How Facebook Plans to Kill Google

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Facebook Chief Operating Officer Sheryl Sandberg just told the world how her company plans to disrupt Google (Nasdaq: GOOG  ) .

"We think making the world more personal and social is having a profound impact on the way we relate to people, communities, and institutions around us," Sandberg wrote in a blog post on Tuesday. "In a more connected world, advertisers are social too ... We believe that more personalized social advertising complements the ways that people use Facebook every day -- to discover, share and connect with the people and the world around them."

Practically, this means Facebook is doing more to show ads based on what users and their friends search for, like, and post about.

Why aren't more analysts writing about this? Sandberg may as well be calling Google's search algorithms quaint, relics of a soon-to-be-bygone era of math-driven digital advertising where search engines give way to humans who recommend articles, songs, books, gear, services, friends, and more via Facebook.

Humans, she's saying, are the new Google.

And she has a point
Going by the numbers, the Facebook zeitgeist -- what we like, what we share, which groups we join and post to, etc. -- is extremely interesting to Madison Avenue. The company is on track to generate more than $1 billion in annual revenue and boasts nearly 500 million users worldwide. Private equity data suggest Facebook was valued at close to $11 billion at the beginning of the year.

Microsoft (Nasdaq: MSFT  ) CEO Steve Ballmer, who led Mr. Softy's $240 million investment in the social superstar, must be smiling.

But he isn't the only one who saw this coming.'s (Nasdaq: AMZN  ) Jeff Bezos and Netflix's (Nasdaq: NFLX  ) Reed Hastings designed their services to take the best of what machines and humans have to offer. While each company uses "recommendation engines" fed by users' site browsing data, they also encourage subscribers to connect with friends.

Humans trust other humans more than they do machines. Call it the Terminator effect, with Google as Skynet, the fictional supercomputer that declares war on humanity in the Terminator films.

We've gone social in response, using digital tools to connect as humans. And Facebook, more than Twitter, LinkedIn, or, yes, Google has become our tool of choice. According to gigya, those who use a social service to sign in at a third-party site use their Facebook identity 46% of the time. Google was second at 17%, Twitter third at 14%.

Whether she meant to imply it or not, Sandberg's right: Facebook threatens Google because we're using it to organize our digital lives, and creating a massively relevant advertising platform in the process.

Get social Google, before Facebook and its social networking peers get you.

How should Google get more social? Buy Twitter? Build a new network to replace Orkut and Buzz? Let the debate begin in the comments box below.

Amazon and Netflix are Motley Fool Stock Advisor selections. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call position on Microsoft. Google is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Google and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has a real taste for the virtual.

Read/Post Comments (5) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 09, 2010, at 11:50 AM, Keal7 wrote:

    Obama. There's got to be something against Obama that can be highlighted above :).

  • Report this Comment On July 09, 2010, at 11:52 AM, harterkr wrote:

    I'm not worried about Google's future. Anyone who values any degree of privacy and autonomy is steering clear of FB.

  • Report this Comment On July 09, 2010, at 1:49 PM, TMFKris wrote:

    Facebook sells its members to advertisers. "Hey, Disney, here's 100K people who "liked" a Mickey Mouse page. Send them an ad for Mickey t-shirts." Sandberg uses the pleasant world "social" to describe advertisers. I think that's trying to wrap today's mass/crass commercialism and consumerism in something that died out years ago in many places -- local stores and service providers whose livelihood was to get you what you wanted and needed in a friendly, competent manner.

    Kris -- TMF copyeditor

  • Report this Comment On July 11, 2010, at 10:22 AM, jb757 wrote:

    This story makes no sense. Most prefer a degree of anonymity and by choice which is the beauty and strength of Google. FB is a hip social spam request medium under the premise "Let's get together globalism". That's not to say it has no social value.

  • Report this Comment On July 12, 2010, at 8:44 AM, BioBat wrote:

    Facebook's slowly starting to go the way of MySpace. Facebook is as good as it's going to be right now - the more they go the spam/advertising route, the more it's turning off users - you're already seeing the pace of canceled accounts rapidly increasing and new users seem plateauing. Worst of all for facebook going forward is that new users in their youngest demographic are dropping. I honestly don't think it'll be around in 5 years.

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