Google and Facebook are similar in many ways because they both work to find ways to profit from their service users. In their own way, they want to take advantage of their respective strengths. Yet, in this task, they show a strategic weakness. What has made them powerful competitors is their weakness. Of the two, Facebook has the largest downside because it does not offer a service in the way that Google does, which means when its core business is potentially unsustainable. In understanding Facebook’s weakness, we have an insight into Google’s weakness.
For Google, the search company, the task is to profit from the traffic through their site. At one level, this comes from advertising, but to a lesser amount than Facebook. Google’s reliance on advertising means they are limited by the traffic, volume, and loyalty. At the root of their success, is the strength of their search engine, which is core to all their services. Yet, by itself, that is not enough profit because they are not capturing much profit from the interactions. In other words, they have volume and even loyalty, but they have not found a way to turn it into profit. By contrast, Facebook offers loyalty, volume, and interactions, but they offer no service beyond hosting other people’s information and their interactions. What each needs is what the other has. Facebook wants to capture the value from the volume that Google possesses while Google wants the loyalty and residual value within each user.
In their own way, their search for revenue beyond advertising is revealing their weakness. To put it simply, they both traffic in users privacy. Although, Facebook’s business model relies upon advertising in its network and relies upon user-generated content, it trades on user privacy. Both companies are seeking to profit from user interactions. For a robust assessment of how Facebook’s business model can become a vicious, and not virtuous circle, in its use of privacy see Alan Patrick’s blog. http://www.broadstuff.com/archives/2214-The-underlying-flaw-in-Facebooks-business-model.html and a related Harvard Business Review blog: http://blogs.hbr.org/cs/2010/05/facebooks_culture_problem_may.html For an assessment of Google’s problems with privacy: http://articles.businessinsider.com/2011-11-02/tech/30349396_1_google-docs-user-data-google-and-microsoft
What the internet allows is a company to exploit user interactions and transitions. Google and Facebook are the best at capturing and monitoring these transitions. They are able to exploit what their users like, whom they interact with, and how they shop and browse. The companies can identify behavioural-based marketing for their users. In the physical world, these interactions were ignored. For the most part, they were ignored because they were so hard to capture. However, the algorithm and behavioural advertising and marketing mean they can be exploited. http://behavioraltargeting.biz/how-behavioral-targeting-changes-the-web/
Facebook’s success relies upon users trusting it with their privacy. The users then generate content. The company’s relies upon behavioural marketing of their privacy, preferences, and transactions. Without users to generate that information, it is not a commercially viable site.
In the end, its weakness is that the public will slowly realize, especially from the behaviour algorithms, that their privacy is under threat and they are the engine of Facebook’s profit. In particular, the users will realize they are not benefitting from this service. Even if users do not turn away from Facebook’s privacy issues, the legislation around behavioural marketing may end up doing the same thing. http://consumercal.blogspot.com/2011/03/privacy-internet-and-new-legislation.html
Google has a similar problem because it is trying to find an alternative service beyond its search engine. As Google also trades in user privacy, tracking, tracing and marketing users, it faces privacy issues. However, it still provides a service, its search engine that does not rely upon privacy. Yet, that underlying strength is also a strategic weakness. One can see this in the search grammar one has to use to find * anything* through their search engine. http://www.howtogeek.com/98698/improve-your-google-search-skills-infographic/
The grammar fits their engine but this is not how the public search nor is it how the web is being structured. Instead, the public want, and they are increasingly turning to, semantic search engines. The future of the web, and most importantly searching, is a semantic based web. What semantic means is natural language and grammar are the search terms and search logic. What supports these are algorithms that allow the words to be searched as part of a pattern or concept *without the user have to designate the logic* which reduces their need to know a search language. Google is aware of this issue and is trying to overcome it.
If Google is to get to the next stage, beyond relying upon advertising, it has to change its search engine to be user-friendly. By that I mean, it has to be intuitive to use in the way that semantic web allows. In many ways, records management is moving in this direction and the search engines need to adapt. On the relationship of search engines and records management, see my article “Do we need bigger buckets or better search engines?: The challenge of unlimited storage and semantic web search for records management”, Records Management Journal, Vol. 20 Iss: 2, pp.172 – 181. http://www.emeraldinsight.com/journals.htm?articleid=1875526 Services such as those provided by Autonomy (an HP company) http://www.autonomy.com/content/News/Releases/2008/1028.en.html seem to be the way that records management, and by inference, those of search engines seem to be heading.
In the end, both Facebook and Google face similar problems about privacy. It appears Google is better placed to adapt. However, it still faces difficulty with regard to its core search industry as it seeks to support its place and expand into other markets.
- Privacy against search engine (comuq.wordpress.com)