Facebook rolls out friends-based search product

16 January 2013
By Sofia Mitra-Thakur
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Facebook CEO Mark Zuckerberg listens to a question after introducing

Facebook CEO Mark Zuckerberg listens to a question after introducing "Graph Search" at Facebook headquarters in Menlo Park, California

Facebook unveiled a new search tool this week that lets people trawl their network of friends to find everything from restaurants to movie recommendations, an improvement that's likely to increase competition with review websites like Yelp and potentially even Google.

The so-called graph search marks the company's biggest foray into online search to date, though it displays only information within the walls of the social network rather than links to sites available across the Internet.

Mark Zuckerberg, Facebook's 28-year-old founder and chief executive, introduced the new product at the company's first major product launch since a rocky initial public offering in May.

"Graph search is designed to take a precise query and return to you the answer, not links to other places where you might get the answer," Zuckerberg told reporters at its Menlo Park, California, headquarters. 

"What you've seen today is a really different product from anything else that's out there."

Facebook shares, which have climbed 15 per cent since the start of the year, slid 3 per cent to just above $30. 

The product news fell short of some of the most optimistic predictions, which included speculation that the social network would introduce its own smartphone or an Internet search engine.

Dubbed "graph search" because Facebook refers to its growing content, data and membership as the "social graph," the function will be available at first only as a "beta," or trial, for just hundreds of thousands of its billion-plus users.

It will let users browse mainly photographs, people, places and members' interests. 

Zuckerberg stressed that people can sort through only content that has been shared with them, addressing potential privacy concerns.

Shares in Yelp dived more than 6 per cent on fears that Facebook's new friends-based search concept will begin to draw users away from the popular reviews site, which also lets people maintain a circle of trusted friends. Google stock held steady.

Some analysts said Facebook may be taking a tiny step toward eventually challenging Google on its home turf, but said that was a much more challenging undertaking and a long-term possibility at best.

Zuckerberg stressed that the new graph search did not encompass Internet searches, Google's specialty.

Sterne Agee analyst Arvind Bhatia said the product was inevitable.

"We think this will enable them to expand beyond display ads and ultimately compete with Google," he said.

The world's largest online social network, Facebook is moving to regain Wall Street's confidence after the IPO and concerns about its long-term financial prospects.

Much of Facebook's recent focus has been on making money from users who are migrating to mobile devices. 

Zuckerberg said he could foresee a business in search over time, but analysts advised caution. Facebook has come under fire numerous times for unclear privacy guidelines.

While the revelation fell short of some of the wilder guesses about what Facebook planned to reveal in its highest-profile news briefing since its market debut, analysts said it was overdue for a well-rounded search tool, given its current inadequacies.

Wedbush Securities analyst Michael Pachter argued that recommendations from trusted friends were more valuable than from strangers on the Web.

Facebook has a vast amount of information in its social network, including roughly 200 billion photos. 

But some analysts noted that the information each user has access to through a network of friends is not always that extensive and could limit the usefulness of Facebook's search offering.

"Very well-connected individuals have a rich treasure trove of data that they can mine, but the average person's storehouse of data is much sparser and has less relevance to these queries," said Ray Valdes, an analyst for Gartner.

Facebook's announcement underscores the increasing overlap between social media and traditional Web search engines. 

Google, the world's No. 1 search engine, launched the Google+ social network in 2011 and has been integrating data between Google+ into its search engine.

In the works for more than a year, Facebook's new search feature will initially be available for the English language only and for use on desktop PCs.

Bringing the search tool to mobile devices, such as smartphones, would probably require a change in design of the product, noted Valdes. 

"It might be that they have to come up with innovation like voice search, a Siri-like voice assistant to get it to work well on mobile," he said, referring to the technology available on Apple's iPhone.

Facebook executives at the event showcased a variety of different potential uses of the product, such as finding a date by searching for single men who live in San Francisco and are from India, and creating a holiday card by finding all the photos in which spouses appear together.

The search technology will use the "likes," "check-ins" and star-ratings that Facebook users have posted about restaurants to determine the order of the recommendations displayed, though Facebook search engineering head Lars Rasmussen noted that users' comments about restaurants don't currently affect search result rankings.

Zuckerberg said the search tool was a work in progress that would take the company years to fully build out. 

He pointed to a variety of additional features on the horizon, such as support for additional languages and the ability to incorporate data from third-party services, like online music services, which connect to Facebook.

"I don't necessarily think that a lot of people are going to start coming to Facebook to do Web search because of this, that isn't the intent," said Zuckerberg. 

"But in the event that you can't find what you're looking for, it's really nice to have."

Andreas Pouros, COO at leading London-based digital marketing agency, Greenlight, said the announcement was a "story of three halves".
"On the one hand, users will be very happy to get this new functionality that Facebook is calling ‘Graph Search’," he said.

"It is innovative and powerful, and will allow people to search within Facebook, albeit restricted to what they can see and read right now.

"It allows the user to search across people, places and interests using structured queries, e.g. ‘Friends who like Star Wars and Harry Potter, or more usefully perhaps ‘Which restaurants do my friends like in London’.

"Innovative, very cool and the first major addition of functionality Facebook has seen since Timeline.

"On the other hand however, it is unlikely to be enough to allay investor concerns over Facebook’s commercial focus.

"Many had expected Facebook would have launched a new mobile phone today or thrown down the gauntlet to Google and challenged the company in Web Search supremacy, neither of which happened. 

"Graph Search may well be a precursor to that but I fear investors will suspect that it’s too little progress.

"And somewhere in the middle, businesses are likely to become more visible within Facebook given that many of these searches will bring up their pages in Graph Search results. 

"However, this may simply offset the reduction in visibility brands have experienced due to Facebook’s Promoted Posts mechanism that has limited the exposure of brand posts on user newsfeeds (where businesses are prompted to pay for their post to reach a wider audience). 

"Also, it is unclear at this stage if or how Facebook will monetise Graph Search.

"Ultimately, this is progress, which is welcome, but whether this is good for everyone rests on if and how Facebook chooses to monetise this new mechanism, and to what degree it is a stepping stone to a more aggressive product strategy."

Victor Basta, managing director of Magister Advisors, M&A advisors to the technology industry, said: “People are completely missing the importance of this announcement.  It positions Facebook as a much more significant strategic threat to Google than it has been to date.  

"Facebook has effectively rolled Amazon, TripAdvisor and tribal search engine capabilities into the ecosystem in one fell swoop.

“This is far more important for Facebook’s mobile strategy than simply doing a Facebook phone.  

"Graph Search will be key to generating revenues from Facebook’s hundreds of millions of mobile users through super-value, highly targeted search.  

"To date it has been very difficult to serve up advertising on a small screen.  Search is really the only way to do it.“

“Graph Search potentially sets up Facebook to generate the billions of dollars of revenues that it needs to achieve to underpin its valuation.  

"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.”

“People are saying Facebook has reached a saturation point with users, but they’re missing the point.  

"This is all about generating revenues from existing users.

"The ramifications of the announcement for Facebook and its competitors are very significant indeed and will be felt for years to come.”

Eden Zoller, principal analyst at Ovum, said: "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, personalized advertising opportunities going forward. 

"But Facebook needs 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.

"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."

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