Cuil not a Google killer – yet

July 29, 2008, 2:15 AM UTC

By Yi-Wyn Yen

Within hours of being launched Monday, Cuil – a new search engine created by former top Google engineers – was already being touted in the blogosphere as the next Google killer. But unless Cuil (pronounced ‘cool’) can develop an ad platform to rival Google’s, the startup will have a difficult time challenging the search giant.

The comparisons to Google (GOOG) were inevitable. Cuil was founded by several lead engineers from Google, including Anna Patterson, chief architect of the company’s TeraGoogle search index. Cuil also claims its search algorithm scans 120 billion web pages – three times the number that Google sifts through. And Cuil’s spare start page is reminiscent of Google’s minimalist home page.

The launch of Cuil certainly raised eyebrows at Google. Though the company would not comment on Cuil, Google’s web search team stuck it to the small search startup on Monday with a blog post that begins, “We knew the web was big….We’ve known it for a long time.”

Cuil representatives did not return phone calls.

Despite the buzz – and Cuil’s PR folks deserve credit for spinning this David v. Goliath story – it would be foolish to argue that Cuil will be the next big threat to Google.

“It’s a new kind of technology and platform that is going to unseat a company like Google – not a company that’s trying to beat them at their own game,” says Scott Kessler, Standard & Poor’s Internet analyst.

Both Yahoo (YHOO) and Microsoft (MSFT) have spent billions in an effort to make a dent in Google’s paid search business, which accounted for 40% of all online search dollars in 2007, according to eMarketer.

Microsoft CEO Steve Ballmer admitted last week to investors that Google has such a huge advantage over other search engines because it delivers more relevant ads and has more advertisers in its system.

Yahoo has also conceded that it can’t beat Google at its own game. In June, Yahoo struck a deal to run Google’s superior search advertising technology on Yahoo’s web properties alongside its own search results.

Cuil currently offers no ads on its pages. And the company claims it won’t monitor a user’s search habits in order to target advertising the way Google, Microsoft and Yahoo do. That’s an ambitious goal. But one of the biggest advantages Google has over its competitors is that it can provide better search results due to its massive advertising platform.

“Google is receiving so many searches per second and gathering incremental information from new [auction] bids and new advertisements that the search engine gets more relevant and powerful,” Kessler say. “It’s self-perpetuating.”

Cuil, which has raised $33 million, could find its niche in search – or become an attractive acquisition for Microsoft, Yahoo or Google itself. The company says it will stand out because it delivers results with images in three columns and it will scour the web more aggressively than the other big search engines. So far, the site has been sporadically unavailable because of the high volume of searches.