Facebook will outgrow Google, says analyst

Thu Mar 19 2009, 08:55 AM UTC

Facebook will be larger than Google by 2012, according to Ross Sandler, an analyst at RBC. He also notes that approximately one fifth Google's visitors come to the site directly after visiting Facebook, suggesting that the social network could profit from integrating a search function into its platform.

Though the two internet giants have tended to complement each other in the past, a number of market watchers are taking Sandler’s analysis to imply a forthcoming rivalry between Google and Facebook.

The flash point could well be web search. Knowing that a fifth of its visitors go directly to Google may suggest to Facebook lucrative business opportunities in integrating Google search, or a rival search engine, into its platform. This would keep users on Facebook for longer and could help the network cash in on profitable search advertising.

It is unclear whether the option of integrating with Facebook will appeal to Google and. As Google is clearly ahead of Facebook in terms of eyeballs, the search giant is in the position to call the shots. This could mean Facebook will look elsewhere for a search partner.

One option is struggling search giant Yahoo!. Rumours have circulated in the past year about a possible search deal between Yahoo! and Microsoft, but it may be that the most fruitful partnership for Yahoo! will be with Facebook. As the world’s leading social network, with a user base rapidly approaching the 200m mark, Facebook is an appealing partner for any internet business.

Another possible tie-up could be between Facebook and Microsoft. The software giant already holds a stake in Facebook and could well have its sights on a wider partnership deal. Microsoft is currently working on an improved version of its search engine, named Kumo. A marriage with Facebook could help the firm drive traffic to its new search offering and help it move Microsoft up the US search rankings from its current position as third most used search engine.

Sandler’s analysts is based on data showing that, since August 2006, Facebook has grown by an enormous 1,427%, while in the same period Google has grown 65%. Assuming that Facebook’s growth will decelerate a little to 85%, while Google’s slows to around 20%, Facebook will command more worldwide unique visits by 2012.

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