That may not be enough of an advantage to get most users to turn away from Google, but it’s enough to start building momentum behind a Facebook search product. We know that Facebook is interested in doing more with search, as the company unveiled its Graph Search in March 2013. The product isn’t a Google replacement as it stands now, but it does show that Facebook is testing the search waters. Oh, and it’s also leveraging Bing instead of Google Inc (NASDAQ:GOOG) for some search results.
The future of search, or just a test?
Facebook and mobile: friend or foe?
Yet it’s important to note that both Google Inc (NASDAQ:GOOG) and Facebook have what the other wants. If Google’s all-hands-on-deck moment was the emergence of Facebook and social, then Facebook had its own epiphany of a coming threat with mobile early last year. At first, Facebook devoted relatively light resources to its mobile unit, seeing it as an extension of its dominance on the desktop. In early 2012, reports were that just a couple dozen of Facebook’s engineers were working on mobile.
However, the rapid rise of not only mobile, but also competing “complementary” products around Facebook forced the company to do a 180 and make mobile its singular rallying cry. In February of last year, the company announced plans to begin offering sponsored ads on mobile. By summer, sponsored ads on mobile were ubiquitous. By the fourth quarter of the year, mobile was 23% of Facebook’s advertising revenue, up from zero percent at the start of the year.
In April of last year, Facebook Inc (NASDAQ:FB) bought Instagram in a move that was generally panned as a waste of a billion dollars. Instagram had no revenues and merely a dozen employees at the time, and it was purchased for what amounted to a billion dollars! What Facebook saw was complementary services slipping away from it. While the company has become the central hub for uploading and sharing photos on PCs, it had lost its edge in mobile. In future months, Facebook’s fears around photos were realized in areas such as messaging, where WhatsApp shot up the download charts.
The implication is that while Facebook is a central hub for often-used actions such as messaging and images on the desktop, on mobile these actions were fragmenting. These are actions that not only tie an identity to Facebook but also drive engagement. Users sit on Facebook browsing images and messaging friends and family. To lose functions like these is to remove the legs from the throne with which Facebook rules as the next great Internet company.
Facebook Inc (NASDAQ:FB) Fights Back
Facebook Inc (NASDAQ:FB) began fighting back early last year by not only buying Instagram but also by shifting hundreds of software engineers to work on its mobile efforts. The first step was a complete rebuild last August of its mobile application, which focused on speeding up Facebook so actions like uploading mobile photos was easier.
Yet the key idea remained. Facebook on mobile was just one icon among many, and services surrounding it threatened to take away many of its key features. Building a better app could help Facebook in the short run, but it was more of a tactical maneuver. The long-term strategy that could eliminate this threat would be owning the mobile experience. That way, a phone’s photos could link directly to a Facebook account. Where a default messaging tab is displayed right now could sit Facebook’s own messenger. Contacts could be synced with existing friends in a manner that Facebook controlled.
