Another Blow to Israel's 'Download Valley' as Google Bans Toolbars

The search engine giant’s decision to remove multi-purpose extensions from its Chrome Store threatens to upend the free browser extension industry.

Google has struck another blow against Download Valley -- the collection of Israeli companies that develop and distribute free web browser extensions -- after it announced last week that it was banning so-called multipurpose extensions, particularly toolbars, from its online Chrome Web Store.

“Extensions in the Chrome Web Store must have a single purpose that is narrow and easy to understand,” Chrome engineering director Erik Kay said in a blog post last Thursday, citing the need to protect users. “While this has always been the intent of the Chrome extension system, not all extensions have lived up to this ideal. These multi-purpose extensions can crowd your browser UI and slow down your web browsing—sometimes significantly.”

The new single-purpose rule goes into effect immediately; however, developers of existing extensions will be given until next June to remove or alter their extensions to meet the terms of the new policy.

The search engine giant’s new policy puts paid to most free browser extension developers' business models, which are based either on revenue received from directing users to a search engine or e-commerce sites or from advertising. Among the companies in Download Valley most likely to be hurt by the change are the startups Revizer, Superfish, CrossReader and the Client Connect division of the company Conduit, which is in the process of merging with publicly traded Perion Networks.

For years companies like these helped global giants like Google and Microsoft attain market share -- until the method finally became a nuisance and the two companies, thanks to their dominance in network browsing, undertook a series of moves to restrict the freedom of action of browser extension developers. In November Google announced that it would not let extensions not found in the Chrome store be installed on the browser. A month before it informed its partners that software advertised on its search engine results would require the user’s active consent before it can be downloaded. It also said that any auxiliary software downloaded with the main program without the user’s knowledge must be removed.

In addition, both Google and Yahoo threatened to break off their contractual relationship with Babylon, an online translation company that has been a major Israeli player in the toolbar segment. Google ultimately made good on its threat in October, while Yahoo agreed to renew the contract a month after Babylon promised to act more cautiously in acquiring new users, and coordinate and maintain full transparency in its relations with Yahoo.

Another emerging threat to Download Valley companies is the movement of users to mobile platforms. Tablet and smartphone usage patterns differ greatly from those of personal computers in which the companies focused on their hardware and gave a carte blanche to downloadable software. But today most applications now being downloaded to mobile devices are supplied by the apps stores of the operating system providers -– Google and Apple -- which can subject application developers to their own sets of rules.

Google’s expansion into different areas of the technology market in the past decade has placed it in a position to act as a kind of industry policeman, setting the rules for developers and other companies that rely on its business. The company’s reach includes the world’s most popular search engine; a computer operating system; Android, the world’s most popular mobile phone operating system; Chrome, the world’s most popular browser; YouTube, a major online video platform; a provider of online services such as email service Gmail; and in recent years it has also begun developing hardware.

Reuters