It happens all the time in Europe. Collaboration between public and private companies is pretty much a pipe dream in the EU. Some company that actually works on building search technology would achieve way more than a bunch of professors.
I disagree on the budget though. It is basically pocket change.
Arguably the biggest most unsolved problem in search is how to make a profit (or even break even). This can be approached in two ways: You can either try to find some way of making search more profitable, or you can find a way to make search cheaper. I think the latter is a lot more plausible than the former.
A shoestring budget keeps the costs down by design and by necessity. A large budget virtually ensures the search engine becomes so expensive to operate it will never break even.
Why not offer a paid tier? Seems to work for Kagi. Information elites will soon flock to paid search engines, which won’t be much more expensive than a streaming subscription. I pay for Netflix and am willing to pay for a search engine that offers as good a search service as the video streaming offered by Netflix.
I disagree on the budget though. It is basically pocket change.