This morning we published a great piece by my colleague Alex Iskold that asked if Google should be afraid of Facebook. Alex concluded that, no, Facebook is not in the same league as Google and Larry and Sergey should be breathing easy. I'll briefly offer a contrarian view in light of the massive influx of cash that Facebook received yesterday, and more importantly, who it came from.
Alex argues that in order for Facebook to compete on Google's level, they will need "serious cash." Yesterday's $240 million investment from Microsoft is not chump change, and if unsubstantiated rumors pan out, the total amount that Facebook raised could be nearer to $750 million. That may still be a marketing error for Google, but enough for Facebook to expand comfortably for awhile. And what if Facebook gets into search?
In order to do that, said Alex, "they would have to build their own search engine or partner with someone." The former was always unlikely, but the latter is exactly what they've done. And not only did they partner with any someone, they partnered with someone who 1. is already gunning for Google in the search space, and 2. is already the 3rd most used search engine (in the US) according to comScore.
Greg Sterling predicted this morning that Microsoft Live Search on Facebook was all but inevitable -- and I'd have to agree. It's a no-brainer. Google already powers search on MySpace, Yahoo! does on bebo, so Live Search on Facebook makes sense -- the technical investment is minuscule and the potential return is mammoth. If Facebook's 30 million monthly users start using Microsoft for web searches, that could have a significant impact on the market.
Deepak, a commenter on Alex's post this morning, isn't buying it. "Not sure a search box will work," he wrote. "[The] search box for Firefox gets all [my] use. My Portal is my browser." If it is indeed the case that people generally use their browser's search box for the majority of their searching, then a Microsoft search box on Facebook may not make much of a dent. But, I do not think that is how the average Internet user behaves. Google is the default search engine on Firefox, which has about 15% of the market, while Live is the default search engine for Internet Explorer, which has about 78.5% of the market. And yet, Google controls 57% of the search market, and Microsoft just of 10%. So clearly, the browser search box is less of a factor than other entry points.
So why should Google worry? As Alex points out, Google is an advertising company, but one that is still very reliant on search. And while Facebook still has yet to prove that it can really monetize its traffic, Microsoft has certainly proven that they can make serviceable search technology. Facebook already fields over 600 million searches per month -- if they can turn those site searches into web searches, that would be a boon for Microsoft.
"Exposing the huge Facebook audience to Live Search and monetizing that traffic with paid results is, I'm guessing, a powerful motivator behind this investment," wrote Greg Sterling today. I agree. Facebook on its own probably wasn't enough to worry Google. But Microsoft with a hook into Facebook's large and rapidly growing user base, might make them look over their shoulder with a bit more apprehension.
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Josh
Good point, but let's ask this question ... let's say that close to 100% of firefox search traffic comes from Google, how much of IE search traffic comes from Google? If I remember correctly, my Dell came pre-installed with the Google Toolbar for IE. I just don't see people searching from within Facebook, unless Microsoft essentially makes Live Search behave like a Facebook app (which might have been what Alex was alluding too). In that case they won't leave their FB account, but it's difficult to search, poke, listen to music, etc all at the same time, while in a brower, you open a new instance or a new tab for all your searching.
Of course, as you note, I am hardly your typical use case :)
Posted by: Deepak | October 25, 2007 1:22 PM"And while Facebook still has yet to prove that it can really monetize its traffic..."
Are you freaking kidding me!? I hear they're clearing of upwards of 100's of millions in net this year alone. That misconception needs to die already.
Posted by: Shane | October 25, 2007 2:02 PM"And while Facebook still has yet to prove that it can really monetize its traffic..."
Are you freaking kidding me!? I hear they're clearing of upwards of 100's of millions in net this year alone. That misconception needs to die already.
Posted by: Shane | October 25, 2007 2:06 PMGoogle is a application oriented user experience where as FB takes user and data oriented approach. I live in the FB "space" which contains all the things I care about people, pictures, music, news, etc. FB seems to have a robust API infrastructure that allows all my other app providers to plug into that space. I think this is a more natural experience for users. In fact it would be nice to have a desktop that was oriented to this way of thinking. I live a highly digital life already email, IM, txts, pictures, music etc. Moving into the FB space is just a choice to organize it all in one place and then to be able to have all my friends and families digital life all in one place. Interesting that FB does not use a real world metaphor to represent the digital life. In fact I would say FB is now the metaphor. Which is a as close to be the defacto standard as I can imagine.
Posted by: Dustin | October 25, 2007 2:58 PMProbably the question that everyone should be doing is "Should the users be worried with facebook?"
If people are screaming "PRIVACY BREACH" whenever you heard the name Google, I advise you all to read this post and see this video.
http://mywheel.net/blog/index.php/2007/10/25/im-out-of-facebook/
If Facebook's terms of service are the ones listed on the video prepare to be run in fear.
Even some tidbits could indicate that you can't use another social network.
Well watch the video and see for yourself
Posted by: Ricardo Proença | October 25, 2007 3:05 PMIn order to get people doing web searches inside of FB than on Google, FB would have to give them a good reason. This is why just over a week ago I wrote a post suggesting that Facebook partner with Yahoo to offer web search inside Facebook. Today you can substitute Microsoft for Yahoo but I used Yahoo for a reason - the reason why people would make the switch from Google.
My suggestion was to also have a Yahoo Answers inside of FB, or at least a version of it that would let users easily convert their search queries into questions. They could then select Facebook friends to send the questions to; have them answered by people who have installed the Answers application or sent to people who have specifically subscribed to questions on certain topics. This could improve the quality of the search, or at least be perceived to do so.
Ok, so it is Microsoft and not Yahoo, well there is no reason why FB couldn't build their own Answers app if they haven't done so already and integrate it with search as above. Perhaps even a third party application developer could do this.
By the way, I think Q&A is the next best thing to search for guaging user intent and therefore for targeting ads. A combination of the two on a site like FB could very well trouble Google. My full post is at: http://www.ideatagging.com/a-facebook-and-yahoo-partnership-that-could-trouble-google/
Posted by: IdeaTagger | October 25, 2007 3:11 PMBut the question still remains, if Facebook is really looking to integrate some third party search into its site...then why on earth did they choose the worst search provider possible to partner with.
OK they may not be the worst, but Live Search really does trail behind Google and Yahoo in a number of areas. I argue that Live Search's algorithm is completely inferior to Google and Yahoo's, but relevance is something that can only be judged on a user by user basis.
Honestly, Facebook had their pick of the litter when it came to choosing a search provider (which they have not necessarily done yet even though they are partnered with MS) and they flat out chose the worst one that was available to them. Same goes with advertising. Whatever the motivations behind the partnership I find it hard to believe it was based on the "best fit" for Facebook. A slow aging dinosaur that is getting its butt kicked just about everywhere it goes (the only new market that MS actually successfully got into was the video games with the XBox and the monster Halo series) is certainly not a good fit for a young and agile company like Facebook.
It will be VERY interesting to see how this all plays out. Surely MS is hoping to get more out of this than just an advertising deal but is Facebook really (and I mean really) ready to jump on board with them. Only time will tell I guess.
Posted by: Devlin | October 25, 2007 3:36 PMMy startup has distributed a search-based application via Facebook and I can tell you that the search stats are absolutely terrible. These kids DO NOT click on sponsored ads at all. The ad-click rate is at least 5x more for the 30+ less tech-savvy demographic. I think that the more people see search results, the more they become conditioned to avoid the sponsored ads. Alternatively, the old folks who search can't seem to avoid the ads and we have them to thank for profitability.
Posted by: Matt | October 25, 2007 5:09 PM"Yesterday's $240 million investment from Microsoft is not chump change"
Posted by: PXLated | October 25, 2007 5:36 PMThat's exactly what it is...C H U M P C H A N G E.
Microsoft invested $150M in Apple and $200M in BestBuy (to insure exclusive MSN contracts) back i n the 2000 era. For them to only give up $240M now, 6-7 years later, they just cast a no confidence vote but protected themselves. They just said by their tiny investment that there is less value in Facebook right now then there was in Apple's darkest days.
"And while Facebook still has yet to prove that it can really monetize its traffic..."
Are you freaking kidding me!? I hear they're clearing of upwards of 100's of millions in net this year alone. That misconception needs to die already.
Posted by: Shane | October 25, 2007 5:48 PMClearly, Google should focus on what it must do to improve rather than keep worrying about what others are doing.
Posted by: Niyaz PK | October 25, 2007 9:53 PMFirst it was MySpace and now it's Facebook.
Who are the next Facebook and Myspace's of the web and what will they look like?
Will they be 3D graphically intensive social networks like CyWorld, Hive 7 or Sleep.FM? White backgrounds are boring and as the net moves on, static to dynamic virtual social network worlds are the future; one of these types of social networks will be the next Facebook!
What do you think?
Posted by: Bah Facebook | October 25, 2007 10:55 PMfacebook rocks
Posted by: Francisco | October 25, 2007 10:57 PMJosh, I assume your stat for IE penetration includes all versions of IE. Live search is only default for IE 7 -- indeed, in-browser search is only present in IE 7 (not 6). And IE 7 has much less than 78% of the market, probably more like 20-30% max. So, I do agree that many internet users actually go to google.com for their searches, your stats are misleading and overstate the case.
Posted by: Noah | October 25, 2007 11:45 PMGoogle should not be worried about Facebook but about social networks in general. I think that in a very near future, a huge part of the information will circulate through the social networks, thanks to the missing "spread" feature:
http://blog.kindalab.com/2007/10/26/information-spreading-through-social-networks/
Have a nice reading.
Posted by: Manuel Vila | October 26, 2007 3:04 AM@Noah: You're right, though IE 6 does have a search button that open a sidebar that uses Live (well, MSN search, which redirects to Live) and if you enter search terms in the location bar -- as I have watched many less technically savvy web users do -- it searches Live by default as well.
Posted by: Josh Catone | October 26, 2007 7:19 AMGoogle search = straight road
Posted by: JM | October 26, 2007 7:38 AMMSN search = detour road, which heads back to Google (after getting lost on the detour)
Google as a starting point is a social phenomenon and it can switch as quickly as it began. What we should be expecting is innovative search from Facebook + MS to start with that is more relevant and more convenient where it is used. Thats the kind of thing that users start changing habits for. Google definately have a reason to sit up.
Posted by: Mashman | October 26, 2007 8:37 AMYou're wrong that Explorer defaults to Live Search. Google was VERY clear that this was an antitrust issue. So MSFT upgrades to IE 8 just uses the default search engine you set in IE 7. For most people that's Google.
Posted by: CK | October 26, 2007 11:51 AMsocial networks represent a different way of storing and retrieving information on the internet. when sonets become more pervasive, and they will, eventually virtually all information will be introduced via the sonet medium instead of individual pages on sites/portals/etc.
what happens if these sonets develop arachnophobia and keep spiders out? who will use google when all the important and relevant information is within the "walled gardens" of sites like facebook, et al?
this is part of what makes sonets worth so much, and why this article makes a lot of sense, IMO.
Posted by: devin | October 26, 2007 12:18 PM@CK: Thanks for the comment. I have IE 6 on one of my computers and IE 7 on another. They both default to Live for search, and neither being my primary browser (I am a Firefox user) I have never installed any extensions on either. Also, version 7 is the latest version of Internet Explorer.
Posted by: Josh Catone | October 26, 2007 12:19 PMNot too sure how MS's ad inventory (i.e. lack of a credible ad platform from MS) is going to help FB.
IS MSFT using FB as a testing platform for it's online ad system?
Here is an interesting analysis of diff. player's perspective
Posted by: Roy | October 26, 2007 12:59 PM@Roy: Microsoft has a very credible ad platform (display ads) after purchasing aQuantive.
Posted by: Josh Catone | October 26, 2007 1:12 PMFacebook is a people's platform.
They already have a people's search engine.
Searching the Web from a social platform? Don't quite see a social motivation behind that.
Posted by: Xavier Vespa | October 26, 2007 5:45 PMLive Search's algorithm became much smarter last month (or was it this month?) when the new version came out. Its index is bigger and the results are much improved compared to the old Live.com, and sometimes I think, better than Google's. Especially for shopping and entertainment, which make up a huge portion of searches.
The problem is getting people to the site to find out that it's now on par, or nearly, with Google, and they now have a choice. If Facebook can get even a portion of its users to search just a few times, and they have a good experience, that could really tip things in Microsoft's favor.
Google's getting desperate to protect its index from increasing irrelevancy as it has a harder and harder time dealing with link buying, artificial content and other black hat methods of manipulating SERPs targeted almost exclusively at Google's algorithms.
Who knows... Yahoo! and Live have both improved their search engines a lot this year... while Google's seems to be slipping... maybe deals like this could change the tide in market share.
Posted by: Dan Grossman | October 27, 2007 1:25 PMIf Google will find a way to put on top of those Social Graphs that they "own" already today (Orkut, Gmail-Contacts; Shared documents in Google-Docs; Shared photos in Picasa; ...)a "Search" that will leverage Social Graphs (naive example: Blog Search could put Posts higher in the result list if they are included in the "Shared Posts" list of my Social Graph)they will be able to compete with FaceBook.
Posted by: Ralf | October 29, 2007 2:59 AMhttp://www.line-of-reasoning.com/solutions/googles-universal-search-to-search-gmail-google-documents-and-social-networks/
Google should be worried about lot of changes in the industry - but their forced opening up the API is a very good sign. That will make it less vulnerable, and level the playing field as well as the industry.
Posted by: Joseph Pally | October 30, 2007 6:17 PM