Does Facebook Fear Google? RRS feed

  • Question


    Has Google taken the place of Microsoft as the company to fear?

    How else do you explain why Facebook would turn to aging software giant Microsoft, struggling for Internet ad respect, over ad king Google for an ownership stake and advertising tie-up? Part of the answer may lie in the ever-changing battle for social media dominance that pits Google against Facebook.

    That rising rivalry may have been what drove Facebook on Wednesday to strike a $240 million deal with Microsoft for a 1.6 percent stake in the social network.

    “Facebook may have viewed Google as more of a competitor also causing a deal not to work on that front,” Goldman Sachs analyst Sarah Friar wrote on Thursday in a note to clients.

    Google has heaps of Internet destinations—Orkut, Gmail, YouTube—that in many ways accomplish what Facebook does: Keep people stuck viewing more ads.

    Search giant Google only recently began paying closer attention to its social-networking site, Orkut, building out features. In addition to adding video, Google in recent months updated the social site so that every time members change their personal photos friends are notified with a slide show.

    If it sounds familiar it’s because gazillions of photos, videos, and random quizzes are shooting between Facebook friends because the social site has allowed a flood of features.

    It’s become a race to lock down more social media to boost ad sales. And Facebook has seen its growth rocket since opening up the site to third-party widget developers, some might even say at the expense of its once-uncluttered interface. The social network has become overrun with booze-mail offers, movie-taste comparison quizzes, and fish tank gifts. How useful is all of this?

    Well, Facebook has grabbed growth numbers to make rival MySpace envious. Unique visitors to Facebook grew by 129 percent in September compared with a year ago, according to comScore. That compares with MySpace’s growth of 23 percent in the same period.

    “While MySpace.com’s user base is almost double that of Facebook’s, we believe the later is growing much faster than MySpace,” JP Morgan analyst Adam Holt wrote Thursday in a research note.

    There’s another reason Facebook and Google can’t be friends. Google is already aligned with Facebook rival MySpace. The search and ad king’s multiyear deal to snap up exclusive access to the social network’s roughly 110 million members puts it in a unique position to boost its network of Internet advertising.

    That $900-million deal gave Google exclusive access to search and keyword-based targeted advertising across the Fox Interactive Media network of sites including MySpace. That deal was seen as a coup for Google over Microsoft.

    Microsoft so far hadn’t made a similar move in the social-networking arena. That makes it more potential friend than foe at this point.

    Ultimately, Facebook’s choice to go with the software giant in some way oddly says something about Microsoft’s less-than-spectacular Internet strategy and how little the social network fears it.  

    Friday, October 26, 2007 5:11 PM

All replies

  • nice competiton -- - a treat to watch.....the new features
    Saturday, October 27, 2007 6:58 AM