Are Google and Facebook Destined to Clash?. Is Facebook taking over the planet? Web-analytics firm Alexa ranks Facebook as the second-most popular Internet property in the world behind Google (GOOG), while Compete puts it at number three.
Google and Facebook presently serve different missions -- Google helps you find stuff, while Facebook helps you share stuff. But are are they destined to clash simply because of their positions at the top?
At last week's Web 2.0 Summit, venture capitalist and Facebook investor Sean Parker delivered a presentation entitled "The New Era of the Network Service." In it, he described how companies like Facebook and Twitter will determine the future of the Web, leaving Google out. Parker focuses on the power of the network to connect people, emphasizing that "collecting data is less valuable than connecting people." The network companies, in his opinion, "will dominate the Internet."
But Parker has it all wrong. That's no surprise, since as a Facebook investor he has a vested interest in pushing his horse.
The notion that Google is not a network company is wrong. Google's incredibly profitable advertising business is one of the most powerful networks on the planet. It's just an advertiser-to-publisher network instead of a peer-to-peer one. It's economic moat is actually pretty powerful because of that network's sheer size and Google's strength in analytics and data collection. There are switching costs to be had for advertisers or publishers leaving the Google ecosystem.
And let's get real -- Facebook is a datamonger rivaling Google. Think about all the information on a typical Facebook page: name, age, educational background, occupation, company, places you've traveled to, etc. That's an astounding amount of reliable demographic data that can be exploited for advertising sales dollars.
If BMW wants to sell an $80,000 car, or Citigroup (C) is pitching a new savings account, they can target exactly the audience they want on Facebook. Tony Soprano once said "Log off. That cookie sh*t makes me nervous." Like the King of North Jersey organized crime, Internet users used to worry about companies like DoubleClick (now owned by Google) gaining access to too much personal information -- but now those same folks give it all away to Facebook!
Facebook's share of Internet traffic, which will get bigger, isn't going to hurt Google. One of Facebook's specialties is allowing people to share off-Facebook content with their friends and business contacts. Guess what? A heck of a lot of those shared blog pages and videos carry Google ads. Users are just using a different route to get to the same stuff. Even if Facebook goes to number one, Google doesn't necessarily have to suffer.
If anything, Facebook's real victims are personal email and instant messaging, not advertising networks like Google.
The real danger for Google, and Yahoo (YHOO) for that matter, would come if Facebook itself became a host for unique and valuable content, rather than a mere distribution point. That would only happen if Facebook started sharing ad revenue Squidoo-style with the users that create all the content. Then, eyeballs would truly shift from Google ads to Facebook ads.
But that's not happening anytime soon, if ever, especially if Facebook goes public and starts feeling the pressure to grow earnings as quickly as possible.
So don't believe the hype -- Google and Facebook do completely different things, and they'll coexist peacefully. / msn
Google and Facebook presently serve different missions -- Google helps you find stuff, while Facebook helps you share stuff. But are are they destined to clash simply because of their positions at the top?
At last week's Web 2.0 Summit, venture capitalist and Facebook investor Sean Parker delivered a presentation entitled "The New Era of the Network Service." In it, he described how companies like Facebook and Twitter will determine the future of the Web, leaving Google out. Parker focuses on the power of the network to connect people, emphasizing that "collecting data is less valuable than connecting people." The network companies, in his opinion, "will dominate the Internet."
But Parker has it all wrong. That's no surprise, since as a Facebook investor he has a vested interest in pushing his horse.
The notion that Google is not a network company is wrong. Google's incredibly profitable advertising business is one of the most powerful networks on the planet. It's just an advertiser-to-publisher network instead of a peer-to-peer one. It's economic moat is actually pretty powerful because of that network's sheer size and Google's strength in analytics and data collection. There are switching costs to be had for advertisers or publishers leaving the Google ecosystem.
And let's get real -- Facebook is a datamonger rivaling Google. Think about all the information on a typical Facebook page: name, age, educational background, occupation, company, places you've traveled to, etc. That's an astounding amount of reliable demographic data that can be exploited for advertising sales dollars.
If BMW wants to sell an $80,000 car, or Citigroup (C) is pitching a new savings account, they can target exactly the audience they want on Facebook. Tony Soprano once said "Log off. That cookie sh*t makes me nervous." Like the King of North Jersey organized crime, Internet users used to worry about companies like DoubleClick (now owned by Google) gaining access to too much personal information -- but now those same folks give it all away to Facebook!
Facebook's share of Internet traffic, which will get bigger, isn't going to hurt Google. One of Facebook's specialties is allowing people to share off-Facebook content with their friends and business contacts. Guess what? A heck of a lot of those shared blog pages and videos carry Google ads. Users are just using a different route to get to the same stuff. Even if Facebook goes to number one, Google doesn't necessarily have to suffer.
If anything, Facebook's real victims are personal email and instant messaging, not advertising networks like Google.
The real danger for Google, and Yahoo (YHOO) for that matter, would come if Facebook itself became a host for unique and valuable content, rather than a mere distribution point. That would only happen if Facebook started sharing ad revenue Squidoo-style with the users that create all the content. Then, eyeballs would truly shift from Google ads to Facebook ads.
But that's not happening anytime soon, if ever, especially if Facebook goes public and starts feeling the pressure to grow earnings as quickly as possible.
So don't believe the hype -- Google and Facebook do completely different things, and they'll coexist peacefully. / msn
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