Original Article http://www.webguild.org/2009/03/why-facebook-could-control-googles-future.php
RBC analyst Ross Sandler predicts in a new report that Facebook could surpass Google in terms of unique worldwide visitors to their websites by late 2011 or early 2012 – I buy that, but here is what really got me.
Facebook now accounts for 19% of Google ’s search traffic and it is “growing at 188% annually”. That means Google’s marketshare gains over the other search engines eg. Yahoo and MSN have been blostered by Facebook traffic and not necessarily by Google taking away traffic from the other search engines or more users visiting Google directly.
This is serious stuff – the largest search engine is dependent on an unprofitable social networking site for 19% of its traffic? Wow! and that is free traffic. What if Facebook decides it wants to get paid for the traffic. What would that be worth to Google?
In fact Google is paying Myspace US$1 billion over three years for low quality traffic and I would guess Myspace contributes less that 5 percent of Google’s traffic. Google also purchased a 5 percent stake in AOL for US$1 billion in a traffic and ad distribution deal. I would guess AOL is contributing about 14% of Google’s traffic and getting a fat cut of the Adsense money.
Microsoft boss Steve Ballmer must be scratching his head in confusion – his company poured money into Facebook to counter Google and in turn Facebook is blostering Google.
I believe the downside for Google is very high on all levels as well as for users and investors. If Google ends up paying Facebook for traffic (which could be hefty) the stock (GOOG) will be hammered. On the other hand Google could taking more control over its future by exploring new revenue streams such as selling the vast amounts of data that it has on users to credit agencies, government and state agencies, law enforcement and such entities that use such data for their business.
