By Omar Akhtar, reporter
Consensus seems to be that the brewing battle between Facebook (FB) and Google (GOOG) is finally here, at least as far as core products are concerned. In addition to Web search, Google now has social site Google+. Soon, Facebook’s graph search will compliment its social network. Some think it even a sign of Facebook’s decline. As Fortune chronicled in its 2011 cover story, this fight has a long preamble. Here’s what the analysts are saying about it:
Yelp and other review sites are in trouble
“As Graph Search allows FB users to see local recommendations directly from friends, this could pressure Yelp usage over time. Note that restaurants and shopping make up 60% of Yelp reviews. “ -Oppenheimer and Co.
“This will inevitably compete with vertical websites that aggregate product reviews, restaurant and entertainment recommendations, travel experiences, and so on. As such, Facebook presents an increasing threat to companies such as Yelp, TripAdvisor and LinkedIn, which have built successful business models monetizing relevant user-generated content.”—Robert W. Baird and Co.
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Practical applications
“The presentation suggested it could be applied as a recruiting tool: for instance, a user could search for friends of friends at NASA. It’s also possible to obtain restaurant recommendations: a search within a subset of knowledgeable individuals, like culinary students, is possible with Search Graph.” —Cowen and Company
Not a threat, but complementary to Google
“We view the relationship between Facebook Graph Search and Google as both competitive and complementary. For example, if someone were searching what their next cell phone should be, the user would benefit from finding out what his or her friends like via Graph Search as well as what experts like via Google. We expect Graph Search to cannibalize some Google searches, but also encourage more Google searches in.” —Piper Jaffray
Partnership with Bing
“We believe the inclusion of Bing search results increases the appeal and relevancy of Graph Search, as the user will not be constrained by information within his own Facebook universe. Instead, the user gets a strong search engine for the worldwide web from Microsoft with a powerful search engine for the Facebook universe layered on top. In addition, because Graph Search results are derived from a user’s friends, the user is more likely to trust those search results than ones from Google’s search engine.” —Wedbush Securities
Not about monetization—right now
“Management is singularly focused on building the new service into “something substantial”, so understandably monetization will be on the back burner for now. However, over time, we believe this could be the company’s next billion dollar revenue stream opportunity. “ —Cantor Fitzgerald
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Big revenue opportunity
“However, we see some highly
monetizable category suggestions for Graph Search (restaurants nearby, games),
and it should be easy to incorporate commercial search results via Facebook’s
partnership with Bing. Given Facebook’s large scale, getting users to search on the platform is a significant opportunity; if Facebook can generate just one paid click per user per year, the company could add $500mn in annual revenue.” –BofA Merrill Lynch
Monetization will still be a challenge
“The company’s challenge in search is likely to be a scale issue when it comes to establishing a revenue model. We estimate only around 15%-20% of the 1B daily queries on FB are non-person search, only a fraction of which have commercial intent. So FB’s hope is this technology is going to change user behavior from the current norm, something we rarely see in the space.” –Deutsche Bank
