access controls on U.S. user data are much weaker than the company says. These allegations suggest that TikTok overstates its separation from its China-based owner ByteDance, uses tools allowing employees to toggle between U.S. and Chinese user data, and utilizes proprietary Chinese software with possible backdoors.

• Calls to ban or limit TikTok in Congress have grown as CFIUS reviews the company's practices for two years without resolution.

• Responding to the allegations, TikTok stated their tools do not independently grant direct access to data, any US user data is managed in US by TikTok US Data Security, and Oracle's Project Texas plan would independently review its software for backdoors.

• It remains unclear if the whistleblower will provide more details of his allegations or testify before Congress; Senator Hawley is committed to protecting the whistleblowing individual's anonymity for now.

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Funding, Venture Capital and M&A

Microsoft, Sony Reach 10-Year Licensing Deal in Activision Blizzard Takeover Dispute

Microsoft says it will do a 10-year licensing deal with Sony to address Britain's Competition and Markets Authority (CMA) concerns over its $69 billion takeover of Activision Blizzard.

• The CMA had suggested divesting the business associated with 'Call of Duty' as a remedy for the proposed acquisition.

• Microsoft offered a package of licensing remedies to guarantee parity between PlayStation and Xbox platforms for CoD and make it widely available on cloud gaming services.

• Sony rejected the proposed remedy, seeking to block the deal or make Microsoft sell CoD instead.

• EU antitrust approval is expected, with a final ruling from CMA on April 22nd.

Stripe to Raise $6 Billion in Record-Breaking Funding Round

Stripe is raising $6 billion at a $50 billion valuation, with participation from venture capital firms Thrive Capital, General Catalyst, Andreessen Horowitz, Founders Fund, and Goldman Sachs private wealth clients. According to Newcomer.

This makes it one of the largest venture rounds in a private technology startup ever. The money is going toward helping early Stripe employees exercise their restricted stock units before they expire and organizing a tender offer for employees to sell shares.

Cloud Security Startup Wiz Reaches $10B Valuation After $300M Funding Round

Wiz, a cloud security startup, has risen to become the world's largest cyber security unicorn and fastest software-as-a-service company to reach a $10B valuation.

• The company recently raised $300M in a Series D led by Lightspeed Venture Partners and Greenoaks Capital Partners and is now valued at around $10B post-money.

• Founded in March 2020, the team behind Wiz had worked together for over 20 years—including as co-founders of cybersecurity firm Adallom which Microsoft acquired for $320 million.

• Wiz offers customers a range of configuration options and analyzes infrastructure hosted in public cloud services such as AWS, Azure, Google Cloud for risk factors that could allow hackers to gain control of assets and obtain data.

• It has scaled from $1M to $100M in ARR in just 18 months, serving 35% of Fortune 100 companies including BMW, Morgan Stanley, Salesforce, Slack, Colgate and Blackstone.

• The recent funding will be used towards product development and hiring well into the new year with plans to double its workforce this year—including at public agencies within the federal government.