Home Technology Facebook Graph Search Is Not A Threat To Google: BAML

Facebook Graph Search Is Not A Threat To Google: BAML

Facebook Inc (NASDAQ:FB) introduced its new social search feature that will appear at the top of each page, Graph Search (GS). The search bar enables users to more easily find what their friends have liked or recommended, as well as photos of friends. The beta version of the new feature focuses on four main segments: people, photos, places and interests. A report from the Bank of America Merrill Lynch, forecasts that the new feature “could help increase engagement on Facebook, either through making information on Facebook more accessible or, possibly, encouraging entry of more likes, posts and interests data.”  As of now, the service is in beta and only in English, it is expected to be launched in other countries and categories soon.

Since the launch of this new service, still in its nascent stage, the social networker is expected to focus more on content and user experience than on monetization. With the new search, Facebook Inc (NASDAQ:FB) has some very good monetizable opportunities like restaurants nearby, games etc and also, it will be easy to incorporate commercial search results via Facebook’s partnership with Bing, says a report. Given its massive user base, it is a huge opportunity, even if the company generates just one paid click per user per year, the company could add $500mn in annual revenue.

As of now, the Graph Search is not yet a threat to the mighty Google Web search, but going forward, it could compete with some of the categories of Google searches, such as Places & Maps. The service also has the potential to snatch some hotel recommendation query share from Tripadvisor Inc (NASDAQ:TRIP), provided the availability of user travel information, likes and recommendations expand. The Facebook search may also give OpenTable Inc (NASDAQ:OPEN) a run for its money, as it may have useful restaurant information and drive traffic directly to restaurant’s sites. The report does not see much impact on Linkedin Corporation (NYSE:LNKD), given a separate consumer need for personal and professional profiles.

The networking giant’s assets are that its data is “walled”, and Facebook has 10%+ of Internet user time. Therefore, “if Graph Search trains users to search on Facebook, then users could start using the function for convenience searches (like on Yahoo) and FB could capture a small percentage of general Web query market share (using Bing results),” says the report.

The Facebook Graph Search launch is a fine example of ongoing innovation and is expected to boost revenues to the platform. (Yahoo! Inc. (NASDAQ:YHOO) has $1.2bn+ insearch revenue with less user time.) The report, maintaining a ‘buy’ rating on the stock, says “We continue to expect new ad formats and mobile traction to act as catalysts and drive advertising revenue acceleration.”