One of the most unforgivable things about reddit is how pathetic the search engine is, considering the amount of free, top notch information is captured there and you need google +reddit to get at it, what can we do to make federated alternatives self searchable ?

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This is going to be even worse than reddit search, unfortunately. There's not an easy way to make a search like this scale for the small amount of instances we even know about. Considering there are tons of instance out there and there will probably be more in the future, these problems are going to crop up a lot more. It's actually much easier to search in one centralized location, however the reddit search actually ended up being implemented.

It does become very fragmented. A post on my single-user server is going to be low down the rankings compared to the same post on a subreddit with the weight of the reddit domain name behind it. I'm also not entirely sure if/how content here gets indexed, especially when it appears under different federated domains. Content discovery is very different in a distributed world.

Perhaps not, google et.al. will likely grab it all anyway, perhaps we can be forward facing. Actually while they're privacy invading, the benefit of keeping feely given info still stands, and may, in the long term, prevail. One may hope...