Julius Dreyer

Ever since Google started ruling the Internet many actors on the market have been requesting more competition in search engines. Yet the technological advantage and maturity of the Google algorithm seems overwhelming. When thousands of developers, quality raters and millions of users are improving the index every day even giants such as Microsoft are struggling to get very far. It is now widely agreed that no newbie is going to beat Google in their area of expertise but that innovation is crucial. Sadly, despite numerous attempts there is still no noteworthy competition; market leaders don’t offer enough differentiation and innovative products don’t have enough impact.

May you live in interesting times

An ancient Chinese curse says: “May you live in interesting times”, suggesting that interesting times bear great potential for radical changes in economic and power balances. Indeed, if you are trying to take on Google you will have to first understand how much the world is constantly changing. Phones replaced telegrams, computers are replacing TV sets and Web 2.0 the rigid giants of the first generation Internet. Radical changes yield a fresh start with new power dynamics. This is exactly the reason why companies in fast-paced sectors struggle to maintain success over a long period of time. Growing big means growing too inflexible to react quickly enough to market changes. This inertia opens up opportunities for startups to solve the problems of a generation. So far Google excelled in predicting customer needs. Products such as analytics, maps, gmail, youtube and feedburner are examples of how Google managed to stay strategically placed in new markets or at least kept a foot in the door. Keeping in mind the constantly changing world and looking back to 1999, however, reveals that Google did solve that internet generation’s problem with their PageRank but has mainly focused on manifesting and strategically expanding their market dominance since then. Without a doubt a successful strategy considering that similar or even superior search engines cannot threaten the Google leadership. “To google” has become a common concept and term even in the Oxford Dictionary. The world’s strongest brand is known for simplicity and reliability; why would anyone leave this comfort to experiment with other providers.

What has changed?

Needless to say that a lot has changed since 1999. Weighting of links introduced hierarchy to a hitherto unstructured Internet, which then developed from a one-way consumer medium to an interactive communication cloud. Data is getting more specific and its format more focused; while you had to buy trade journals in the past you can now simply consult a few blog entries. People connect on social networking sites, in shared interest groups and use instant messengers, Facebook and Twitter to share insights, links, achievements and whatever else is on their mind. While these messages can at times appear ludicrous they still represent highly personalized and thus relevant pieces of information. Similarly to Google Reader, the user will only receive information from peers rated as relevant. This constitutes a fundamental turnaround: While you had to search for information in the past, information is now being delivered to you.

Tell me what you like and I’ll tell you what you’re looking for

Google recognized years ago that they would have to constantly increase their acquisition of information. While a link from website 1 to website 2 was a good enough quality criteria at first, there was soon need for more background knowledge. When this stopped to suffice, the outdated PageRank has become more of a TrustRank now, facilitating the Herculean wealth of Google user data to optimize it. Nevertheless, despite collecting, storing and exploiting data Google still remains merely an observer, limited to mathematical conclusions on more or less anonymous user data. Attempts to include Digg and other social media services as a viral component of the algorithm were somewhat successful but still only scratch the surface of this new Internet. A profound insight into the interaction of social networks and interest groups requires not statistical but real, authentic personal data…

How Facebook is going to compete with Twitter

Looking at a preview of the new Facebook layout last week I didn’t immediately realize the consequences the design changes could have. After reading the German Spiegel article “Facebook baut sich zur Webschwatzbude um” (translated: “Facebook transforms into a web gossip hub”) I also remembered Techcrunch’s interview with ex Google Sheryl Sandberg as well as the failed $500m Twitter takeover. It was then that I started to connect the dots. Facebook is not just building a Live Stream but are in fact aiming to become a giant Internet aggregator. The new Pages not only allow me to connect with millions of fans, supporters and customers but also to keep them updated through status messages and other activities – all updates reach my entourage directly per Livefeed. And unlike Twitter, Facebook is no aspiring startup but already a heavyweight network with nearly 200 million members and well on the way to become the world’s most visited website. A David vs. Goliath scenario with Facebook offering far more ways of user representation.

For gays.com we put a lot of effort into our Twitter account but also created a Facebook page that we now use to promote blog entries, plan events and distribute newsletters to our 18,000 fans. Twitter can’t match that.
Contemplating the $1m revenue Dell claims to have generated through Twitter only and that Obama’s winning strategy was partly based on their excellent communication with almost 6 million Facebook supporters and 400,000 Twitter followers, the tremendous potential which lies in connecting to users starts to materialize. Already including a fifth of the Internet population and still growing at double-digit rate in the populous Asian countries will soon make Facebook the number one connector for products, companies, celebrities and everyone else on the planet. My experience of running one of Germany’s biggest dating websites Poppen.de had always made me wonder why Facebook didn’t simply switch to a Freemium model; a modest estimate of 1% premium account holders could certainly cover most of their expenses. It is now that I realize they are planning to generate revenue somewhere else entirely…

Facebook Connect as social aggregator

Furthermore, Facebook Connect and the social applications are now enabled to feed activities from external sites directly into my Livefeed. You could call this Beacon 2.0 but with the critical difference that websites no longer choose to link into Facebook for advertising purposes but will soon have to connect to Facebook to get a piece of the (traffic) action. According to my privacy settings, the final result could be a universal feed for web activities of my friends, products and business partners. Using the option to separate my Facebook friends into individual groups will enable me to easily distinguish Livefeeds of friends and family from business partners. I can even imagine my beloved Google Reader soon becoming obsolete, as more and more bloggers are linking their RSS feeds with their Facebook accounts.

The information is coming to me

Looking at the new Facebook homepage again I also notice how “Share” is becoming the central element of their new home page. Facebook has realized that there is no more need to google for the most relevant information when “Shares” of my digital social network deliver that exact information to me organically. For example, I can absolutely imagine researchers not only grouping family and friends (see groups left on the screenshot) but also including “researchers”, “government agencies” and “businesses” in their future Facebook stream. This way, news about Procter&Gamble, the WHO and fellow researchers are just a click away.

Maybe you don’t have to improve Google but simply have to realize today’s needs and deliver the according products and services?

Facebook as the Google Killer

Of course, it is risky to make such a blunt statement. But if there is any company that could compete with Google it has to be Facebook. Arguably not because of but definitely thanks to Microsoft’s generous evaluation of $15bn, Facebook had a lot more options and time to develop themselves while Microsoft-competitve offers on an even higher evaluation are much less likely.

It’s still a wild guess if Microsoft will at some point want to integrate their Live.com search into Facebook. But it’s a fact that a lot of skilled Google employees are joining the Facebook work force. It is also certain that by now, Facebook’s intelligent Adserver features functionality to group users thematically and to track user behavior.

Knowledge about what information and links specific user groups on Facebook share and how sub groups perceive these (“I like this”/”I don’t like this”) can absolutely develop into an alternative to the Google TrustRank. If you then track these sub user groups’ click behavior in SERPS and use that data plus my social network to optimize my search results, Google better prepare themselves for tough times.

Whatever the future holdes, there will be exciting changes and I am looking forward to it.

Please don’t hesitate – your comments are welcome and even very much appreciated