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In the very early days, this was just a question of looking at the words in the web page. This is how YAHOO started. Then the founders of Google were doing a research project at Stanford University called "backrub" which looked at the web links between websites (backlinks) as a way of judging the importance and usefulness of websites. They could also exploit the anchor text (the text on the actual web link). This proved very successful, and before we knew it Google had usurped YAHOO as the leading search engine because they gave better results.
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