Facebook Inc.'s Search Ambitions May Finally Start Impacting Google Inc.

Source: Flickr/Robert Scoble

On Facebook's most recent earnings call, CEO Mark Zuckerberg noted that Facebook users perform more than 1 billion searches on its mobile app on a daily basis. In previous quarters, he's called out Search as a product that he wants to develop further and grow. While Facebook introduced more robust search functionality in 2013 with the release of Graph Search, its functionality is extremely limited compared to the potential in the social graph data behind it.

Over the weekend, TechCrunch reported that Facebook is working on a new use for its social graph data, which will allow users to search for links to articles directly from Facebook's mobile app. The aim is to solve the problems facing users looking to share content via mobile devices, which involves lots of app switching and copying and pasting. This could have a small impact on Google now, but it could have a much more significant impact in the future.

Telegraphed in the earnings callZuckerberg isn't shy about giving investors an idea of where he sees Facebook's search product going:

Surfacing links that are popular on the network is a perfect example of what the CEO described on the company's most recent conference call. As is the new feature Place Tips, which Facebook released last quarter to surface posts from friends in places near a user's location.

What's most interesting about the comment Zuck made is that he said those are things "we continue to focus on doing first." That statement implies that he has a much bigger vision for what search on Facebook could be. Considering Facebook accounts for nearly 20% of time people spend on mobile devices, and searching the Internet for answers has become one of its main purposes, Facebook has a big opportunity to lean on data unique to its service to create a new search engine.

Why Google should be scaredFacebook's popularity on mobile coupled with its unique data represents a huge potential threat to Google's success on mobile devices. Google's search engine runs mostly on publicly available data, and it tweaks its results based on a user's' previous browsing habits. So, if you visit the Motley Fool a lot, you might see more Motley Fool articles in Google News search results. Facebook, on the other hand, knows what you, your friends, and their friends are sharing and are interested in, which may provide better personalized results.

Additionally, with Facebook's push into native content with its new Instant Article program -- where publishers publish content directly to Facebook -- Google could see fewer ad impressions from partner websites. Given two links to the same article -- one hosted on Facebook, the other hosted on a publisher's site -- Facebook is going to recommend the link hosted on its own platform. That provides a better user experience, and ensures users stay on Facebook longer.

Revenue growth from Google's Network Member sites slowed to just 1% in the first quarter. Paid clicks on Network Member sites declined 12% last quarter, representing a significant impact from the shift to mobile apps over desktop or mobile Web browsing. If Facebook is able to keep users in its mobile app even longer instead of sending them to a Google Network site, Google could see a decline in a revenue source that accounted for more than 20% of the search giant's total last quarter.

Searching for more engagementFacebook's push into search isn't too surprising as the CEO has spent several quarters discussing it as a key product on the level of Instagram, Messenger, and WhatsApp. Continued innovation in search within the Facebook app should lead to wider adoption and, therefore, more engagement among Facebook's users. We're seeing the same thing with Facebook's Instant Articles.

With more time spent finding and consuming content directly in Facebook, the company stands to increase its advertising revenue from more ad impressions, and increased ad spend from both brands and small businesses.

The article Facebook Inc.'s Search Ambitions May Finally Start Impacting Google Inc. originally appeared on Fool.com.

Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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