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DuckDuckGo Business Model Case Study

When you hear the phrase ‘search engine’, what’s the first name that pops into your head? For most of us, the answer would be Google. And that’s because for almost two decades now, Google has had more than 90% market share among search engines. Google’s market dominance is such that so many people haven’t used or even tried a different search engine.

Even in 2008, the year in which Gabriel Weinberg launched DuckDuckGo, Google had around 90% percent market share? So why did he even bother building an alternative to a search giant like Google? Originally, he had no plans of launching a search engine. All he was trying to do was to improve his Google results by implementing features like spam removal and adding instant answers ( Google Search results weren’t as good back then). He also added Wikipedia to the top and included privacy features.

At that time, he wasn’t thinking about DDG ( For the sake of ease, we’re going to refer to DuckDuckGo as DDG in the article going ahead ) from a business perspective and just put it out there to see if people would like it. By the end of 2010, his iterative work on the project had made it so much better that people started to switch to DDG. The search engine was getting around 59,692 searches a day. 

The traction enabled Gabriel Weinberg, DDG’s founder, to raise $3 million from Union Square Ventures and a few angel investors in 2011. Around the same time, he decided that privacy would be DDG’s differentiating factor. This was and still is very contrary to the popular belief that search engines need to track users and store data to make money. [We will discuss why Google tracks users even then below]

After raising money, DDG took a dig at Google with a billboard that read, “Google tracks you. We don’t

Source: Wired

The billboard caught the media’s attention, helping DDG increase its user base significantly. Since then, DDG user queries have seen positive Year-Over-Year growth due to both internal and external events. 

DukcDuckGo Traffic Growth from Launch to 2021
Source: DuckDuckGo

Point A on the image represents the “Google tracks you. We don’t” billboard. 

Point B represents the day Google updated its privacy policy to allow tracking across all its properties ( YouTube, Gmail. Google Search & other Google properties )

Point C represents when whistleblower Edward Snowden blew the whistle on NSA spying.

Point D & E represents when Safari & Firefox included DuckDuckGo as a search engine option.

Point F represents DDG launching its Privacy Beyond Search initiative, under which DuckDuckGo offers additional apps and browser extensions to protect people’s privacy beyond its own search engine, wherever they go on the internet.

Google vs DuckDuckGo

Even though DDG’s user base has grown over the years, it still obviously pales in comparison to Google. 

Market Share: As of Oct 2021, DDG has a market share of 0.61% while Google dominates the search engine market with a 92.04% market share.

Daily Searches: While DuckDuckGo gets 97 million daily searches as of Oct 2021, it pales in comparison to the 5.6 billion daily searches on Google ( Please note that these are estimated daily searches. Google doesn’t reveal actual numbers ).

Earnings: In 2021, Gabriel Weinberg revealed that DDG’s yearly revenue now exceeded $100 million while Google’s generated revenue of $104 billion from “Search and other”, a term that includes revenue from Google’s search properties and ads on other Google-owned properties like Gmail, Maps and the Google Play app store. Despite the fact that we don’t know how much search ads individually contribute to Google’s bottom line, it would be safe to assume that revenue generated from Google’s search ads is significantly higher than the revenue generated by DuckDuckGo.

When it comes to privacy, Google & DuckDuckGo take a completely opposite stance. While the CEO of DDG, Gabriel Weinberg Gabriel says it is a myth that you have to track users to advertise; Google’s CEO, Sundar Pichai embraces the idea that Google collects user data without failing to add that it does so to make its services more useful to the average user.

So how does DuckDuckGo makes money without tracking you and why can’t Google do the same? We’ll see that below when we discuss how DuckDuckGo makes money.

DuckDuckGo Business Model

DuckDuckGo makes money from two sources: keyword-based search advertising & anonymous affiliate partnerships with Amazon & eBay. DuckDuckGo became profitable in 2014, six years after its founding in 2008, and has been profitable ever since without collecting any personal information of people using the search engine.

Let’s have a look at each one of the revenue sources individually to understand them better.

Search Advertising

Just like you see ads on Google search, DDG also serves users with ads when they type in a search query. For example, if you tell DDG you’re looking for a dishwasher, you get dishwasher ads above the organic results.

Every time a user clicks on an ad, DDG makes money. This is similar to how Google makes money via Keyword-based search advertising. But the difference lies in the amount of data they collect. The searches you make on DDG are kept private, even from DDG. Every time you use DDG to make a search, it’s like you’re using it for the first time.

On the other hand, Google tracks users’ searches, mines them, and uses the data to create a user profile that allows advertisers to follow you with banner ads on millions of websites and Apps that have signed up on Google’s ad network.

Ever made a Google search and been swamped with similar ads on other websites you visit? Now you know why. To put it simply, here’s how it works: Advertisers pay Google for the ad placements. Google takes a cut and pays the remaining amount to the websites & apps these ads were displayed on. But not only does Google use your search data to make its advertising services better, but it also uses the data to make all Google products more relevant for you.

Here’s an example of how Google’s data collection policies enable them to show you highly relevant searches. Try searching the term ‘restaurants near me’ on both Google and DuckDuckgo. Chances are that Google already knows your exact location and uses that knowledge to give you a result that is relevant to your location. On the other hand, DuckDuckGo comes back with a result that is less relevant since it does not know your location.

The point is that while DDG’s privacy policy hampers user experience in this particular case, Google’s supreme user experience comes at the cost of privacy. Google probably won’t ever give up on tracking you because it is an advertising company, not a search company. Google’s user data collection is what makes the user experience great. If the user experience is unparalleled, users are more likely to stick to Google. And since users stick to Google, it remains the largest consumer attention aggregator; attention which is then sold to advertisers wanting to grab consumer eyeballs.

Coming back to DuckDuckGo, another difference between Google & DDG’s search ads is the underlying ad-buying mechanism. Google has its own ad-buying platform called Google ads which is used by online marketers use to buy search ads. 

On the other hand, DuckDuckGo does not have its own ad buying property. It is a Microsoft Yahoo Search Alliance partner. When online marketers buy search ads using Microsoft Bing, they can check an option that allows them to also show ads on search partner websites like DuckDuckGo.

Image Source: DuckDuckgo

In his interview with Forbes, Gabriel refused to disclose the ad revenue share DDG gets from their Microsoft Yahoo Search Alliance partnership, stating it was confidential information.

2. Affiliate Advertising

While DuckDuckGo is able to make a profit solely via search ads, the company keeps looking out for new ways to make money anonymously in order to reduce their dependence on advertising.

Non-tracking affiliate partnerships with Amazon and eBay is the only successful way they’ve found so far, which accounts for a smaller portion of their revenue. 

Every time a user visits Amazon or Ebay via DuckDuckGo and makes a purchase, DuckDuckGo receives a small commission.

DuckDuckGo explicitly states that no personally identifiable information is exchanged between them and Amazon or eBay.

DuckDuckGo’s Privacy Beyond Search Initiative

On 23rd Jan 2018, DuckDuckGo launched a revamped version of their browser extension and mobile app, extending their privacy protection to wherever you go on the internet. The DDG extension is available on all major browsers — Chrome, Firefox & Safari; and the DDG App is available on both iOS & Android. 

Based on how a website you’re visiting scores on privacy, the extension and the app show you a Privacy Grade rating (A-F). You can also dig into the details to find out who is tracking you and learn about how DDG enhances the underlying website’s privacy measures.

In order to help people understand online privacy better, DuckDuckGo has created a short privacy crash course. You can check it out here.

Thank you for taking the time to read the entire article. If you liked it, you might also like our article covering The Business Model of Netflix.

Summary
How DuckDuckGo Makes Money Without Tracking Users, Unlike Google
Article Name
How DuckDuckGo Makes Money Without Tracking Users, Unlike Google
Description
DuckDuckGo makes money from two sources: keyword-based search advertising & anonymous affiliate partnerships with Amazon & eBay. DuckDuckGo became profitable in 2014, six years after its founding in 2008, and has been profitable ever since without collecting any personal information of people using the search engine.
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WhatIsTheBusinessModelOf
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Muaaz Qadri
A Proud Computer Engineer turned Digital Marketer
Summary
How DuckDuckGo Makes Money Without Tracking Users, Unlike Google
Article Name
How DuckDuckGo Makes Money Without Tracking Users, Unlike Google
Description
DuckDuckGo makes money from two sources: keyword-based search advertising & anonymous affiliate partnerships with Amazon & eBay. DuckDuckGo became profitable in 2014, six years after its founding in 2008, and has been profitable ever since without collecting any personal information of people using the search engine.
Author
Publisher Name
WhatIsTheBusinessModelOf
Publisher Logo