How Does DuckDuckGo Make Money? Business Model of DuckDuckGo


How Does DuckDuckGo Make Money

DuckDuckGo is one of the most popular search engines in the world. Unlike other search engines, DuckDuckGo claims it doesn’t make money from tracking and selling users’ personal data.

DuckDuckGo primarily makes money via keyword-based advertising. However, the company also makes money from affiliate partnerships with eBay, Amazon, and Microsoft and from licensing fees for their Tracker Radar Tool.

Founded in 2008 by Gabriel Weinberg, DuckDuckGo is known for being a privacy-focused search engine. DuckDuckGo is currently a private company.

What is DuckDuckGo & How Does It Work?

DuckDuckGo is a search engine provider known for its strict policies around respecting user privacy. Its stance toward user privacy is what sets the company apart from other search engine companies. That has made it, according to some estimates, one of the most popular search engines on mobile devices in the US today. It’s second only to Google.[1]

Though DuckDuckGo was formed in 2008, it didn’t take off until 2013, when Edward Snowden brought to light the US National Security Agency’s mass surveillance program. That year, the company reported a 600% increase in traffic.[2] According to founder Gabriel Weinberg, the company became profitable in 2014.[3]

With a steady stream of data-tracking scandals in recent years, internet privacy is increasingly central in peoples’ minds. DuckDuckGo promises users a search engine that will keep them safe from surveillance.

Normally, when you access a website through a search engine, the search engine uses your IP address to record what you searched for and what site you then accessed. The website you navigate to can likewise record your IP address and the search that brought you there.

DuckDuckGo claims to block this process. They hide your IP address both from the websites you access through DuckDuckGo and from DuckDuckGo itself. This is different from standard search engines. For example, Google records what searches you make and what sites you access from your search.

Moreover, according to DuckDuckGo’s own research, Google has data trackers in 85% of the top 50,000 websites.[4] These trackers allow them to record what you do within the websites where it has trackers, whether or not you access the website through a Google search.[5] This gives Google troves of data about you that it sells to ad companies and data brokers.

In DuckDuckGo’s view, Google’s harvesting of personal data makes them less of a search company than an advertising company.[6] By contrast, DuckDuckGo claims to be a search company that protects you from third-party tracking and records only what data it needs to deliver your search result. These are just the keywords you use to search.

Inspired by the popularity of their search engine, DuckDuckGo introduced other internet privacy tools. Many of these tools are bundled together in their ‘Privacy Essentials’ browser extension, compatible with Chrome, Safari, and Firefox.

The extension makes DuckDuckGo your default browser and blocks 3rd party trackers from loading. It also provides an encryption service that limits search results to encrypted websites. In addition, it gives you email protection that blocks data-tracking when you open an email. Finally, it includes privacy controls that allow you to set your own privacy preferences on sites across the web.

Building on their encryption tool, DuckDuckGo introduced its ‘Tracker Radar Tool.’[7] This is a continuously updated database of common online data-trackers and a detailed description of their performance profile.

Using the Privacy Essentials extension, individuals and developers can increase their security by blocking all sites that are detected to use these trackers. They can also make customized block lists. It’s so well-respected that researchers use the tool as an accurate, accessible resource about data-tracking.

DuckDuckGo’s commitment to noninvasiveness doesn’t appeal to all users. After all, one benefit of a search engine storing information about your past activity is that, over time, it can learn your idiosyncratic preferences, interests, and political orientation.

This allows it to more accurately predict what you are searching for. It also allows the search engine to present you with content and ads that are more relevant to you. In short, it delivers a personalized search experience.

By contrast, DuckDuckGo is designed to give you a non-personalized experience. It is consequently known for being a ‘no frills’ search engine. That can be off-putting for many accustomed to more traditional search engines.

DuckDuckGo’s algorithms are reportedly less advanced than other top search engines. They also provide fewer protections from viruses and malware.[8] For the majority of users, these perceived drawbacks are likely to outweigh the benefits of increased privacy.

Despite this, DuckDuckGo has captured a small corner of the market. They average over 100 million search queries a day. The company ranks 5th in global search behind Google, Baidu, Yahoo, and Yandex.[9]

 

Business Model of DuckDuckGo

In 2008 when DuckDuckGo launched, it entered a market dominated by a few key players. Google has since effectually developed a monopoly. Rather than adopting the strategy of becoming the most popular search engine in the world, DuckDuckGo decided to pivot their business model to fill a specific niche.

They chose to market their search engine to a segment of people who are opposed to the prevalence and invasiveness of data-tracking and desire greater online privacy. In exchange for greater online privacy, DuckDuckGo users sacrifice some of the bells and whistles of standard search engines.

Much like Signal, the privacy-focused instant messaging company, DuckDuckGo tries to make that sacrifice a selling point rather than a drawback. In these ways, DuckDuckGo has been able to be candid about its limitations. Users are choosing it for privacy, not for performance.

A clear strength of DuckDuckGo’s business strategy is that it is hard for competitors to replicate its model successfully without giving up potential revenue they need to sustain their business.

Many search engine providers, including Google, are now taking steps to limit users’ exposure to third-party tracking. For example, Google is allegedly phasing out tracking ‘cookies.’[10] This could prevent some from defecting to DuckDuckGo.

However, it’s doubtful that standard search engine providers will stop tracking users’ data themselves. Data is too central to their business model. It is DuckDuckGo’s commitment to not do this that really sets DuckDuckGo apart from its competition.

In terms of carving a niche for itself, DuckDuckGo’s business model thus seems to be a fairly secure one. However, there are other risks with the business model that DuckDuckGo has adopted.

First, given the data-driven economics of the internet, it’s hard to monetize a site committed to user privacy. Where other search engines make most of their money from targeted ads that are enabled through data-tracking, DuckDuckGo can run only non-targeted, keyword-based ads.

This means that the ads you see on DuckDuckGo are a function only of the terms you used in your last search. The trouble is that compared to targeted ads, non-targeted ads are much less profitable. Though DuckDuckGo says that their non-targeted ads alone are enough to make the company profitable, they are always also looking for other sources of revenue.[11]

This has led the company to form affiliate partnerships with other companies, including eBay, Amazon, and, more recently, Microsoft. The idea behind these partnerships is that DuckDuckGo automatically receives a commission every time a user of DuckDuckGo accesses one of the affiliate websites and makes a purchase.

However, as DuckDuckGo explains it, the mechanism by which this occurs is anonymous, and no information about the user is shared between DuckDuckGo and the partner website. Through such partnerships, DuckDuckGo supplements the income it receives from non-targeted ads.

However, in May 2022, DuckDuckGo shook the trust of some users through a lack of transparency related to another partnership. As part of a new agreement with Microsoft, DuckDuckGo permitted select Microsoft companies special data-tracking privileges while continuing to block other companies from data-tracking.

This decision was made without informing DuckDuckGo users.[12] After an initial wave of online backlash, DuckDuckGo amended its contract with Microsoft to remove special tracking privileges.[13]

If the initial backlash and the recent dip in traffic below 100 million searches a day are any indication, the breach of trust may have been a costly one to the company.[14] It remains to be seen how they will recover from it.

One risk of DuckDuckGo’s business model is that if they make a single privacy misstep, their entire value proposition may be called into question. While the company’s recent blunder with Microsoft may blow over, it could also generate disappointment and frustration from its user base. Because DuckDuckGo’s brand rests on their staunch commitment to user privacy, getting caught betraying one’s stated commitment is risky.

While demographic to which DuckDuckGo markets itself may be a minority, it is a significant minority. It could also be a growing one. For example, after Roe vs. Wade was overturned in the US, many Americans became more concerned about online privacy.

Law enforcement has a history of turning to Google with subpoenas for personal search information to help with criminal investigations. For that reason, many abortion rights advocates and journalists have been recommending those wishing to research abortion use DuckDuckGo rather than Google or other search engines to do so.[15]

Every time concerns about government surveillance rise, DuckDuckGo generates more publicity. Use of the search engine could rise in a post-Roe world similarly to how it did after the Snowden revelations.

But that might end up being counter-productive. If government regulations were suddenly to emerge requiring search engine providers to track users’ activity and to share this data with authorities, DuckDuckGo’s value proposition could suddenly evaporate. A company that bases its value entirely on a single feature accepts inherent risks.

 

How Does DuckDuckGo Make Money?

DuckDuckGo makes money in three ways. Their main revenue streams are non-targeted ads, affiliate-partnerships, and licensing fees for commercial use of its Tracking Radar.

DuckDuckGo does not publicly release its financials, so the relative distribution of revenue across the company’s income streams isn’t clear.

 

Non-Targeted Ads

DuckDuckGo sells keyword-based ads to advertisers on its platform. Unlike most online ads, there is no way for companies to target them towards people who have visited their site previously or people who are from a particular demographic. For that reason, companies tend to pay less for them.

DuckDuckGo has reported that it makes the majority of its revenue is from advertising. They also report that, as of 2021, they are making at least $100 million of revenue a year.[16] This is a tiny amount of money in comparison to Google which made $149 billion in 2021 alone just from search advertising.

 

Licensing Fee for Tracker Radar

DuckDuckGo built a tool that detects trackers hidden on popular websites by ad networks like Google or Facebook. Their Tracker Radar tool logs how these trackers use the browser API, the cookies they set, and any other data they might collect.

Once they know how these trackers work, they create a tracker block list. While they provide the source code for this for free on Github, DuckDuckGo makes money when other companies license their tracker to use commercially.

 

Affiliate Partnerships

DuckDuckGo has created affiliate partnerships with companies like Amazon, Microsoft, and Ebay. When they send business to those sites and the person buys something, DuckDuckGo receives an affiliate commission.

DuckDuckGo claims that they keep your data private while they facilitate this. It’s unclear how much these companies pay DuckDuckGo for each referred sale. In all likelihood, DuckDuckGo has negotiated different contracts with each of the companies for different percentages. It could also depend on what is bought. Amazon is known for paying different levels of commission on different kinds of products.

It is also unclear how much the company makes in total off affiliate partnerships.

 

DuckDuckGo Funding, Valuation & Revenue

DuckDuckGo is currently a private company and doesn’t regularly release their financial information publicly.

DuckDuckGo has raised $172 million in venture capital funding during 5 funding rounds. Notable investors include Quiet Capital, Omers Ventures, and Bracket Capital.[17]

The company last raised capital in late 2021. At the time, it took on investments of $100 million from a pool of new and existing investors. In a blog post that discussed the investment, the company claimed to have been profitable since 2014 and to be generating over $100 million in revenue per year. [18]The investment was focused around helping the company grow, creating liquidity for employees and early investors, and improving the company’s financial position.

While information about their revenue growth isn’t public, DuckDuckGo’s search growth has been impressive in recent years.

YearAnnual Searches on DuckDuckGo
20189.24 billion
201915.05 billion
202023.65 billion
202135.30 billion

 

Is DuckDuckGo Profitable?

DuckDuckGo claims they have been profitable since 2014. As of 2021, the company made over $100 million a year in revenue. However, the company took on a new investment of $100 million in late 2020 with a goal to grow their business.

Whether the investments necessary to power that growth will affect their profitability in the future remains to be seen.

 

Conclusion

Thank you for reading this article on how DuckDuckGo makes money. We hope that this helped you to understand how DuckDuckGo works and why it is different from other search engines.

We are at a turning point in the way companies handle our personal data. The internet has become a place where we all share information, but at times it feels like the companies who run it are more interested in sharing our personal information than they are in protecting it. This creates an environment where many people feel like they have lesser control over their own personal lives.

We are confident that by reading this article, you learned something new about DuckDuckGo, and how they are working to change things for the better.

21 Compliance Training Statistics You Need to Know

39 SEO Spending Statistics To Boost Your Business

Sources

  1. SearchEngineJournal
  2. TheGuardian
  3. DuckDuckGo
  4. DuckDuckGo
  5. DuckDuckGo
  6. DuckDuckGo
  7. DuckDuckGo
  8. SearchEngineJournal
  9. Backlinko
  10. HubSpot
  11. DuckDuckGo
  12. MSN
  13. TechCrunch
  14. SearchEngineLand
  15. Washington Post
  16. DuckDuckGo
  17. Crunchbase
  18. DuckDuckGo