There's a good chance that if you have a smartphone, you have the Facebook (NASDAQ:FB) app installed on it. The social network plans to take advantage of its position as the most popular app in the world with a new update to its notifications tab. Facebook is also expected to release a new app called Notifications later this year that will provide push notifications to users with news headlines about specific topics.
The new update, which is rolling out to both iOS and Android users in the U.S., will add new items to the notification tab, such as local news and events, weather updates, movie times, and nearby restaurants. That puts it in direct competition with Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Now, which provides similar information in the Google app and across Android devices.
Even more engagement
Facebook users already spend a lot of time in the Facebook app, but the new notification additions could make it even more engaging. The notification tab is one of the first things users check when they log into Facebook. It has information that's already very personalized, including event invitations, comments on your photos, and friends' birthdays.
With the new notifications, Facebook is taking the News Feed concept and making it even more personalized while helping users discover items that might not show up on their traditional News Feed. Since users are already checking their notifications tab multiple times per day, the additions should help increase engagement on the platform and stop users from searching for entertainment and information on other apps.
That's the real threat to Google. If Facebook can serve up news based on a user's interests and location, there's little need for users to go to Google for more information. Additionally, Facebook's revamped search engine will enable users to search for more articles and opinions within Facebook, with results personalized for each user.
Google updated Android this summer with Google Now on Tap, which pops up relevant information from Google Now in other apps. If you're reading an article about how the Steve Jobs movie flopped at the box office, for example, Google Now might show up with showtimes, so you can check out how bad, good, or inaccurate the movie really is. That gives Google Now more of a presence on Android devices, but Facebook is less intrusive and is available across operating systems.
Another avenue for advertisements
It's one thing to get users more engaged with the Facebook app. If Facebook can't monetize that engagement, however, then the new feature may be damaging to its financial outlook as it potentially takes away from more valuable areas of the app, such as News Feed.
The new notification section does, of course, hold the potential for monetization. Since it operates similarly to News Feed, Facebook could insert sponsored cards from businesses, but it's unclear if it would convert as well as in News Feed.
Features such as restaurant suggestions, however, are a new opportunity, with local restaurants and businesses paying for top billing. That ad unit may require an increase in Facebook's ad-sales team, but Facebook already has a huge directory of businesses using Pages that could help automate the process. Movie studios or local theaters could push their movies to the top of listings for showtimes, and television networks could do the same for their shows.
Placing promoted businesses at the top of listings is expected among Web users, and it's how Google makes billions of dollars in ad revenue every year.
Setting the stage for the new app
Facebook is reportedly working on a new app called Notifications that will enable users to sign up to be notified on their phones when a favorite publication has breaking news or there's news on a certain topic of interest. The new notification tab doesn't push any more information than before to users' lock screens, but the Notifications app would.
I see such an app working in parallel with the notifications tab, which could include all of the news users received notifications for but haven't read yet. Additionally, users could be pushed back to their notifications tab after viewing an item they received a notification for, increasing engagement on Facebook instead using another app or searching Google for more information.
Ultimately, Facebook wants to take over how you use the Internet on your smartphone. The new notification tab is just a piece of that strategy and could turn into another big moneymaker for Facebook.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.