Time seems to prove that Facebook
and Google are engaged in a long lasting rivalry with an unknown issue. At
first hand we can be mislead by thinking that Google and Facebook are offering
complementary services and that those two giants are not really in the same
field of expertise. Indeed the two companies have built their core businesses
on different areas of the internet, one on search (Google), the other on social
networking (Facebook). But limiting the comparison between these two to this
judgment couldn’t be more wrong. As we are going to see, Larry Page – Google’s
founder and CEO – and Mark Zuckerberg – Facebook’s founder and CEO – are
engaged in an internal war of an intensity rarely seen before in the Silicon
Valley. The fight will result on who will shape the future of the web. For now,
the only outcome we can be sure of is that consumers benefit from better
services from both companies compared to only one year ago.
The Strategy
There are two different points of
view based on the same assumption, everything on the web starts by a search.
From this basis, Google and Facebook have built their success on different
strategies. Google bet on the fact that as users we want to make our own research
based on what we want (i.e. if I want a new pair of sneakers, I am going to
search for it). Facebook on the other hand foresaw, or rather provoked the
change of we how use the web. I don’t search for the pair the sneakers I want, I
wait for my friends to tell me what to buy. It seems that each company is
trying to get closer from the other by “stealing” each other’s ideas.
Advertising
Both companies want to generate
profit through their advertising strategy. Google is the worldwide leader in
this field since over the 31 billion dollars engendered by the U.S. online
advertising market; it almost grabs half of the market with 41% of the total
market share. However, Facebook is becoming an increasing threat for Google as
the search advertising industry is slowing and is focusing more on Facebook
with a database of more than 800 million people who are spending more time on
Facebook than on any other websites. Therefore, Facebook’s revenue from advertising
is forecasted to grow by 81% this year compared to only 34% for Google.
Email
At the end of the year 2010,
Facebook entered a face to face competition with Google with the launch of
their own email address offering its users to create their “facebook.com” address
while Google already battles in this field with its Gmail service. We have
previously seen that Facebook users spend a huge amount of time on this
website, and the facebook.com email address was created in this matter since in
2009 people spent only half as much time on Facebook as they did on Google.
Facebook believed that with an email address on their website it will increase
the amount of time spent on the website generating more revenue from
advertising. We can now understand how everything is closely linked between those
two Silicon Valley success stories.
Social Network
Here, Google turned to offense after
the few strategic moves from Facebook with the creation of their very own
social network Google +. As you all know Google + opened up to everyone in
September after a trial period used to increase users attention and inputs to
improve their service. Although it is very unlikely to see the 800 million
Facebook users shift to Google + service, Google is clearly representing the
main competitor for Facebook since it overcame MySpace (see our previous article).
Google + benefits from a tremendous promotion made possible through all Google’s
websites. We all know that the next step of the social network battle will be
on the mobile market. Here again, Google with its Android phones is able to
build many features for Google + directly on users’ phone. In response Facebook
is trying to set an alliance with Apple – another historic rival of Google –
and its Iphones to counter the recent moves of Google. It seems that Google
wants to implement their Google + service in all the aspect of the company and
not only limit it as a simple social network. This why Facebook reasonably fears
the new service from Google as they don’t have the same back up as Google has.
Google and Facebook are competing on
many other levels, but I decided to focus on the subjects we already talked
about in our blogs. Have a look on this last chart (a bit outdated since it was in 2010 but still interesting). And feel free to read the articles with the links below for
more information.
 |
| (2010) |
Cheers!
Sources:
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