In the Google vs. Facebook discussion, I think people seem to forget a tiny detail:

Google has some products that are market leaders with heavy usage, eg:

* Search

* GMail

* Youtube

* Android

* Chrome

* Maps

* Docs

Its just that Google is unable to monetize many of them.

However, Facebook has only Facebook, Instagram and Whatsapp.

1) Instagram _is_ what Facebook was 10 years ago. Its not a new product. They just bought it because Instagram was becoming _The Social Network_.

2) Instagram and Whatsapp were bought acquired.

What I'm trying to say is that Google is unable to monetize many of its products. And if online advertisement gets doomed, it would have to look for other business models.

But it _does_ have a very diverse set of products that people love.

What does Facebook have? and when was the last time they created something people loved?

From that comparison, it is quite apparent that while Facebook may have a stronghold on your hours per day, and have richer personal data on the individual, Google has access to a far more diverse dataset from its users.

For example, there have been talk about how search has shown promise in early cancer diagnosis [0].

So as you say, while Google are currently only monetizing their ad platform at the moment, they are far better positioned than Facebook to quickly find new revenue streams, should they need to.

Additionally, if you should believe that AI is going to be a huge area for monetization in the near future, then Google are very much well positioned to be a leader there - it is no coincidence that a "search" company is able to make self-driving cars or Alpha Go...

[0] http://www.nytimes.com/2016/06/08/technology/online-searches...

They also neglect intent. When I search for something, I want it, at that moment. When I see an ad on my facebook page, it's trying to guess what I want at that moment, but I'm actually doing something else and the ad is simply trying to distract me and convince me I need something at that moment.

Yep. Facebook has just as many visitors as Google and makes much less.

Sure they know what age I am, that I'm college educated, live in NY, like anime and startups. But would they know I'm suffering from hemorrhoids and need help? That I'm considering an abortion and need a clinic recommendation? I sure as heck ain't broadcasting that in my timeline.

Shit. Hope you get that stuff sorted out, probably deal with the hemorrhoids first.

(aside since I assume that was an example! :) [Edit: and in case you aren't, hope you do get that sorted out]

Google has better potential for growth, but it still needs to prove it can heavily monetize anything outside of search. That is, find a new business that is competitive with their search revenue, until it's too late.

Facebook's first success was monetizing mobile (which Google should have been able to do better than it currently does). Its potential to find new sources of revenue is good but not as great as Google's.

Only time will tell if either or both will succeed next. Since potential isn't as good as realized potential of course.

People spend a ton of time on Facebook.

Of those products you name, GMail, Youtube, Chrome, Maps and Docs are near-commodity products. These are just basic services for which open-source versions exist, and every engineering team of about 50 people could easily recreate them given today's state of technology. This also holds for Facebook.

The real struggle lies not in the technology, but in the network-effect and branding.

What do you think the thousands of engineers that work on these products are doing? You realise that there's a lot more to these products than the web interface?

They work on making it scale. But that is an activity that pays for itself.

Indeed. I use gmail, gmaps, and gdocs because they're good tools. If not for my still-free Google Apps account, I'd pay for just gmail and docs even if there are free alternatives.

>What do you think the thousands of engineers that work on these products are doing?

Not much. Usually worsening them...

Yes, Google is mostly an advertisement company relying on search.

In 2015, Google's revenue amounted to 74.54 billion US dollars. It was largely made up (90%) by advertising revenue, which amounted to 67.39 billion US dollars in 2015. [1]

A rough estimation is that 80% of Google's advertisement revenue comes from search. [2]

1: http://www.statista.com/statistics/266206/googles-annual-glo...

2: http://www.statista.com/statistics/343191/googles-digital-ad...

Android and GCP seem not to contribute enough yet.

Selling Android isn't generating revenue, but that makes sense because Android is adware and also a platform. Google doesn't want to sell it directly and harm those revenue streams.

Many (most?) people primarily search from their phones now, so I imagine Android generates a lot of ad revenue. Android is even more important because most people don't know how to block ads on it, whereas desktop ad blocking has become mainstream.

Google Toolbar, Chrome and Android: all of these were created with the goal to increase the number of searches. If Android wouldn't have been created, Apple could ask as much revenue sharing from Google as they want and slowly destroy Google in the process.

Oracle seems to disagree:

http://www.businessinsider.com/oracle-google-generated-42-bi...

But while we can't take Oracle's statements at face value, how do you know Android isn't making Google money? It's also likely that without Android, Google's revenues would've declined a lot faster.

Even if say people would've still used Adsense/Admob on iOS or other mobile operating systems, look what Apple did - it allowed adblockers on its platform. Google doesn't allow them and Chrome, which is the dominant browser on Android doesn't support extensions, so no adblock there either.

there are adblocks on google play store.

its just that the mobile chrome doesnt support extensions. google isnt stopping anyone from a local "adblock" proxy or editing the phones host file.

How exactly is Facebook better positioned? CTR for Facebook ads is abysmal compared to that on Google search.

People spend most of their time on Facebook products, especially on mobile - for example, in HK's public transits, it is not uncommon if you find over 70% of people near you are actually using Facebook products at the same time (FB/WhatsApp/Instagram)

I reckon if Facebook would add search to WhatsApp, it could hurt Google's ad income quite a bit.

Right now you have to close WhatsApp to start a search. And then come back when you have found the answer.

There is potential for Facebook for smooth search integration in its products and take bigger piece of the search-ad pie.

Start a search and use whose API? Google has tens of thousands of people working on a top 5 difficulty problem with a 20 year head start. Facebook would need at least 10 years of trial and error just to make a dent.

Now on Tap does that for pretty much any application though, if you've got Marshmallow.

That's the thing though, how many android phones are on mashmellow? A very small percentage.

Facebook has infinitely better targeting and signal about their users.

Are banners/sponsored posts more efficient than purchased keyword? I would have thought someone searching on google wants to click, that's why he is on google for. Someone checking what their friends are up to on facebook is merely annoyed by unrelated content.

I don't see FB/G as direct competitors.

Google is good to sell products that are actively searched for.

People go to Facebook when they are bored. Facebook is great to sell products to people who are bored (various forms of entertainment products and services). It's also good to sell stuff people aren't actively searching.

So, depending on the product/service you are offering you can pick a different channel to reach your customers. There's no one-size-fits-all solution.

Sometimes I click on those purchased keywords by mistake. Then get presented with the inevitable "could not connect to server" message because they use tracking servers which are blocked at the router level.

Main problem with advertising in general is more and more people are learning it's best use is as a signal of what not to buy.

Facebook on the other hand. At least can pretend it's something a friend is recommending. Although that is transparent enough to be even worse.

Google has context. You search for something, chances are you're interested in buying it. Placing an ad in the search page has better ROI for advertisers. At Facebook you can build loyalty which is a different beast altogether.

So is it safe to say that Google is better for acquiring hot leads, while Facebook is better for branding?

Yes - also important to remember that Facebook has Instagram too, which is a nicer (imo) ad format and self selects for more affluent users.

That sounds right.

Along those lines, Amazon is a much more dangerous competitor to AdSense than Facebook is at the moment.

This is reliant on people continuing to use Facebook as their primary social networking tool.

In my environment (Netherlands) I'd say that WhatsApp is now the primary social networking tool for most people. I wonder how that is going to work out for Facebook.

Facebook owns WhatsApp. The question is what they are going to do with it. WhatsApp with end to end encryption seems to not allow for the type of monetization people are talking about here.

That's what I mean: how will they monetize it? They'll probably introduce business / bot accounts that they can monetize, but the encryption makes all sorts of monetization schemes hard - which is what I like about it.

Maybe it's possible to do ad-targeting on the client.

Facebook bought Whatsapp two years ago.

What's done is done. Facebook won't delete your data, once U registered, give your gender/age, you are probably forever screwed, forever becoming a data point that waiting to be targeted.

CTR = click-through rate

For the vast majority of advertising, CTR isn't terribly important.

Facebook has social data. Google knows a whole heck of a lot more than that. Adsense, GMail, Analytics, and hosting fonts for a ton of websites, for example are sources of data that provide a pretty good deal of insight as to who you are and what you are insterested in.

Facebook pixel is becoming more and more common, so they will shortly have the same data plus verified and not inferred data from their social channels.

edit: now that I think of it facebook will be shortly in a position of being able to de-anonimize the internet. imagine selling that ad-space.

Shortly? You're joking right. They've been able to do that for years.

but the pixel isn't that much widespread, many are still on google analytics for tracking

No need for the pixel. Facebook like buttons already proliferate the web. Add to that instant articles, and all links from Facebook itself, and you already have a pretty good model for identifying users even when logged out.

All it takes is a 'like' button. Even if you don't have a facebook account that's enough to track you until you re-install your machine, and even then there are ways to re-connect your profile.

I still don't understand why they backtracked on their plan to become the 'social layer' of the internet. They'd get data on so many more things.

For example, I was working on integrating Facebook in a large media site, and Facebook would've had access to: what users viewed, how long they viewed things, game play usage (high scores and whatnot) and a lot of other information.

My media company uses facebook because it is very easy to target those who would be interested in our product. We've found it is very difficult to keep our ads running. Despite being told that our ads are in compliance with their "20% text rule" they are regularly disabled. In addition, the initial traffic is always much better than after the ad has been running for several weeks. This makes facebook advertising very costly in terms of labor.

I'm not so sure about facebook - historically social media companies just "run out of fashion".

Until they don't. The past is an unreliable predictor of the future[1].

The only people who care about being on a fashionable network are young people, and Facebook solves that problem by buying whatever platform young people are using.

1. https://en.wikipedia.org/wiki/Problem_of_induction

rtruin's argument is an intuitive assumption that the same causal factors for other like companies are also present in Facebook, which sets the frame for discussion -- what factors lead to the diminishment of other networks, and why is Facebook resilient against those factors?

You may be identifying that young people set trends and thus the growth rate of different social networks, and you may be arguing that Facebook is resilient because they can buy out companies. But so can Microsoft, Google, Apple, MySpace, or Yahoo. That power is not unique.

One might also say that young people who join some social network like the peculiarities of that network, and so it behooves the parent company to keep that acquisition fairly independent in brand and experience. That means the existing strength of your platform might be a non-factor to the future success of WhatsApp or Instagram.

Which is why they keep buying the latest cool

> Google is mostly an advertisement company heavily relying on their search business.

You're right that google is an advertisement company (87% of their revenue comes from their ad network), but I don't think that's entirely from search alone. Google's 3rd party adsense program is absolutely massive. This includes things like youtube ads, as well as ads on other 3rd party websites. Pick a random website with ads, 9 times out of 10, it will be an adsense (google) affiliated website.

It saddens me that so many smart people work for IT companies like Google and Facebook, while they could make a real difference doing medical or fundamental physics research.

Google and Facebook provide tools to help people implement their dreams. For example, our nonprofit heavily relies on Google's services (email, drive, sheets)for everything. In fact, sheets doubles as a database that can be used for all sorts of functionalities without needing to learn how to code. My point is that tools that help other companies in their journey to innovate can make a real difference. I realized this only when we were in Nigeria setting up the entire program. I am much less convinced bout Facebook of course but I imagine it helps new businesses with an avenue to get a lot of early revenue. Substitutes, at least for Google products for me seem much less functional in comparison and would probably require an equal # of engineers.

I have no stock in Google or Facebook and don't benefit by promoting either in any way. I just genuinely appreciate what Google's tools has allowed us to do (linked spreadsheets, email, docs, Android, Chromebook, drive and search of course!). I don't care much for fb but I imagine there are businesses that wouldn't survive w/o it and whatsapp is amazing at bringing ppl closer.

> I just genuinely appreciate what Google's tools has allowed us to do (linked spreadsheets, email, docs, Android, Chromebook, drive and search of course!) [...] whatsapp is amazing at bringing ppl closer.

But Google and Facebook are not the only companies in town that provide these products. They just invest insane amounts of money (and thus human resources) to be marginally better than everybody else. That is the saddening part of it.

>But Google and Facebook are not the only companies in town that provide these products

Your argument falls apart there because they wouldn't be the only companies in town doing "medical or fundamental physics research" either.

It is blind luck that the industries and/or execution by Fb & Google allow them to print money - I don't think you can expect the same successes had they started off as medical or physics startups.

Incidentally, Alphabet is diversifying into medical research with Calico, and I hope it will turn out to be more than a billionaire's way of coping with their mortality.

Google probably makes quite a difference to medical research/treatment through its search facilities. Also this stuff http://www.forbes.com/sites/leoking/2015/08/24/google-sergey...

So instead of doing medical research yourself, you do IT work for a big company, so that its money can buy medical research?

In Google's case their actual product helps with research aside from the money.

why, would you prefer there not to be a search engine that can find (almost) anything you need in less than a second for (almost) no cost to you and then takes the money it earns from you and pours it into major projects with no promise of revenue?

Comments like these seem to suggest that Google or Facebook are the worst and one spends their time better somewhere other than IT. I really just don't see it.

Because Google and Facebook waste too many resources on keeping their market share.

For instance, if Google search took 2 seconds per search instead of 100ms, they would lose their market share. But that difference in performance is what is keeping 95% of their highly educated workforce busy.

It is just a worthless arms race, and I hope that people start to realize this.

To quote Jeff Hammerbacher, "The best minds of my generation are thinking about how to make people click ads."

Facebook (the website/app) isn't that popular anymore. What's still going strong are FB chat, WhatsApp and Instagram.

...and what happens to advertising budgets in a downturn? People who would buy google stock now would be very brave or not believe we are close if not past peak of the stock market. Though google's ad revenues are probably more resilient than traditional advertising companies. I would assume a lot of their clients rely on google traffic to survive.

I am not so sure that Facebook is in a better position. Aren't most of their revenue also primarily tied to advertising?

If you own Facebook Shares, Please add a disclaimer.

>Google is an advertisement company.

FTFY

From what I've read, about 96% of google's revenue comes from advertising. So they are kind of marginally diversified. Some cash comes in from Google Apps I suppose.

Goggle has some income from cloud business, but yes, it is an ad company in the first place.