Facebook’s an immediate search threat, but not to Google

January 16, 2013

Facebook has made a splashy announcement about search, immediately raising questions about how its new product could affect the king of search: Google.

The answer isn’t exactly the stuff of headlines, according to analysts. Right now, Facebook and Google are making very different products that do very different things. Facebook’s Graph Search gives users a quick way to survey their friends, while Google takes a much more holistic approach.

Facebook’s new search tool does, however, threaten businesses such as Yelp, which provides reviews for businesses and restaurants, but doesn’t have the same valuable social data to mine for its users. Facebook’s strength is in being able to pull recommendations from folks who, by virtue of their friendships, are probably somewhat like-minded.

“The challenge with me for Yelp is that I can find that 30 people who have given [a business] five stars, but they have different tastes from me,” said Jan Dawson, a technology analyst for Ovum.

That point was apparently well-taken by Yelp investors; the company’s stock fell on Facebook’s announcement. That slide continued Wednesday — Yelp was at $20.37 in mid-afternoon trading, down nearly $2 from its price before Facebook’s announcement.

Analysts said that Facebook’s move into search could help extend its online advertising market share down the line.

“We believe users will engage strongly with the product, which should result in better monetization overall as users spend more time on the platform,” said Sterne Agee analyst Arvind Bhatia. He added that he would not be surprised if Facebook — perhaps expanding its partnership with Microsoft and Bing — eventually launched a more expansive search tool.

So while Facebook’s entry into the market certainly signals that it could be planning to challenge Google’s core business, it’s not a war we should expect to see any time soon.

Related stories:

Reasons to use Facebook Graph Search

Facebook’s Graph Search: Another reminder that your big data has big value

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Hayley Tsukayama covers consumer technology for The Washington Post.
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