Another week, another round, in the heating-up competition between Facebook and Google.
If you didn’t catch the news, today Microsoft and Facebook made a joint announcement in which Bing search engine will use social data from Facebook (data from “Likes” and “Instant Personalization”) to deliver improved search results to users.
Today’s announcement represents a worthwhile enhancement for Bing. Users will definitely see an improved search experience, especially in the 4% of searches that involve a person’s name. Also, other kinds of searches will be improved — for example, searching for a local restaurant (in a region where there are many choices), will highlight items that your friends have Liked.
Although these improvements are valuable for users and add polish to the innovation facet of Bing’s brand, this does not seem to be a game-changer in the search engine sector. I don’t think these improvements will fundamentally change the dynamics of competition between Bing and Google. I do think that Bing will gain some share (perhaps even 5%) — especially if it keeps following up with additional improvements. However, Google’s dominant position of 67% is a high bar to reach, in the short-term. Nevertheless, Bing is doing the right thing, one rung at a time.
The real importance of today’s announcement is that it highlights the growing strategic conflict between Facebook and Google. Today’s announcement follows last-week’s launch of Facebook Groups, which was a pre-emptive strike against an upcoming Google initiative in the social space. (For background, see my blog post last week about Facebook Groups. )
There is a large and growing fault line in the landscape of the modern Web. While Microsoft, Yahoo and Google duke it out in the search engine sector, there is a battle for the future of the Web, and it is not about search engines, but about the Social Web. The competition is between the new and the old, between Facebook as the early leader in the Social Web, and Google as the dominant player in the Content Web. Everyone else, such as Microsoft, Yahoo, Twitter, plus many small startups in the social sector, will play a secondary role — and will start lining up on side or the other.
Although Facebook is strong in this new sector, it is still relatively small, in terms of resources and staff. The sector itself is small, in terms of revenues. Also, even though Google has made mistakes in the social arena in the past (Buzz, Wave, Orkut, Jaiku and Dodgeball), the company has tremendous resources that it can marshal for a new assault on this market territory. Google has made recent acquisitions, recruited new talent and repositioned existing management, for an initiative that, rumor has it, will be unveiled over the next few weeks or months.
Therefore, for Facebook to hold on to its leadership position in the face of the challenge from Google, it needs to make more alliances such as the one with Microsoft. I expect to see more such announcements and possible acquisitions over the coming months. One interesting question is: Which player has a large enough checkbook to buy Twitter, in light of this “Worlds in Collision” dynamic? Or, will Twitter continue to try to grow and stand up on its own, in the race to reach one billion active users?
While the major players do hypothetical calculations regarding this one large prize, there are smaller pieces to enlist and/or acquire, such as location-based services (Foursquare, Gowall, and Booyah), question/answer services (Quora, Hunch, StackExchange), social gaming (Zynga, Playdom, Crowdstar), virtual goods and mobile payments. It promises to be an interesting ride for all.
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