Google vs. Facebook: Who’s Winning?

The battle for billions of dollars has become fiercely competitive with Google and Facebook battling for the hearts and minds of both businesses and consumer. Recently, a Wall Street Journal article. The article highlighted Facebook’s increasing number of users, 600 million, and more importunately a critical performance metric of minutes spent on-line. A recent 2010 report by ComScore revealed that users spend more time on Facebook than any other site including Google. Users spend an average of 14% of their time on-line on Facebook with Google coming in second at 10%. While this is a big development for Facebook what does it mean for Google?

This development should be a concern for Google but in no ways spells doom for the on-line search giant. Market share comes and goes, and this is not a unique event. We all remember the huge splash MySpace made in early 2000 with all the pundits heralding this social networking site. As MySpace grew in popularity, near 100 million unique visits, Rupert Murdoch purchased the on-line site for $580 million dollars. With this acquisition MySpace was supposedly positioned to dominate the on-line experience for businesses and consumers. But MySpace never was able to leverage all the assets of its parent company, News Corp. Digital Media and lost the momentum it had gained in the early 2000s. MySpace shares some of the some problems that Facebook has or is currently experiencing, poor site lay-out (information architecture), inadequate on-line security and lack of content.

The public is fickle and what is a hit today is a failure tomorrow and while Facebook has on-line user numbers far greater than MySpace it still must find a way to keep the attention of its users while producing a revenue model that does not offend its users. The jury is still out on if Facebook’s management can find this balance and not face user abandonment over the next 5 years. Facebook must greatly improve their software code development and overall IT security (even Mark Zuckerberg’s account was hacked) and find other revenue streams that do not bombard their users with endless advertisements. Revenue producing ideas could include partnerships with Smartphone manufacturers, on-line payment processing like PayPal, service provider for travel services and Email and storage.

Google on the other hand continues to build their on-line search brand by providing their customers with even faster results but has expanded its business revenue model to include the hugely successful Google phone (Android), creation of a Linux based operating system called Google Chrome, Google TV and the purchase of AdMobs a leading on-line mobile advertising company. Google is also planning to enter the hospitality business by purchasing ITA Software, a business that provides travel related information to various web sites and search engines such as Yahoo and Bing. The $700 million acquisition is pending regulatory approval. Travel is one of the world’s top “keywords” and with this purchase Google will now be providing content in a major way.

In conclusion Facebook has a long way to go to catch Google and prove that they can sustain their current success. But if their management can develop a long term revenue model; it has a real chance to be a dominate on-line business. And with a 600 million users everyone is looking to see what Mark Zuckerberg and his management team will do next.

David L. Hughes is President & CEO of DL Hughes Consulting a leading Technology and Internet Consulting firm located in Nashville, TN. David has over 25 years experience in Business Development, Public Accounting and Information Technology. David can be reached atdavid@dlhughesconsulting.com