You can certainly make a case that the Internet/tech world is shifting a bit. Mobile is “the next big thing,” and that space hurts Google — phrased simply, there’s less space for ads; phrased in a more complicated way, Google does know what people are doing when they use standard search (data is probably the most important thing on the Internet, in some ways) and doesn’t know what people are doing when they’re in and around apps. But someone does, and predominantly, that someone is Facebook:
For Facebook, the strategy is simple. It has already shown its vision for mobile by starting the process of dissembling its monolithic app into a series of smaller ones, all the better to encourage usage and ensure user loyalty by making their lives easier. Now it is extending that strategy to the rest of mobile as well, by making life easier for the people who build apps. Moreover, allowing other apps to use its functions gives Facebook the ability—through its “Like” button, its ad network, its login functions—to keep track of what its users are doing outside of its own apps. That is a valuable thing in an age where data is the currency that drives the internet.
It is arguable that with Applinks (Facebook’s platform for deep-linking), it could wield more power than Google, which makes mobile operating systems and apps but doesn’t have insight into what its users are doing when they’re in other apps.
Facebook’s mobile revenue is already pretty strong, and then there’s this — another semi-shot across Google’s bow:
ZUCKERBERG: We’ve been talking about apps and experiences for helping people share and communicate. But over a five-year period, people will start thinking about social networks not just as communication tools, but also knowledge tools. There’s all this knowledge being shared, whether in private messages or in Facebook posts on Facebook or structured data through Open Graph, and right now, there isn’t a great way for us to try to surface that to you, either from a search perspective or a discovery perspective. We have a big focus in our company on trying to help make all that knowledge useful to people.
It turns out that between 5 and 10 percent of posts on Facebook are people asking questions to their friends, everything from “Where should I go on this trip?” to “Who should be a drummer for my band?” Those are questions that you wouldn’t ask a traditional search engine. The knowledge probably exists within our system to provide some insight for you. If we can do that, it’ll change how people think about social networks from being just about communication to being about knowledge and answering useful questions. So we’re doing a bunch of things, whether it’s Graph Search or Open Graph or different discovery tools or the Nearby Friends feature we just launched. The app platform plays into this too, because that’s about getting a lot of knowledge and content into the ecosystem that we’re not working on ourselves.
All this stuff makes sense — if you look at the “conventional Internet” (desktop/laptop/etc.), the glue is Google and the currency is data (without data, who knows how to do anything or market to anyone?). If you look at the emergent “mobile Internet,” the glue is Facebook and the currency is still data — and in that space, Google is clearly on the outside looking in.
One very important extra point, though: Google and YouTube may lose money some quarters over the next five years (or not make as much money), but they’re not going anywhere. They’re ingrained as a part of the culture in terms of search, which is how we organize information on a day-to-day basis, broadly speaking. Facebook isn’t going anywhere either, but because the base of their organization — where they get their user base, and thus their clout — is a social network, it has a different set of side challenges that Google may not. It’s got a teenager problem in terms of future users, for example; even though it just released some ideas about how to monetize at F8 yesterday, it also has a potential organic reach problem that might drive some brands away — or force brands to pay for ads, thus clogging NewsFeeds and driving regular users away. Maintaining the quality of the overall social network is important for FB as it does these other things, and that’s an important contextual piece of this puzzle.
Facebook has a long way to go to hit Google’s market cap, but many think it can be done. Google went from $0 to $400 billion in 15 years. Facebook has 4.5 years until it’s 15 years old, and it’s somewhere around $153 billion right now.
