Is Google's Rival Coming?

It's the nightmare of any Silicon Valley CEO: The thought that a smart kid in a messy garage in Silicon Valley is right now developing technology that will make his company's products obsolete.

So should Google founders Larry Page and Sergey Brin be losing sleep about a tiny German company called Proximic?

While the notion may at first seem ridiculous, given Google's strengths and cash hoard, computer scientists at some of Silicon Valley's biggest Internet companies have been struck by the firm's promising new search technology.

Although in this case, contrary to stereotype, the extremely powerful software code was actually developed by a 54-year-old German mathematician working in a spick-and-span office near the University of Munich.

Thomas Nitsche's program matches Web pages with relevant advertising. That's what Google's AdSense network also does. But Nitsche and his 33-year-old partner, Philipp Pieper, chief executive of Proximic, believe they do it better. People who have played with their program say that seems to be true.

While Google looks at the words on a Web page, Proximic looks for patterns of characters. That means Proximic's approach is completely language-independent, so it works as well with German and Chinese as it does with English.

In theory, this makes Proximic ideal for the random spew of user-generated content posted daily on blogs and social-networking sites around the Web, material that often gets the the better of Google's algorithms.
"If they can do this, it could be a breakthrough," said Sue Feldman, an analyst with IDC.

A veteran of an Internet giant who recently took a close look at Proximic's technology and who asked to remain anonymous said it has the potential of being a game changer, but that Nitsche and Pieper face the challenge of proving that a dramatically different approach is better than existing methods.

Currently, Proximic is showing off its technology via a Firefox plug-in available at www.proximic.com. The plug-in produces a sidebar that matches the content of a Web page with additional articles on the Internet or other information, such as an ad.

It is currently being used by the Independent, a daily newspaper published in the United Kingdom, and the Nature Publishing Group, which is owned by one of Proximic's venture backers.

Proximic raised $4.5 million in its first round of founding from Wellington Partners, a European venture capital firm, and Holtzbrinck, which owns Nature through Macmillan.

Ian Mulvany, a product manager for Connotea.org., Nature's social-bookmarking service, said he has tested Proximic and Google AdSense and that Proximic had so far come out ahead. "The matching seems to be of a very high quality," he said.