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Berkeley professor and Google's chief economist, Hal Varian:

Google has been searching the web for nearly 10 years, which is far longer than our major competitors. It's not surprising that we've learned a lot about how to do this well. We're constantly experimenting with new algorithms. Those that offer an improvement get rolled into the production version; the others go back to the drawing board for refinement.

He continues:

So I would argue that Google really does have a better product than the competition — not because we have more or better ingredients, but because we have better recipes. And we are continuously improving those recipes precisely because we know the competition is only a click away. We can't fall back on economies of scale, or switching costs, or network effects, to isolate us from the competition. The only thing we can do is work as hard as we can to keep our search quality better than that of the other engines.

So modest. What Varian doesn't mention: Intellectual property — the "recipes" he talks about in such a folksy manner — is well understood by his fellow economists as a barrier to entry that can shield dominant players in a market from competition. Glad we could help with the lesson, Hal!