The upcoming war on Google (GOOG) from Microsoft (MSFT) & Facebook

By: ispeculatornew
Date posted: 07.12.2010 (4:00 am) | Write a Comment  (10 Comments)

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To start off, no there are not a stock pick today. For the first time in a little while, no trades were closed this week so exceptionally we will remain with our current 5 long & 5 short positions.

How ironic isn’t it? Google has been dominating search for years now and up until 2 years ago, there seemed to be no one with the capabilities to even put up a fight. But things have changed quickly and much of it is thanks to Microsoft (MSFT). The company based in Seattle has put a major effort into revamping MSN search into Bing, a product that is arguably almost as good as Google in most regards and better in a few others. Then came the deal with Yahoo which has helped Microsoft take Bing to the top of the contenders list. All of this was funded by Microsoft’s very deep pockets and while the battle is far from over, Google has to be worried to a certain extent.

A new wave is coming

We’ve known for years that the social web has been an emerging area and one that could perhaps be part of Google’s downfall. As much as I like Google, I’m not a fan of “Buzz” and don’t see how it will be able to compete with Facebook. But as bad as struggling to compete with Twitter and Facebook has been, it was about expansion for Google. The next wave of attacks will be on Google’s home turf; Search. It’s not clear that Google will be able to dominate search as much as it has been able to in the past years because of two major challengers.

1-Microsoft’s Bing

It is not new, Microsoft has been trying to compete in “Search” for a decade it seems. But the recent efforts seem to have been showing some results as Microsoft attacks from every possible angle to gain market share. First, the most important part was getting a solid product. Microsoft hired and spent money on R&D and has come up with a product that is at least comparable to Google, something no one else had been able to pull off. They have even caught Google off guard with a few features and forced Google to play catch up, which used to be the other way around.

Of course, once the product is live, two main steps are left:

1-Improve the product: Bing has continued to add new features and improve search results. Just days ago, it added ways to listen to music, view tv shows without leaving the ssearch engine, something that Google does not currently provide.

2-Gain users: This is the difficult task. Microsoft has been putting tons of money trying to gain users and these are the main methods:

-Yahoo alliance: The major alliance with Yahoo has helped Bing gain queries, a bigger name and much more, it has been a major part of the effort
-Advertisements: They have spent millions advertising in magazines, newspapers, tv shows, etc
-Social media: Both by paying and through viral efforts, Microsoft has been passing the word about Bing
-Mobile web: Microsoft secured being one of the pre-installed search engines for the Iphone. Will it soon be the default choice?
-Other mobile efforts: Microsoft has worked hard on partnering with top apps on Itunes to gain visibility

Results

Microsoft is not yet Google’s equal and will likely struggle to do so before many many years. But it has became what is probably the biggest threat and continues to gain market share month after month. It is a very slow process because getting users to switch will always prove very tricky. But gaining market share should become easier over time if the search engine continues to return solid results.

2-Facebook’s upcoming search engine

What? Yes, you read correctly. There are many signs that Facebook is trying to become a player in search. Until recently, searching on Facebook only returned “People”. But blended in are webpages that were recommended by users. Apart from Google, Facebook likely has the most data and most knowledge about internet users around the world. They are free to discuss their interests, name and communicate with friends and family, post photos and videos, etc.

How is Facebook gaining knowledge of the web though?

The most recent effort for Facebook to gain knowledge is through the spreading of Facebook “Like” button. When Facebook users (virtually every internet user it seems) browse the web and find something they like, they can let their friends know about it by clicking a simple button. Of course,by doing so, they let Facebook know as well. Combined with all of the users, that helps Facebook gain knowledge of what users are finding across the internet.

Not a threat yet

Right now, Facebook is not really even advertising its search possibilities and many popular search terms do not even bring any results. Needless to say it is far from anything Google or even Bing currently offers. It is also unclear how Facebook will be able to gain knowledge of pages that do not have the “Like” button. The vast vast majority does not currently have such a button so the chances that Facebook will gain knowledge or that many users will post it to their profile are very small.

Do not underestimate Facebook or Microsoft

That being said. I don’t think anyone would be foolish enough to underestimate either Facebook or Google. They both have significant resources that could take them in almost any area and both seem to be putting efforts into search right now. Microsoft counts on huge cash reserves and a steady cash flow backed by the top software applications available (mostly Windows & Office) while Facebook is the top social network and could become the biggest tech IPO since Google over a decade ago.

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10 Comments

  1. Comment by The Financial Blogger — July 12, 2010 @ 7:53 am

    I’ve read that Google will be coming with another site go compete with Facebook called “Google Me”. Have you heard of it?

  2. Comment by IS — July 12, 2010 @ 8:31 am

    @TFB – yes and honestly I don’t have much of an opinion yet as it’s far from Google’s first attempt at the social web and they have failed miserably so far. Will they eventually find a way? Probably but who knows about this specific attemps?

  3. Comment by The Financial Blogger — July 12, 2010 @ 11:23 am

    They might kidnap the guy from Facebook and force him to work for Google to create Googlebook !

  4. Comment by Craig — July 12, 2010 @ 6:11 pm

    I am still sceptic about Facebook going into the world of search. I mean, what can be really better than what exist right now? What can be different anyway?

  5. Comment by The Passive Income Earner — July 12, 2010 @ 8:11 pm

    When I look at the competition and all the innovations in the social and networking space, Intel and Cisco come to mind for investment as they both will provide hardware to these companies.

    I say, let them fight. In boxing, the promoter gets much of the dough!

  6. […] Via intelligentspeculator. net […]

  7. Comment by IS — July 13, 2010 @ 4:28 am

    @TFB – LOL..he is pretty famous now, might get noriced!

    @Craig – I think the main thing is that Google has always been good at “guessing” what websites we like and use. Facebook KNOWS which ones we like and which ones we forward to friends

    @The Passive Income Earner – Very well said yes, would need to write about that eventually

  8. Comment by Sam — July 18, 2010 @ 4:04 pm

    I have been so used to using Google for searching that I now refuse to use any other search engines just because I feel that it’s not too much help. LOL.

    But do you think that Facebook and Bing can even be close to what Google now offers?

  9. […] Speculator presents The upcoming war on Google (GOOG) from Microsoft (MSFT) & Facebook posted at Intelligent Speculator. He says: Microsoft’s BING with Yahoo as an alliance, and […]

  10. […] been gaining market share, which it has been doing even more successfully in the gaming business. Microsoft & Facebook are doing their best to compete with Google and become credible alternatives to searching the world wide […]

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