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As Facebook and Google jockey for dominance of the Web, the social networking titan's $5 billion stock offering will give it a hefty warchest for the ongoing fight, analysts said.

"It gives Facebook the ability to roll out more services," Gartner technology analyst Michael Gartenberg said. "It's going to be harder for companies to compete with Facebook."

Facebook, in its filing for an initial public offering, cited Microsoft and Twitter as competitors but made it clear its chief rival is Google.

"We compete broadly with Google's social networking offerings, including Google+," Facebook said of the social network launched by Google which has attracted 90 million users to Facebook's more than 800 million.

"Some of our current and potential competitors have significantly greater resources and better competitive positions in certain markets than we do," Facebook said.

At first glance, Google would appear to have the upper hand.

Google sites, which include the popular YouTube in addition to the eponymous search engine, attracted 1.09 billion unique visitors in December, according to online tracking firm comScore.

Facebook saw 794.3 million unique visitors in December.

But users spent more time on Facebook -- a key metric for advertisers.

Visitors to Facebook spent an average of 377.3 minutes on the site in December compared to 207.2 minutes on Google sites.

Google, which launched six years before Facebook, is also flush with cash.

Facebook, opening its books for the first time in the filing with the US Securities and Exchange Commission, said it had net income last year of $668 million and revenue of $3.7 billion.

Google posted a net profit of $2.71 billion last quarter alone on revenue of $10.58 billion.

But Facebook may have more upside.

"What Facebook's management would like us to believe is that Facebook's growth potential is much greater than Google's," said Virginie Lazes of investment bank Bryan, Garnier & Co.

"Google is a cash machine but what more can they do in terms of growth?" Lazes asked. "Google's growth is a maximum of around 15 percent a year."

Facebook's revenue meanwhile went from $777 million in 2009 to $1.97 billion in 2010 to last year's $3.7 billion.

"That's what the market will try to put a value on, this future growth potential," Lazes said.

The battle between Facebook and Google comes down to a contest for eyeballs and online advertising dollars.

Google is the dominant player in online advertising with a 44.9 percent share of US online ad revenue last year to Facebook's 6.4 percent, according to eMarketer.

Most of Google's revenue comes from search advertising while Facebook is the top player in the rapidly growing display advertising space.

Facebook's share of total US display advertising revenue was 16.3 percent last year to Google's 12.3 percent and Yahoo!'s 12.5 percent, eMarketer said.

"What's not to 'like' about the Facebook IPO?" asked Kathleen Smith of IPO investment adviser Renaissance Capital. "The social networking king is an advertiser's dream, accessing the intimate social interactions of one in every 10 people in the world."

Gartenberg said that because Facebook has become such a dominant force in social networking it may be better positioned than Google in the long run.

Social networking is not a "passing fad," he said. "It also seems to be pretty profitable.

"Facebook is the dominant player here and it's become dominant in such a relatively short period of time," he said. "To the point where we talk about companies like Google being the underdog."

Google, however, "is not going to stand idly by and allow Facebook to become the center of gravity of the Web," Gartenberg said.

"The only type of company that could mount a challenge to Facebook is a company of the size and scale and with the resources of a Google," he said. "That makes for what could be a very interesting year going forward."

Lou Kerner, social media analyst at secondshares.com, said the struggle between Facebook and Google is "about how people discover the Web."

"We've been used to periods of one king: it was Yahoo!, then it was Google," Kerner said. "Now we're entering a period of two kings of the net.

"Google is not going away."

Continued here:
Facebook stocks up for Google fight

If you use familiar search tools such as Yelp or Angie's List to help choose, say, a great place for Sunday brunch or a trustworthy contractor, maybe you've wondered: Sure, lots of people recommend it, but how do I know I can trust them?

A new Philadelphia company, Cliqsearch, aims to solve that problem in a novel way, with software that links you to recommendations from people you're especially likely to trust: friends, and friends of your friends, who have mentioned a business on social networks.

The intersection of social media and commerce is huge news at the moment, thanks to the blockbuster $5 billion initial public offering announced Wednesday by Facebook. Cliqsearch is at the opposite end of the spectrum, with about $1 million in angel funding, a staff of seven, and a business plan that just this week began drawing revenue.

Cofounder and chief executive officer Alex "Pooyan" Khorram, 37, has already impressed some knowledgeable outsiders, such as Munir Mandviwalla, chair of the management information systems department at Temple University's Fox School of Business.

"People have been looking for the next thing in search for a long time," Mandviwalla said in an interview. "Cliq has added a new dimension to search."

Cliqsearch - yes, the name is a double-barreled pun on clicks and cliques - is designed to address a growing problem on the Internet that affects its value as a search tool for goods or services.

Some companies have been shown to be paying for shills willing to post positive reviews on their products - a phenomenon called "opinion spam" that threatens to devalue the whole concept of "asking the crowd" for recommendations.

Even trusted resources such as Angie's List and Consumers Checkbook provide only anonymous information, leaving them at similar risk. And, as many people have learned from reading movie reviews on Rotten Tomatoes or hotel critiques on TripAdvisor, one person's poison may be another's cup of tea.

Those problems, coupled with the explosive growth of social media, provided the germ of Khorram's idea.

With websites such as Facebook, Twitter, and Foursquare, consumers can easily see if friends or associates have mentioned a business. They can even post questions such as: "Can somebody recommend a plumber?"

But any individual's network, by definition, is fairly small. So Khorram wondered: What if there were an intermediate point between "crowdsourced," totally anonymous information and specific reports from a person's own circle?

The result is a search tool available in beta form since last month at www. cliqsearch.com, beneath the slogan: "Because reviews from complete strangers are not enough."

Cliqsearch makes use of the open architecture of social-media sites. If you log in with your Facebook account and enter "Sunday brunch in Philly," you won't see what the whole world says, nor only what your friends and Twitter connections recommend. You'll see something in between: Facebook "likes" and other kinds of mentions from your friends and from their friends, too.

Khorram says an active Facebooker probably averages more than 200 friends. Even allowing for overlap, he says, your friends-of-friends universe can easily top 15,000 or 20,000 people - a sizable data set of people that you can probably trust and that have a better-than-random chance of sharing your taste.

That's not all Cliqsearch offers. It's also building what Khorram calls "the next-generation Yellow Pages": So far, it has created more than a million Web pages for businesses mentioned on social-media sites.

Companies can "claim their page" for free and correct or update information, Khorram says. But for monthly fees starting at $10, they can do more, such as post pitches: "You're a friend of Alex's? Buy one, get one free today."

Khorram's cofounder and largest angel investor, Barclay Knapp, says Cliqsearch marries two of the Internet's all-time killer applications: search and social networking.

"It really brings the two powerhouses of the last decade and makes each more valuable," says Knapp, a "serial entrepreneur" whose resumé includes cofounding Cellular One in 1983.

Temple's Mandviwalla, who has examined hundreds of ideas and business plans over the years, says the friends-of-friends network holds great potential - for research as well as for search.

"In the last decade of looking at all kinds of things," he says, "this is the one that stands out."

Contact columnist Jeff Gelles

at 215-854-2776 or jgelles@phillynews.com.

Read more:
Jeff Gelles: Marrying search and social networking to enhance commerce

Facebook took its first steps toward going public this week, and observers think its valuation might be as much as $100 billion. Mark Zuckerberg, its founder, owns 28 percent of the company, so that would instantly making him one of the 10 or 15 richest individuals in America. In this essay from October, 2010, I considered how much credit Zuckerberg deserves for social networking phenomenon that has led to his incredible success.

Facebook founder Mark Zuckerberg. (ROBERT GALBRAITH - REUTERS) Much like a Facebook profile, "The Social Network" is made more appealing through some artful lies, well-chosen omissions and careful shading.

Co-founder Eduardo Saverin's ejection from the company, for instance, is turned from a story of inattentive financial management into a senseless betrayal of a friend. And though the movie portrays Facebook founder Mark Zuckerberg as a pining loner, he has actually dated the same woman since 2003.

But it's not the details of Zuckerberg's life that mislead so much as the decision to focus on Zuckerberg at all. The movie recasts a story of inevitable technological change as the saga of a socially inept genius, two or three of his most important relationships and the social pressures of Harvard University. That makes for a better film, of course. But it misses the richer drama behind transformative innovations like Facebook, and it's part and parcel of the way we misunderstand, and thus impede, innovation.

"The idea of the lone genius who has the eureka moment where they suddenly get a great idea that changes the world is not just the exception," says Steven Johnson, author of "  Where Good Ideas Come From: The Natural History of Innovation ," "but almost nonexistent."

And that's because innovation isn't really about individuals.

I was not born physically or mentally superior to my grandparents. But I would have been much likelier to invent Facebook than they were. The natural capabilities of human beings don't change much from year to year, but their environments do, and so do the technology and store of knowledge they can access. Better sanitation lets people live in cities, where they can learn from one another. Transportation and communication advances allow ideas to mingle across distances that, a thousand years ago, they would never have traversed. The development of the Internet makes the coding of social networks possible.

When these advances happen, they happen to many people simultaneously, so many people tend to see the next step forward at the same time. In 2003, we were all social network geniuses, at least compared with everyone in 1993.

Consider CU Community, a Facebook competitor started at Columbia University. Adam Goldberg, its creator, programmed his social network over the summer in 2003. It was more advanced than Facebook, with options for pictures and integrated blogging software, though it did lack the elegant minimalism of Zuckerberg's design. (Disclosure: Washington Post Co. Chairman Donald E. Graham is on Facebook's board, and The Post markets itself on Facebook.)

This phenomenon is age-old: It's called "simultaneous invention." Technology - and the conversation about what can be done with it - advances to the point that the next step is obvious to multiple people at once, and so they all push forward. In the end, one squeezes the others out by landing the patent, or the market share, and becomes synonymous with the invention. That's what happened with Alexander Graham Bell, who in all likelihood invented the telephone after Elisha Gray - and both of them came after Antonio Meucci, who couldn't afford the fee to keep his patent current.

Today, Zuckerberg is many times as rich as Goldberg. He won. Zuckerberg's dominance can be attributed partly to the clean interface of his site, partly to the cachet of the Harvard name and partly to luck. But the difference between Mark Zuckerberg and Adam Goldberg was very small, while the difference between what Mark Zuckerberg could do and what the smartest college kid in 1999 could do was huge. It was the commons supporting them both that really mattered.

Human beings are more comfortable thinking in terms of people than in terms of technology. And a movie about a socially inept genius is certainly more interesting than a film about conferences where programmers present advances in social network software. But the focus on people leads us to overinvest in the rewards for individual innovation and underinvest in the intellectual commons that make those innovations possible. We're investing, in other words, in the difference between Zuckerberg and Goldberg rather than the advances that brought them into competition.

Consider the current debates in Congress. Republicans are fighting to add $700 billion to the deficit to extend the Bush tax cuts for incomes above $250,000. It is hard to imagine the innovations that happen at a 35 percent tax rate for your two-hundred-thousand-and-fifty-first dollar, but not at 39 percent. We're also helping creators and their heirs hold legal monopolies on innovations for much longer, extending individual copyrights to the life of the author plus 70 years, for instance. Would we lose so many great ideas if the monopoly lasted only until 15 years after the inventor's death?

At the same time, the recession has broken the back of state budgets. California is gutting its flagship system of universities. Salaries are dropping, and research money is drying up. And California is not alone. According to the Center on Budget and Policy Priorities, 43 states have cut funding for higher education, while 33 others - plus the District of Columbia - have hacked away at K-12. And Congress seems to have given up on the energy and climate bill that could've kick-started our green energy industry —even as China has committed almost a trillion dollars in green energy funding over the next decade.

And let's not kid ourselves into thinking that public investments don't matter. Direct public investment was crucial for developing a national railroad system, planes and semiconductors. It was behind the Internet and the Global Positioning System. It was behind the educated populace that developed those innovations.

Nor should we be overly sanguine about the private sector's interest in innovation. The average company spends 2.6 percent of its budget on research and development, and a National Science Foundation survey found that only 9 percent of companies reported a product innovation between 2006 and 2008. "You can't be an innovative economy if only 9 percent of your companies are innovating," economist Michael Mandel wrote.

People have many incentives to innovate. They love what they're doing. They're competing with others. They want to make money. They want, as Zuckerberg does in the film, to "make something cool." And they should be richly rewarded for their successes.

But there really isn't a replacement for public investment, and good rules. You need a good education system. You need intellectual-property rules that ensure space for new ideas and uses. You need a tax code that encourages research and development spending. You need, in other words, to furnish people with an environment in which innovation can take place.

We need to think harder about whether we want to spend our limited dollars on the vision of innovation in the Facebook movie or the reality of innovation behind Facebook.

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Repost: Did social networking need Facebook?

30-01-2012 16:21 When Facebook makes its debut as a public company this spring, the social-networking company will likely vault into the ranks of the largest public companies in the world, alongside McDonald's, Amazon.com and Bank of America. (Jan. 30)

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Will Investors 'Like' Facebook After IPO? - Video

31-01-2012 04:46 The President of the United States, Barack Obama, has hosted a video chat on the Google Plus social network to answer questions on last week's State of the Union address. Report by Adam Sich. Like us on Facebook at http://www.facebook.com and follow us on Twitter at twitter.com

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US President Barack Obama's Google Plus video chat 'hangout' - Video