Two of the most important gatekeepers to the Internet, Google (NASDAQ: GOOG) and Yahoo (NASDAQ: YHOO), are crossing over into each other’s business with increasingly regularity. They are closer than they have ever been in terms of services. Now Yahoo! has closed the gap with Google in customer satisfaction.
According to the latest data from the University of Michigan’s American Customer Satisfaction Index (ACSI), Yahoo has scored an 80 out of a possible 100 in the e-business ACSI up from 78 last year while Google ranks an 82.
The two-point gap is the closest Yahoo! has come to Google in customer satisfaction underscores how the lines have blurred between the two Internet companies. Where once Google was dedicated to Web search and paid search results it has branched out to e-mail, news aggregation, desktop search, mapping and shopping.
Similarly, Yahoo, a web-portal keeps adding new features to its long list of services. It has even built a formidable search capability. Both companies are aggressively pushing into the nascent market for mobile and localized search.
"The portal and search market is very competitive and Google and Yahoo are out in front," said Larry Freed, Chief Executive of ForeSee Results that uses ACSI methodology to advice companies on how to improve customer satisfaction. The increasing competition between the two Internet gorillas was apparent last week when Google openly questioned Yahoo’s claim that its technology was capable of searching through 19 billion web pages, which is more than double that of Google.
Google’s sales have ballooned to $3.2 billion in 2004 from $440 million in 2002 but its customer satisfaction rating has not kept pace. Its enviable rating of 82 is level with 2003. Yahoo’s rating has grown from 71 in 2001 when it pulled in $717 million in sales to a current rating of 80. The company had $3.5 billion in sales last year. Google has had consistently high marks even as it has expanded into new categories that put it into competition with an amazingly diverse group of companies.
"Google is starting to compete with everyone in every front," Freed says. "They want to own the medium of how you get to everywhere. They’re going after your brand and minimizing the brand of others."
The company would rather have you find green snakeskin boots by googling them rather than visit a specific retailer’s Web site. In the same vein, Google is changing the game in the news business by automatically publishing content from around the Web giving readers a way to bypass a specific news site, but at the same time giving equal weight to tiny, obscure newspapers and wire services while burying many well-known brands. By contrast, Yahoo scans for the big headlines from the largest and best-known names.
All this is why search-engine optimization and search-engine marketing have become a crucial component of any company’s business plan today. It is possible that this kind of power could backfire on Google as it defends its position against Yahoo and others. For now, Google and Yahoo will battle it out to be the doorway for every Internet experience.