Facebook Inc (FB) announced updates to the social network’s search functionality today on its website. The brief news release is less than 200 words, but make no bones about it: Facebook Search poses a major threat to Google Inc (GOOG) stock.
The social media giant first launched what it called Graph Search in January 2013. Hailing it as the “third pillar” of the FB experience — the first two being the News Feed and Timeline — it never really earned its name.
At the time, FB CEO Mark Zuckerberg spoke excitedly about how Graph Search differed from typical web searches that GOOG performs. Graph Search, he explained, could answer specific social queries — for example, “friends who live in L.A. and like The Velvet Underground,” would populate just that, and would return different results depending on who searched it.
But despite Zuckerberg’s enthusiasm for them, Facebook’s search efforts simply haven’t yet been met with a passionate embrace.
Potentially Groundbreaking Step in Facebook Search
Working to improve the feature, Facebook has been incorporating feedback from its Graph Search functionality, and the feedback FB received is at the core of the new changes:
“You’ve told us the most important thing is being able to find posts you’ve seen before, and now you can. With a quick search, you can get back to a fun video from your graduation, a news article you’ve been meaning to read, or photos from your friend’s wedding last summer.”
Here’s where the threat to GOOG more clearly emerges. While FB mentions uses the most innocent and purely social thing you could imagine — a friend’s wedding — as a way to use Facebook Search, the road to commercial queries is a short one.
Currently no ads are being served against these queries. But FB is a public company, after all, and if people start using Facebook Search with queries like “plumbers in my city” or “best nearby taco place” or “diamond earrings,” the company would practically be forced to serve ads against those queries. And FB stock could go through the roof if it started building even a 1% or 2% share of the search market.
Of course this ability doesn’t just threaten Google. It has the potential to be an existential threat for companies like Yelp Inc (YELP) and Angie’s List Inc (ANGI). But the three core reasons Facebook Search is a major threat to GOOG stock are as follows:
- Google can’t do it. Its social network, Google+, is a joke, so social results will be far less meaningful from GOOG.
- Less people would use Google if Facebook Search took off.
- With a smaller market share and with advertisers experimenting with FB, Google’s ad revenue would decline.
These days aren’t upon us yet. Facebook just announced the changes this morning after all, and they’re only available on desktop and the Facebook app on the Apple Inc. (AAPL) iPhone. (Google’s Android phones were conspicuously not mentioned as a working platform.)
That said, the threat exists, and GOOG stockholders, myself included, deserve to be conscious of it.
John Divine is assistant editor of InvestorPlace.com. As of this writing, he is long GOOG stock, GOOGL stock and AAPL stock. You can follow him on Twitter at @divinebizkid.