Facebook presents unique challenges to Google. In my opinion the
game has gone to Facebook. The only thing that can stop it is some combination
of:
1) Government interference
2) Aggressive action by big players like Google, Apple, Microsoft,
Amazon, etc.
3) Big missteps by Facebook management
4) Dramatic sabotage
5) An aggressive, disruptive competitor
Many appear to underestimate the threat presented by Facebook.
People are motivated to 'act' when they use a search engine
looking to buy something. They will be more receptive to specific relevant
advertising. However, Facebook is increasingly in a better position to know who
will buy and when. Search engines have a query string and perhaps a little
history. As they refine the system, Facebook will have much more. They will
only put ads where they will be most effective. An advertisement on Facebook
will ultimately anticipate the search before it even happens. You will
eventually not be able to present your ad because no search will take place.
Both the search query and the data it is looking for will be on Facebook and
you will be out of the loop.
In the Facebook universe, I do not have to turn to a search engine
to find out what folks around me are doing. It is scrolling by when I log in.
As the Facebook relationship grows, they will anticipate more and more of what
I might be interested in seeing and they will present it to me before I ask for
it. Google is an excellent search engine, but it takes at least a dozen
keystrokes or more to do any non-trivial search. It also requires me to shift
attention away from what I am doing. On small-screen devices, it means I have
to essentially switch applications to move off to do a search. As Facebook
matures, it has the following advantages:
1) It has the user's attention already. If you are not Facebook,
you have to get the user's attention first.
2) It has rich context beyond just a query string. It knows the
user's habits and recent past, it knows this for friends, family, cohorts,
demographic groups, etc. It gets real-time updates to this, so it 'knows what
is going on'. [Network forces are cumulative. Here is one particular advantage
this deep context confers on search: it can 'auto-up-vote and down-vote' pages.
The user is more likely to see the results they want. If everyone in your
social circle is looking for that dance video, Facebook can anticipate the
search request and place the link on the page before it is even requested.]
Given time, Facebook will know where you are, who you are with and how long you
are staying. A search engine might use geocoding to guess where you are and use
'cheats' like persistent cookies to steal data otherwise.
3) It can access the full universe of data inside and outside of Facebook.
Search engines can only access data visible outside. If I am looking for that
picture of my friend's cat it is not even in the search engine index.
4) It already has relationships with buyers, sellers,
intermediaries and other interested parties. Its relationships are persistent and
interconnected providing much more intelligence.
5) It knows the user and has enough information to determine
'worthiness' (credit, health, credentials, social status, etc)
6) It can persist unlimited data specific to users, buyers,
sellers and their relationships.
7) Killer Facebook feature: mediated promiscuous data. There are
ways to provide everything a vendor needs to offer a good quote without
compromising user privacy in any way. Users can store private information
without worries that they lose control.
8) Function is embedded in a 'live' application. A search in Facebook
is a request to a framework, not a search engine.
9) The user has a 'vested relationship' with Facebook. Gaining
access to private personal and financial information, contact information, etc
is easier for Facebook because they already have a relationship capable of
trust and they have ongoing storage related to the user.
10) Facebook already has experience and expertise with
infrastructure at scale. This can allow very rapid expansion of capabilities
that can entirely take competitors by surprise. They can consolidate before
competitors can respond.
There is no doubt in my mind that Facebook is investigating what
they need to do to compete in all the major categories. If they are not, they
soon will be.
Right now, Facebook has a nearly insuperable advantage. They have
the user's attention. Right now, it is possible to directly monetize that
attention through advertising and they are doing that. However, the really big
score is the deepening commitment of Facebook users. As these users continue to
accumulate data on Facebook, their relationship with Facebook deepens in ways
competitors simply cannot match.
Network effects have taken hold at Facebook and since that is the
current center of gravity the positive feedback loop is irresistible. In fact,
I believe that the only thing preventing gravitational collapse right now is Facebook
itself.
I think a search company has a good chance of unseating Facebook.
However, it needs to focus on the correct goal. Once Facebook institutes a
usable search on their site it will be extremely difficult to compete with them
in the search space.
Here are a few 'quick hits' -- ideas that I would have in mind if
I were doing a search engine competitor to Facebook:
1) Providing a high-quality search is key. Bean counters will move
in and suggest how you might 'improve' the business. Resist them. For now, the
business is Search and you know more than they do.
2) Users are your partners. Keep faith with them. Going forward,
you should look for ways to share your success with your users. This may seem
strange, but users create equity and ultimately they can snatch it away. Keep
them from taking that equity away by sharing with them fairly. One idea that
might have merit is to allow them to participate in some preferential way in
the actual market equity of the company. Perhaps users could accumulate rights
in something akin to warrants to buy shares in the company. When I say
'fairly', I mean that you should, for instance, protect their privacy.
3) Lean really hard on getting into user's browsers as the default
search engine. This is an instant win and if you are at least as good as the
other search engines, you almost win the battle (not the war) right there.
4) Realize that social networking is the ultimate killer app.
Search is your entre, but providing users with a permanent home should be your
goal. Users will go back to the location where they find their friends and
family and their notes and pictures and messaging system, etc. The dominant
social networking player will have all the time in the world to perfect search,
applications like mail, online sales, news feeds, etc. If you compete in a
'niche' like search, you must be the best and stay that way. If you are the
dominant social network, you just have to 'be'.
5) Your true competition, Facebook, is still vulnerable. You can
beat them, but not for long. It could render itself invulnerable within less
than two years. While that window is still open, a killer search company is the
best bet for replacing them. It is not an option to just stick to your search
niche, though. Eventually, the dominant social network will take that over. You
need to gain traction with your niche, but make no mistake, they will
definitely close the search niche.
It may be that the game is already over and Facebook has won. If
that is the case, you should approach them as soon as you can to sell them the
company or at least license the technology. Were you to join forces with Facebook
today it would probably be a 'Google killer' and Facebook might well be willing
to share significant equity to dispose of a potentially powerful rival like
Google.
There are many nuances in all of this. For instance, keeping faith
with users may be one way to steer clear of government interference.
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