Facebook’s Next Big Move is on its Way!
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Every time you start your web browser which is the first URL that hits the address bar? Which is the most active app on your smartphone? Which is your favorite home page tab?
According to a survey conducted by Alexa, the web information company, Google (NASDAQ: GOOG) ranks first in the Top 100 most visited websites in the world. Google is an American multinational Internet and Software Corporation specialized in internet search, cloud computing and advertising technology. Google is the most famous search engine in the world. Google’s fame as a search engine can be understood from the fact that in the web world the verb search has now been replaced with google. When it comes to searching something on the web, people use the term google it.
In the survey conducted by Alexa, Google is followed by the world’s no.1 social networking website ‘Facebook’. Facebook (NASDAQ: FB) has a humongous database of over 955 million user profiles and their activities on FB and other external websites that feature its ‘Like’ button. But the big question is how are they going put their database into use?
Most of you would agree that one of the most captivating services in the technology world is Search. When it comes to Search, Google is the master of all. Many other companies have tried their luck but have failed miserably. Bing, the search engine from Microsoft (NASDAQ: MSFT) and Yahoo! Search are the only other search services that have a fairly decent market share. As of August 2012, the search engine market share can be depicted as given below.
This clearly shows that Google is the master of this game.
Why are We Discussing Facebook Here?
The chief executive of Facebook, Mark Zuckerberg, announced in a press conference on September 12 that Facebook is planning to get into the Search business. Long dominated by Google Inc, the Web search market represents a "big opportunity" that Facebook is uniquely positioned to address. Facebook has not being doing very good for the past few months. Its revenue growth from advertisements is slowing. The share price of Facebook fell from $38 to $18 in the past few months. Investors are still hoping for a miracle.
Share Price of Facebook for the past 6 months.
Zuckerberg’s comment was a ray of hope for the investors. After Zuckerberg's announcement Facebook’s share price rose by 7.7%.
Facebook's Share price for the past 5 days.
We believe that Facebook is the only company on the planet that can truly compete with Google in the Search business. Facebook may not even require creating an index of every site on the Web. Its huge database of user profile and their activities is enough to develop a search engine that would satisfy its customer's need. If Facebook can figure out how to use the information from its social network to provide consumers with better web search results, the company could steal more market share than just about anyone else.
Yahoo! (NASDAQ: YHOO) has been struggling to keep its search engine alive. In its attempt to develop a better search engine as compared to that of Google, Yahoo acquired search engine providers like Inktomi and Overture Services, Inc. There was a time when even though Yahoo! owned multiple search engine companies, it was still using Google search engine for its web search results. Later with Yahoo! Slurp, the company came up with its own web crawler-based search engine. This was the time when Yahoo’s relation with Google was terminated and they became each other’s main competitor. Now Yahoo! Search is powered by Bing.
If Facebook comes with its own search engine, it would pose a real threat to Yahoo! Search. If Facebook can develop a better search engine than Bing, it will automatically beat Yahoo! Search. But then one cannot underestimate Bing. Microsoft has been investing a lot to improve Bing’s search results. Bing was one of the early search engines to come up with Semantic search.
Even if Facebook is successful in defeating Bing and Yahoo! it would be a mammoth task to compete with the master. Google has a market share of over 73%. Facebook will have to come up with some incredible search algorithm to beat Google in its own game. Some areas where Facebook can have an upper hand include:
1) The social network behavioral data
2) Data mining to get information on what users like and dislike
3) Search results based on status updates, chats or Applications used
4) Search results based on likes and dislikes of friends and groups
Another advantage that Facebook has over Google is that most of its active users can use the search service from Facebook’s home page. It’s not that difficult to conclude that people prefer spending more time on a social networking site rather than on a search engine's home page. It is obvious that even Google+, the social networking site from Google, uses this feature. But then the user base of Facebook is much more than that of Google+. So this could be an advantage for Facebook.
One problem that we foresee is the invasion of privacy. Facebook, in order to provide a better search, may start intruding into the personal life of its users. Every activity of the users may be recorded. This may lead to many users filing lawsuits against the company in the future, which in turn may jeopardize the company’s reputation.
Will the new web search functionality, if implemented, bring back the glory days for Facebook? Will we see new confidence in investors for Facebook’s shares? Will the share price break all records and reach new heights? Will the company be able to defeat Google and become the master of Search? Will this revolutionize the search service and help come up with better search results? Will this lead to breach of privacy? Will this hurt the reputation of Facebook in the future? Will this lead to Facebook’s downfall ultimately?
We don’t have answers to all these questions. Only time will tell. Let’s wait and watch…
Feel free to leave your comments and views on this topic.
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