When most people think about Facebook, they see it as a social networking platform that's used to communicate with friends, upload photos, and share articles. However, what most people don't realize is that Facebook is expanding in many different directions. And this expansion is happening at such a swift and successful pace that many internet companies - Google included - need to watch out.
The Rise of Google and Facebook
If you were to combine the valuations of Google and Facebook, it's possible that, collectively, they're worth more than a trillion dollars. In fact, some experts estimate that each company could eventually be worth more than a trillion dollars on their own.
With that said, the fact that we're even discussing Facebook alongside Google is something that few could have ever predicted. Sure, Facebook has always been a massive social media brand, but the idea that it's rivaling - and could soon surpass - Google as the ultimate technology company is certainly a riveting story.
Whereas Google is dominant in one single area - search - Facebook is moving successfully in many different directions without compromising its core product. It doesn't take a business expert to understand that success in multiple niches is a better long-term growth strategy than dominance in a single area.
Five Signs that Facebook is Taking Over
Google will be a powerful company for years to come; nobody doubts this fact. However, it's clear that Facebook is better poised for evolving developments in the consumer marketplace. Here are just a few of the signs that experts and investors are looking at when they claim that Facebook is vaulting to the top.
1. Stronger Mobile Strategy
Google is in some serious trouble on the mobile advertising front, which is clearly the future of the industry. "It is struggling to outline a coherent mobile strategy to investors in a mobile era," says Rakesh Sharma of Investopedia, even going so far as to call Google a besieged firm. "This could have serious consequences for the company's bottom line as mobile advertising is posed to overtake digital advertising as soon as 2019."
Sharma is also quick to point out that Google is under fire in Europe, where regulators are challenging its dominance in the search industry. With multiple anti-trust lawsuits in play, Google could possibly be forced to diminish its presence in its second largest revenue market.
Meanwhile, Facebook is thriving with its own mobile strategy. Facebook mobile started out as a glitch app, but has since been refined in a major way. In just a few short years, Facebook's mobile ad revenue has grown from zero percent of the company's ad revenue to a whopping 69 percent.
2. Better Advertising Model
Even if you take mobile out of the equation, Facebook's advertising model is much more stable and promising. Whereas Google AdWords was once an equalizing force for small businesses in their attempt to gain search engine recognition, it's no longer a cost-effective tool. In many competitive industries, the larger players with unlimited budgets are buying up all of the inventory and squeezing out the little guys.
Take the real estate industry as an example. Big brands like Zillow and Trulia are sucking up so much inventory that individual agents and small websites are finding it impossible to grab any space - but Google's loss is Facebook's gain. Realtors and small businesses are utilizing social media tools to tap into the robust Facebook ad marketplace.
It's not just the real estate industry, though. From ecommerce to brick-and-mortar retail, small businesses are becoming increasingly fond of Facebook advertising for two major reasons: (1) It's more cost effective, and (2) It offers better targeting features.
Whereas users are limited in what they can do with AdWords, Facebook has access to millions of data points and makes sophisticated audience targeting surprisingly intuitive. In the years to come, this will turn even more ad spend away from Google.
3. New Independent Search Function
The average person may not realize it, but Facebook is actually coming after Google in the search arena. There's no question that Google is the current king of search, but Facebook is positioning itself to overtake Google and to become the future of search.
Facebook understands that, in order to become a major force in the search industry, it has to do something different. It has to look down the road and to predict what customers will want five, ten, or fifteen years from now. In Mark Zuckerberg's humble opinion, the future of search is rooted in artificial intelligence and something called "Graph Search."
Graph search is designed to answer search queries and questions when the answer isn't clear, fixed, or structured. This includes questions like, "Which bars do my friends in New York City like to visit?"
However, don't expect Facebook to become the new king of search any time soon. Zuckerberg admits this is something that may be more than a decade down the road. "The way that we're thinking about this, there's just so much content that people have shared on Facebook that simply building the infrastructure to index all of it and start ranking it is a multiyear effort, which we're making our way through," he said in 2014.
4. Growth of Facebook Instant Articles
Everyone knows that Facebook is one of the internet's leading traffic referral sources. However, Facebook wants to be more than a referral source. It wants to do something that Google hasn't been able to do - own content. It's currently experimenting with this in the form of Facebook Instant Articles, which was just released on April 12.
While there's much debate over whether this new initiative will work, it's clear that Facebook understands the importance of gaining more ownership and control over ad inventory and content.
5. Focus on User Engagement
While there are a lot of concrete signs that point to Facebook's ability to surpass Google in the years to come, it's the intangibles that Facebook possesses that could be its greatest driving forces. Take user engagement, for example.
"Google is primarily driven by data. It's like an incredibly intelligent piece of string that both guides and follows you throughout your day," says tech journalist Jamie Carter. "Facebook is primarily driven by engagement, by providing spaces where we can spend time engaging with other people and content. Its places are much more defined - its website, its mobile app, Instagram."
In other words, Facebook develops everything with user experience in mind. This makes Facebook products incredibly useful and immersive. While Google also develops quality products, data is the company's heartbeat. Ultimately, this focus on data over engagement could come back to bite the search giant.
Look Out, Google...Facebook is Coming for You
It's inaccurate to say that Google is on the verge of becoming an obsolete tech company. It's less about the fact that Google is slipping and more about the fact that Facebook is moving rapidly to the forefront.
Expect to see many battles waged between these two global tech forces in the years to come. However, if the trends that we're currently experiencing end up holding true, it looks like Facebook will be on top.
Now, wouldn't that be a story: a college student starts a simple social networking website out of his dorm room and grows it into the world's largest and most influential technology corporation.
Maybe the American Dream is alive and well after all.