A simple model of vertical search engines foreclosure

Abstract
Analyze the functioning of the online search intermediation market.
Develop a simple model of consumers search and a monopolist general search engine to
analyze the incentives behind search manipulation.
Present preliminary evidence on vertical search engines foreclosure by assessing the exit
traffic patterns featured by major search engines (Google and Bing).
We examine the incentives of a monopolistic search engine, funded by advertising, to
provide reliable search results. We distinguish two types of search results: sponsored and
organic (not-paid-for). Organic results are most important in searches for online content,
while sponsored results are more important in product searches. By modeling the underlying
markets for online content and offline products, we can identify the sources of distortions for
each type of result, and their interaction. This explicit treatment proves crucial for
understanding, not only spillovers across markets, but also fundamental policy issues, such
as the welfare effects of integration. In particular, integration of the engine with a small
fraction of content providers is welfare-enhancing when incentives to distort are stronger for
sponsored than organic search, but welfare-reducing in the opposite case.

7. Concluding remarks
A simple model of consumers search is employed to identify the major forces that underpin a
monopolistic general search engine decision to manipulate organic and sponsored search
results in favour of an integrated vertical search engine. The main finding is that the general
search engine incentives to bias the results returned to consumers queries are stronger in the
case of organic search. The reason is straight forward. In the organic search case the general
search engine only source of profits comes from consumers purchases on the integrated
vertical search engine, this implies that the general search engine has a clear interest in
placing its own vertical website prominently. In the sponsored search case, instead, the search
engine internalizes the impact of manipulation on its profits, because the less a prominent
vertical search engine is relevant to consumers, the lower is the revenue per click that the
general search engine can extract from it via the price-per-click.

The business model of most search engines relies on two pillars, namely organic
results (generally displayed to the left) and paid results (or sponsored links, to
the right and on top). Both kinds of results are relevant to queries entered by
users, the main difference being that the search engine does not receive
payments from publishers who appear on organic listings, whereas sponsored
links are bought by advertisers. Whilst organic results receive the majority of
clicks,1 paid results have proved to be very profitable, generating billions of
dollars of annual advertising revenue

Literature Review:
Model of Vertical Search Engines
The operation of the online search intermediation market is analysed. The incentives of a
monopolist search engine behind the search manipulation is examined employing a simple
model of consumers search. The business model of most search engines depends on two
mainstays, viz. organic results (displayed to the left) and paid results (or sponsored links
displayed to the right and on top). The main finding is that the general search engine
incentives to manipulate organic and sponsored search results in favour of an integrated
vertical search engine. Though both types of results are pertinent to the queries sought by
users, the key difference is that the search engine does not receive payments from publishers
who appear on organic listings, whereas sponsored links are bought by advertisers. Though
the organic results get the majority of clicks, it is learnt that paid results are very profitable,
generating good amount of advertising revenue. The traffic patterns of entry and exit featured
by major search engines Google and Bing is assessed and the pattern reveals the share of
exits directed towards websites that are integrated with a general search platform have
increased.

Search Engine Optimisation

According to companies, a website is seen as the most effective and least expensive
marketing tool to reach electronic community who are evaluated as customers. The
search engine, an internet-based tool searches an index of documents for keywords
specified by the user and refers to the websites. The operations of the search engine
navigation, data collection, indexing and storing are performed by spider, also called
crawler or bot. The search engine algorithms play an important role in relevant result
showing and sorting process. The technical conditions that are required by Search Engine
Optimization (SEO) and the process to enable a website to appear on the top rows in the
search results has been explained. Also, the two groups of optimization internal website
optimization using data from the website and external website optimization using links
from other optimized websites, social media factors, etc. by back linking, are briefed in
the paper. The SEO process is analysed periodically to analyse users method of reaching
to a website and to capture the changes done on a website and its effects.