Exactly, I think what we might be needing is a non-US (perhaps Iceland or NZ) based alternative. The moment, duckduckgo becomes relevant enough (i.e significant traffic) then is game over IMO.
I'm not sure if i missed something when I initially read about the startup Chile program, but i don't quite remember the documents stating they only wanted US entrepreneurs, am i wrong?
I would have agreed with your argument about not lowering the price if your offering is superior, but aren't we talking about a very poor country? doesn't Google have enough $$ to make a concession? (I'm not talking about giving the service for free just low enough to match competition).
In my opinion, the procedure he describes sounds great to measure the skills of the candidate(s), but that's too early to called the 'Best' resource of the bunch. It will not be until he or she is actually working there that you will be able to measure the real quality (both on the technical and the human perspective ) of him/her.