Right now, Google has a market cap of about $100 billion which is severely depressed from its all time high of nearly $180 billion. That's quite a tumble, but not nearly as big of a tumble as Facebook has taken. Facebook went from a valuation of $15 billion in Oct 2007 to about $2 to $2.5 billion on secondary markets like SecondMarket. Facebook is going to absolutely dominate the future of the internet. Social networking is more popular than email and growing at an astounding clip.
Search will continue to keep the top ranking. But it's not hard to imagine a time when Facebook launches its own search engine. I have no doubt in my mind that in the next 6-24 months, Facebook will launch it's own search.
Search is all about brand. I know people like to claim that Google search results are better than Yahoo's and that's why they've dominated, but it's simply not true. In 2007, Yahoo overtook Google as the top rated search engine, even as their market share declined.
Facebook, when they launch their search engine, (and again, it is inconceivable that they will not) will know who all your friends are and what their search queries and clicks have been. With that data, even a terrible programming team could make the results slightly better than existing search engines. And Facebook seems to have great programmers. So shortly after they launch, Google will see itself facing a competitor who has better search results and a better brand. That is a one, two punch that will clobber Google.
Facebook will take market share from Google search. I think there is a very real chance that Facebook search eventually eclipses Google search in the next 5 to 10 years.
I know the dig on Facebook has been that it doesn't have a revenue model. But, check out this article from 2002.
Facebook will find a revenue model and Google market share will be pared. So, if you can scoop up Facebook shares at $2 billion, it's a steal.
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