Facebook's commander in chief announced that the company has a team of developers working on a new search engine. Are you excited? Well, most investors aren't. In fact, the fb stocks fell so sharply yesterday that it trigerred a "circuit breaker" blocking investors from selling short. Why so much pessimism about Facebook shares? First, below, I'am laying out my take on this phenomenon and then run a short thought experiment about some probable mechanics of a new Facebook search engine.
Facebook Stock Woes
Investors in high tech companies have long been watching top players like Google, Apple, Amazon. So, they have a base line, so to speak, which allows them to evaluate Facebook's performance. And clearly, Facebook has not earned investors' trust, not yet.
For one thing, Facebook has not been able to show top innovative performance that we have seen from the mentioned three companies. To innovate, create innovative products and generate innovation is what Google, Apple and Amazon have demonstrated once and once again. Google pioneered Adwords that seemlessly weeved ads into its SERPS and brought in boat loads of money while avoiding to overly annoy users. It has also created world famous public e-mail service G-mail.
Apple, well, do I need to talk about Apple's achievments? It has revolutionized mobile as we know it with its iPhone.
Finally, Amazon showed us how to get your buyer to the hook of free shipping, easy, seamless online shopping and immaculate service quality. I recently shopped for a moisturizer and while I did perform a search on Google to get some information about it, I finally purchased it on Amazon because it already had all my info saved, so I did not need to type my billing address, credit card number, etc. - my ordering process took three clicks - literally. Amazon is already eating into Google's profits slowly as more and more people perform product searches directly on Amazon's website, bypassing the famous one word page.
Can Facebook demonstrate an equally phenomenal innovative behavior? Yes, it has everything ready to go. While you might think that Facebook was fooling around with useless launches like their famous "like" button and various social plugins, I think the contrary. It was collecting data...
The fb Search Engine
Now, it is ready to start using these massive data to build a new, innovative search engine. While Google uses back links as the main ranking factor for its search results, Facebook can use "likes". fb social plugins that allow users to comment, register and log on to many third party websites also provide a great amount of data about users interests. Say, you posted a comment through a fb social plugin on a site devoted to purple widgets. Then, you posted a comment on an article devoted to blue widgets. Then, you liked a few resources devoted to, again, widgets. Once you have enough data on several people in the same interest group, all you need to do is assign a "weight" to each user - basically, how much knowledge and experience each user has about widgets, so that each "like" they shared has a certain level of authority. Then simply line up the sites they liked and were active on in a neat list, say, ten per page?
There are, of course, technicalities that have to be worked out but the general idea is there and that's all there is to it. These "authority" weights together with the number of likes and activity of each user will replace the backlinks that Google uses to rank sites nowadays. And to populate the results for each keyword variation all one needs to do is to use standard on-page search technology - borrowed, maybe, from... hmmm, Bing? A handsome search engine will emerge that many people will find useful - have no doubt about it.
There are many avenues Facebook can pursue in developing its new search engine. For example, It might partner with Bing and add its new secret souce to Bing's search technology, thus, boosting Bing's capability to finally stand against Google. No matter which path Facebook decides to follow, it will be well on the path to making money.