One of Canada’s largest pension funds is financing DuckDuckGo Inc., a rapidly growing search engine that positions itself as the “anti-Google” because it doesn’t track or store its users’ search results.
The Ontario Municipal Employees Retirement System is leading a US$10-million investment in the profitable U.S. firm, which handles about 24 million searches a day and generates more than US$25-million in annual revenue. DuckDuckGo has steadily grown following a rash of disclosures in recent years about how much personal data is harvested online and used by Google, Facebook and the U.S. National Security Agency.
It’s a small but symbolic investment by the pension giant. OMERS Ventures, the pension plan’s venture capital arm, recently stated it believes emerging blockchain technologies will empower a “decentralized web” where users will regain greater control over their own data, potentially disrupting the business models of internet giants that extensively collect and mine user information.
“We went out very aggressively” to pursue an investment in DuckDuckGo after monitoring the company’s development for years, said John Ruffolo, chief executive of OMERS Ventures. “We have been deeply concerned over the misuse of data, privacy and data sovereignty and we believe the public is starting to realize the cost of what they were giving up. [DuckDuckGo] is the leading company that’s figured out a different business model. … It’s proving that, in search, it’s possible to both make money and respect privacy and data sovereignty.”
The company, based in Paoli, Pa., thousands of miles from Silicon Valley, encrypts searches and stores no personal information or search history of its users. “There’s a growing population who want to protect their privacy, but doesn’t know how,” DuckDuckGo founder Gabriel Weinberg said. “We’re trying to fill that role.”
While Google collects and stores user data from across its various properties, including YouTube and Gmail, and tracks millions of other websites to sell targeted advertisements that follow users around the net, DuckDuckGo does none of that. “You share your most intimate secrets with your search engine without even thinking,” Mr. Weinberg said in a recent blog post. “All of that personal information should be private, but on Google it’s not.”
DuckDuckGo makes money as Google originally did, and still does – by selling keywords to advertisers and collecting fees based on how many clicks the ads get. It also provides extensions for all major browsers to extend protections to wherever users go on the web. “I contend that Google doesn’t need to track you as much to make most of their money,” Mr. Weinberg said. He has been a persistent outspoken critic of his rivals, saying Google users get biased results that trap them within its ecosystem of internet properties and contribute to a “filter bubble” that is increasingly polarizing society.
Google spokesman Aaron Brindle said the search giant made it easier for users “to see and understand” and control how their data were used with the 2015 launch of privacy and security-management tools. “Our focus is on building great products that consumers love because we know that size doesn’t guarantee success – it’s never been easier for new players to thrive," he said. "We know competition is only one click away.”
Mr. Weinberg, a 39-year-old Atlanta native and veteran entrepreneur, began DuckDuckGo 10 years ago as a project to weed out spam that littered the top of his Google searches. A key insight came when he took a stained-glass-making class and the instructor provided a list of the top links of blogs to learn more. “It looked nothing like the results when you typed out ‘stained glass’ in Google,” he said.
After tinkering for a couple of years, DuckDuckGo became good enough that he noticed a pick-up in usage by others. He raised US$3-million from New York venture capital firm Union Square Ventures (which is also backing the latest financing) in 2011. At the time, DuckDuckGo processed 200,000 searches a day, less than 1 per cent of its current volume.
DuckDuckGo is typically the fourth-place search engine (behind giant Google, which is estimated to process more than one trillion searches every year, and distant rivals Bing and Yahoo) across many countries, with less than 1 per cent market share, relying largely on word-of-mouth to generate growth. It “has been on the right side of the [data privacy and sovereignty] argument for a long time” Union Square partner Brad Burnham said. “If the market becomes more broadly aware of the market power that accrues to data monopolies and begins to change the way it thinks, DuckDuckGo can become a very large business.”
The company, with 55 employees, including five in Canada, still hasn’t burned through the money it raised in 2011, but Mr. Weinberg said he was open to an investment by OMERS because "we felt [it] really shared our vision” about privacy.
Sean Silcoff