Facebook search tool popular with analysts, but not with investors

By Sooraj Shah
16 Jan 2013 View Comments

"To date it has been very difficult to serve up advertising on a small screen. Search is really the only way to do it - Google gets more than 90 per cent of its revenues from advertising, and search drives advertising, so this is really the only way that Facebook can take revenues from Google," he added.

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But Ovum analyst Eden Zoller believes that Facebook is not positioning itself to compete with Google.

"Facebook Graph Search is not a web search engine, but a search tool designed to enrich the Facebook platform and experience for both users and advertisers. This is sensible as a full-blown web search engine from Facebook would inevitably have to compete with Google search, and given Google's dominance of the search market it would be hard for Facebook to make a serious impact - and win advertising dollars," he said.

Zoller added that the Graph Search function may add functionality to Facebook, but the social media firm must be careful with users' privacy.

"Before the arrival of Facebook's Graph Search, the search function on Facebook was basic and as such, a wasted opportunity given Facebook's imperative to strengthen advertising revenues. Facebook Graph Search will no doubt leverage member data to provide advertisers with more targeted, personalised advertising opportunities going forward," he said.

"But Facebook needs to tread very carefully here and be mindful of user privacy. It claims to have built Graph Search with privacy in mind, but Facebook has a mixed track record on this front and is in the habit of pushing privacy to the limits of what is acceptable," he added.

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