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Can Facebook Inc (FB)’s Graph Search Compete With Google Inc (GOOG)?

Back in April, I wrote an article stating that Facebook Inc (NASDAQ:FB)‘s replacement Android launcher, Facebook Home, was a possible threat to Google Inc (NASDAQ:GOOG)‘s dominance of smartphones and tablets. However, Facebook Inc (NASDAQ:FB)’s plan never panned out, due to its clumsy, overbearing design of the launcher and poor reviews. The premiere “Facebook phone,” the HTC First, which was sold with Home pre-installed, also bombed, and was pulled off the market after only a month. In other words, Facebook woefully overestimated its own clout in the market.

Facebook Inc. (FB)

However, the failure of Facebook Inc (NASDAQ:FB) Home hasn’t deterred CEO Mark Zuckerberg’s plans to take on Google Inc (NASDAQ:GOOG). He recently announced a broader rollout of its Graph Search engine, which was introduced earlier this year, across the United States. Can Graph Search, which uses Facebook Inc (NASDAQ:FB)’s sprawling network of 1.1 billion users, change the way Internet users search for information, or is it doomed to fizzle out just like Facebook Home?

Liking vs. Googling

Graph Search is a search engine designed to search for friends, interests and places sorted by a user’s Facebook connections. For example, users can search for “Friends who like horror movies” or “Restaurants in Seattle my friends have been to.” The idea is to make their friends’ opinions the center of the searchable universe. It could replace other services such as recommendations site Yelp and Google’s map-integrated “Places” function with more personalized search results.

Facebook wants to show that searching the Internet via sites, links, posts and interests that their friends have “liked” is more effective than searching the Internet in the traditional top-down manner used by Google Inc (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO) and Microsoft Corporation (NASDAQ:MSFT) Bing.

Good in theory, but lacking in foresight

Although Graph Search sounds like a good idea, since Internet users are constantly “liking” and sharing content, I doubt that it will ever replace Google Inc (NASDAQ:GOOG).

The first problem is the lack of data. Although each Facebook user is a treasure trove of information, it pales in comparison to the amount of data that can be swept up in a single Google search. Graph Search results will also vary greatly depending on the number of social connections a user has. Graph Search might yield decent results for an average Facebook Inc (NASDAQ:FB) user, who has 141.5 friends, but it will be less impressive for users with less, and too broad for users with more. Graph Search is a walled garden, compared to Google’s wide open search frontier – and the latter is still a more attractive option to most Internet users.

The second problem is the conflict between Graph Search and its advertiser base. Companies advertising on Facebook often convince users to “like” their pages for special discounts, which leads to a lot of accumulated “dirty likes” which don’t properly reflect personal interests. It’s difficult to ascertain how many of Facebook’s 4.5 billion daily likes are “clean” or “dirty,” which can lead to misleading, convoluted search results.

Those two problems lead straight to Graph Search’s third problem – Facebook needs to grow its database of accumulated user information even larger if it hopes to succeed. Facebook Inc (NASDAQ:FB) users had just gotten used to the idea that their data was being farmed by advertisers, when the PRISM debacle revealed that their life stories were an open book for the U.S. government to peruse. This means that Facebook’s expectation of users to actively power its searchable database could grind to a halt, whereas Google Inc (NASDAQ:GOOG)’s passive combing of the Internet will continue unopposed.

In my opinion, Facebook Graph could challenge Yelp, but it will never threaten Google Inc (NASDAQ:GOOG). However, Facebook Graph will be a valuable tool for advertisers, who can now precisely target specific demographics with their ads, which could be its saving grace.