Tuesday, April 19, 2011

3 Reasons Why the Facebook Proponents Get Google Wrong

The question of whether Facebook is an imminent threat to Google IMHO is a misnomer in that I see Facebook as a subset of the massive "platform" called Google. Commenting, posting pictures, "Liking" are all activities already carried out on some Google services. For my friend Eben who believes Facebook is a clear and present danger to Google, here's why I think not, at least for the foreseeable future.

Monetization
A company can outperform rivals only if it can establish a difference that it can preserve


Google has a formidable monetizing machine that works for them perfectly. It can be summed up simply in the Akan phrase "Yen kyendi" which roughly translates as let's all share in the booty. Basically Google says look, we'll give you a slice of the cake if you sell our ads to your readers. Other than showing ads next to search results which I hardly see anyway, Google has hundreds of thousands if not millions of sites that sell ads for it. Some of the biggest sites/blogs on the web sell Google ads. The point here is that even when you don't visit Google.com or any Google owned service, chances are they still will make some money from your visit online. And let's not forget how easy they've also made it to place their ads on your site. Blogger- the fifth most visited site on the Internet- actively encourages you to sell Google ads and made it just a matter of clicks to do so. Now do the math.


Diversification
The essence of strategy is choosing to perform activities differently than rivals do.


Again one thing people forget is that Facebook has only one product- well it's Facebook. I never cease getting amazed at how quickly folks like Eben can forget about MySpace, Friendster, Hi5 and other social networks that preceded Facebook. Unless Facebook can find a way to evolve to meet any future trend, only one end awaits it; it will die a slow death like MySpace. Sometime back Facebook promised its users a new, unified inbox that some claimed would be a rival to Gmail. An eternity later and I'm still waiting to test it. Google on the other hand, has Youtube, Blogger, Gmail, Chrome, Chrome OS, Android, Search. Now compare the two.

Strategy
It doesn't take much to develop a Facebook clone. Elgg and Dolphin are two CMSs that anybody can just grab and build a Facebook clone. Of course they'd not attract oodles of people, but this goes to show you that it's easy to imitate Facebook. And any business whose cardinal product can be easily copied is not safe strategically. All Google will need to do to beat Facebook on the latter's own turf is well elucidated by Professor Michael Porter thus "[a] second and far more common type of imitation is straddling. The straddler seeks to match the benefits of a successful position while maintaining its existing position. It grafts new features, services, or technologies onto the activities it already performs." The point here is that it's easy for Google to copy Facebook's competitive advantage than the other way round.

A second and far more common type of imitation is straddling. The straddler seeks to match the benefits of a successful position while maintaining its existing position. It grafts new features, services, or technologies onto the activities it already performs.


Now one might ask OK Luqman, if Facebook can't beat Google, why is Larry Page so obsessed with it? The answer is simple: because if the future of the web is "social", then Google needs to be there, big time. Android, YouTube, Chrome, what do all these have in common? Pat yourself on the back if you said "market disruptors." A careful study of Google's DNA will tell you that whenever Google believes something is the future, then it becomes incumbent upon the company to be there, in a big way.

When they believed video was going to be a vital component of the Internet, they snatched up YouTube. Same with Android. Today what do we see of these two products? Google does not need to win. Google just needs to make sure that no single player has a monopoly in the market.

So yes Page is certainly looking closely at Facebook because if the future is social, then Google will need to be there as well. And if that means directing resources at beating Facebook, then so be it.

I am under no circumstance underestimating Facebook and their numbers. No. What I believe is that the idea that Facebook will imminently beat Google and overnight replace all Google services with theirs thanks to the massive amounts of data they have is far fetched.

With change remaining the only constant however, only time will tell in the very, very long term which of these two companies survives. But for the foreseeable future, Google can and will easily beat Facebook on the latter's own turf.

Edit
I did not want to go into the financial aspect of the argument for the sake of brevity and a cohesive presentation of my argument.

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