Market Overview

Facebook's Link Search Could Lower Google's Traffic

Share:
Facebook's Link Search Could Lower Google's Traffic

Facebook Inc (NASDAQ: FB) officially launched Instant Articles this week, allowing publishers to create interactive articles for the social network. The company is also testing a search function that allows users to find and share links without using a secondary platform, such as Google Inc (NASDAQ: GOOG).

Rob Enderle, principal analyst at Enderle Group, told Benzinga that Facebook is trying to transform into a "much more powerful destination site."

"The problem for Facebook is there's only so much time you want to spend looking at posts from other people and not looking at unique content," he said. "Part of the excitement of Facebook is to find something and share it with others, not just re-share something somebody else has created."

By having original content, Enderle believes that Facebook can retain eyeballs and advertising dollars much more aggressively.

"It makes it a more powerful and engaging platform for folks that like to share and talk about unique content," he added. That said, Enderle thinks it would be a mistake to think of this as a "direct competitive attack on Google."

"It is, in a way, because it's trying to keep Google from [taking] away advertising dollars," said Enderle. "But, for the most part, this appears to be focused on the users -- and giving Facebook users a much more powerful toolset to find and share things with their peers. This is a fairly strong core offering for Facebook. It undoubtedly will hurt Google, but that's not the primary goal. It's just the effect."

Related Link: Will Facebook And Twitter Takeover Google's Ad Business?

Eventual Competitors

Tech industry expert and analyst Jeff Kagan told Benzinga that while companies don't always start out as competitors, they could end up that way as they evolve.

"Industries continue to innovate, and the players that are the innovators are the winners," said Kagan. "There's the potential that a good enough product will attract users, then all of a sudden Google and Facebook are competitors. Companies that don't start out competing eventually [become] competitors."

Kagan pointed out that this happened to Google before when Apple Inc. (NASDAQ: AAPL) replaced Google Maps with its own mapping application.

"They're partners one day, then adversaries the next day," he said. "What Facebook is doing is something for tomorrow."

Those Who Will Benefit

In addition to Facebook search hurting Google, there are some concerns that Facebook's Instant Articles feature will hurt the publishing industry. There could be one exception, however.

"I think if you were a newer publisher, and you were invited to this party, it certainly could give you an audience," Mitchell Reichgut, CEO of Jun Group (an ad platform that gets consumers to engage with branded content), told Benzinga. "I do think there are benefits, it's just a dangerous gamble to be making."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Jeff Kagan Jun Group Mitchell Reichgut Rob EnderleAnalyst Color Top Stories Exclusives Tech Best of Benzinga

 

Related Articles (GOOG + FB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
EGBNDowngrades
EBAYMaintains37.0
EBAYMaintains40.0
SQAssumes78.0
PYPLAssumes140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Nordstrom Posts Downbeat Q1 Earnings, But Sales Top Expectations

Dillard's Misses Q1 Views