Did Facebook Just Threaten to Take Over the Internet?

Mohamed is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Last September the 14th, on the second floor of Building 17 where the team who is in charge of tracking Facebook's (NASDAQ: FB) growth works, there's a giant screen showing Facebook active users around the world that registered a 10 digit number for the first time ever, signaling Facebook's one billionth user. This historic milestone means that Facebook is currently used by 1/7th of the world's population and 1/2 of all users online. 

While Facebook is one of the most important sites on the Internet, it is still only just a site on the Web. If you were to ask me what first pops into my mind when the word Internet is mentioned, I would answer with Google (NASDAQ: GOOG). Google is my Homepage, the first thing that I see when I open up my Google Chrome web browser, I then use Google to find anything on the web I need to, I also use my Gmail address to gain access to other sites and services on the web. Google as I see it is the fabric of the Internet; what links it and puts it all together. 

That could change though. Mark Zuckerberg had this to say in a recent interview with Businessweek

"There are already trillions of connections between friend requests and all the content that's being pushed on the system and at some point that will be a better Map to navigate the web then the traditional link structure system of the web; I think there's an opportunity to build something interesting there."

The link structure he is referring to is how Google allows people to navigate the web.  Larry Page and Sergey Brin devised a better way to organize and search for information on the web. They called it PageRank.  It is based on the number of Backlinks to a website and the importance of the page that had the link itself. Google then uses this information to determine the relevance or importance of your site.  Google PageRank (PR) is measured from 0 -10 using a Google toolbar and is translated from the actual calculated PageRank using a logarithmic scale. The more quality back links a page has, the higher its PageRank.

The Equation to calculate PageRank:

PR(A) = (1-d) + d (PR(T1)/C(T1) + ... + PR(Tn)/C(Tn))

Where PR(A) is the PageRank of Page A 
d is the damping factor. Normally this is set to 0.85
PR(T1) is the PageRank of a site pointing to Page A
C(T1) is the number of links off that page
PR(Tn)/C(Tn) means we do that for each page pointing to Page A

<img src="/media/images/user_13029/pageranks-example_large.png" />


The above Graphic is a representation of how PageRank works using percentages. The percentages substitute for Google's Logarithmic Scale calculation of PageRank and represent the likelihood that web-surfers will end on that page in the above model using the common damping factor of 0.85. Page B has a lot of sites linking to it giving it a high PageRank and it has one link on it to page C which in turn gives C a high PageRank. This effect is also magnified by the fact that page B only links to one page, C. [Recall from the equation to calculate PR(A) that we divide the PageRank P(T1) of a page pointing to A by the number of links on that page C(T1)]. In turn, Page C which received a high PageRank from B links back to page B further increasing the relevance of B, an effect called PageRank Feedback.  

When you conduct a search, Google uses advanced text matching algorithms along with the sites PageRank to display the most relevant result to you. Google rose up to conquer other search power houses like Alta Vista and Yahoo! because PageRank made search results more relevant.

Facebook however has an entirely different set of information about its users that Google doesn't have, very personal and intimate information. Mark thinks that this information will help people use the Internet to access information in more relevant ways, not just to the topic the person is searching for, but to each and every person on an individual level.

Facebook has already announced that they perform a billion search queries per day, 1/3 the daily searches on Google, without even trying.  I would take that number with a grain of salt though, because alot of them are likely people searching for their friends.

Facebook may not yet be trying to compete with Google for organizing the world's information, but it has already begun to take the fight closer to Google's turf. Mark Zuckerberg has recently announced a search partnership with Microsoft's (NASDAQ: MSFT) Bing. Microsoft and Facebook go way back, ever since Microsoft invested $240 million for a 1.6% stake in Facebook in 2007. Bing also happens to be the current underdog in search and Zuckerberg has stated that he likes to be the underestimated underdog, it seems he likes his partners to be so as well. 

Bing will start integrating data from users friends and social network into search results. This information includes likes, reviews, photos, and links from friends. The end result of this is expected to be search results that are more personal and relevant on a person to person basis. Instead of a focus on keywords, there could be a focus on you and your friends preferences, location, education, job and past experiences. That means if you were to conduct a search for cars you could end up with entirely different results then what I get!

However the partnership with Bing may be only the beginning of a shift in Facebook's business model. Facebook Connect is already functioning as online ID for users by allowing it to gain access to services and applications on the web such as Skype, Ticketmaster, and Spotify via their Facebook accounts without having to remember all different kinds of passwords. Facebook may start to use the massive amount of Information it has to organize the Internet in a different fashion and forever change the way we access information on the web. The Future Infrastructure of the Internet may have a Facebook core underneath.

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