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Facebook Gaining Ground on Google

Google (GOOG) and Facebook are more than two competitors trying to de-throne each other in the battle for market share. They represent diametrically different business models -- search vs. social media. But the two are already in conflict on several fronts.

According to Nielson, Google reached 170 million unique U.S. visitors in September 2011, while Facebook rang in at 155.1 million during the same month. Latest reported statistics show that Google reached a billion unique visitors worldwide, while Facebook had about 800 million.

Seeing the writing on the wall, in July, Google launched its own version of Facebook, Google+, a social networking platform. Since launch, however, Google+ has declined for five consecutive months in referral traffic, despite its 260-million Gmail users, and has seen its share of referral traffic decreasing by 82%.

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Facebook CEO Mark Zuckerberg

The rivalry will likely increase from here. Let's take a look at the profiles of these two companies currently.

Facebook currently employs over 3,000 people, whereas Google has 24,400 full-time employees -- 9,508 engaged in research and development, 8,778 in sales and marketing, 3,346 in general and administrative, and 2,768 in operations. Google is bigger by far, but Facebook, still a very young company, is growing faster.

Google has a market cap of $200 billion and is close to passing Microsoft's (MSFT) market cap of $215 billion. For the third quarter of 2011, Google reported revenue of $9.72 billion, an increase of 33% from the same quarter prior year.

Facebook will generate $4.27 billion in revenue this year, more than double the $2 billion made in 2010 and may reach a high of $6.9 billion in 2012. Its display ad revenues are estimated at $3.8 billion for the year, up 104% according to eMarketer. Currently, Facebook has a display ads market share of 17.7%, vs. 13.1% for Yahoo (YHOO), Google's 9.3% and AOL's (AOL) 4.9%.

Facebook is planning a $10 billion initial public offering (IPO) in the second quarter of 2012, which could be the most valuable IPO ever by an Internet or tech company. Google, on the other hand, raised $1.7 billion through its IPO in 2004.

An IPO of this size would make Facebook worth 23 times its projected annual revenue of $4.27 billion, according to eMarketer. In contrast, Google trades at 6.5 times its projected annual revenue, and Microsoft at 2.8 times.

Global Reach:
Google offers its products and services in more than 100 languages and in more than 50 countries, regions, and territories, whereas Facebook offers more than 70 languages on the site.

Mark Zuckerberg, CEO of Facebook, founded the company in 2004. He is responsible for planning the company's overall direction and product strategy. Larry Page heads Google as a co-founder, member of board, and CEO.

In its annual list of the most powerful people in the world, Forbes Magazine ranked Mark Zuckerberg at number nine -- the youngest in the list and among the top 10 contenders. Google's Larry Page was ranked number 30.

Strategies and Expansions:
Facebook and Zynga (ZNGA) have entered into a five-year strategic relationship that increased their shared commitment to social gaming on Facebook and expanded the use of Facebook Credits in Zynga's games.

Recently, Google announced that the takeover of Motorola Mobility (MMI) has been delayed as European Union regulators have suspended their review of the deal.

Facebook is planning to enter the mobile advertising market by March 2012, aiming to compete with Google and Apple (AAPL). Google leads the mobile ad market with a share of 24%.

Face Off:
While Facebook may have a fraction of the employees that Google does, the company is becoming a potential rival to Google as its valuation has rocketed beyond $30 billion.

Google's sprawling monopoly over Web interaction positions it as an Internet brand offering better customer satisfaction than Facebook. However Facebook, with its critical mass advantage, is a high-growth company on the verge of a public stock offering, connoting that it has access to both a great deal of investor cash and top-flight employees hoping to cash in on that growth.

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