Why is Facebook Scared of Google…?

By now, you may have heard news first reported by The Daily Beast that Facebook had secretly hired massive PR firm Burson-Marsteller to hit up and encourage prominent bloggers to write articles scathing of Google’s social media scraping practices – Burson-Marsteller even offered to help write the hack-jobs as well. The secret part of this arrangement is no longer applicable – as the lid has been blown off this extremely poorly thought out plan to drag Google through the mud. There are a number of questions that Facebook’s exposed douchebaggery poses – such as;

1.     What was Facebook thinking…?

2.     What could Facebook gain…?

3.     Why are Facebook so scared of Google…?

Other sources have more than covered this story – and are much better placed to continue to provide commentary and updates on the story. This article will instead focus on the three questions noted above.

What was Facebook thinking…?

With hindsight the plan to manipulate the highly talented, switched on, connected, and influential contributors to the tech blogosphere was really fucking stupid. Many of us possibly considered Facebook to be a hotbed of the brightest minds, and the most creative thinkers. That those brightest and most creative could come up with this plan is astounding – and surely will be sending off alarm bells within the boardrooms of those who have invested heavily in this yet-to-be profitable behemoth.  The plan was fucking stupid – and failed at the earliest efforts at execution. The problem with this kind of really fucking dumb plan is it will always be destined to failure – whether early within its execution, during, or at the less than glorious end. There are not enough big players within the market for the protagonists to remain anonymous. Facebook has virtually zero competition within the social space for user hours – so when Burson-Marsteller started hitting up bloggers to bitch and moan about Google’s scraping of social graph information from social networks (social networks = Facebook obviously!) it wasn’t hard to work out what was going on. Perhaps, a very unlikely perhaps, Facebook considered the chances of this convert plan remaining covert were slim – and expected the cover to be blown forcing the issue of Google’s behavior into the ongoing and very public discussion. As I said – this is a very unlikely scenario. Perhaps, again an unlikely perhaps, this was some rogue outfit within Facebook who executed this operation without sanction from the executive – but this scenario is laughably implausible. The decision to hire Burson-Marsteller to execute this top secret (LOL) plan came from the top. It wouldn’t surprise me if this entire plan was hatched in the famous Facebook ‘fish tank’ with Mark Zuckerberg making the call. It may well have been Zuckerberg’s idea to begin with – and surrounded by sycophants and yes men they all agreed it was a great plan that would expose the evil Google and elevate the saintly Facebook. But, what could Facebook gain from this plan if it had gone off without a hitch…?

What Could Facebook Gain…?

The long and short of it all is advertisers. Facebook has hundreds of millions of users, and can expected hundreds of millions more to come. But they lack blue chip advertisers – advertisers who spend big and who spend long. I visited my Facebook profile just a moment ago – and I saw an advert for Talisker Whiskey from a firm in Britain (that cannot ship Whiskey to Canada), an ad for a bogus $27 iPad 2, an ad for the Warrior Walk (a cross country walk / run), and of course the ubiquitous coupon ad with a misleading photo to encourage clicks. Facebook is an experimental platform – and one that hasn’t been widely adopted by those blue chip advertisers with massive budgets.  Google has the blue chip advertisers – and lots of them. Google generates tens-of-billions in ad revenue a year – and facilitates the exchange of money between users to businesses of hundreds of billions a year. There was recent news that Google had set aside $500 million to settle a case with the US Dept. of Justice. I speculated this might be connected with the rampant and phony nutraceutical wave of affiliate marketing that occurred during 2007, 2008, and 2009. Google almost certainly profited via Adwords, Adsense, and its in-house affiliate program from these Acai berry and nutraceutical scams – and to avoid going before (another) trial Google decided to instead give Uncle Sam half a billion dollars. Seizing the moment, Facebook seems to have decided this was the perfect storm to execute their fucking dumb plan – to expose Google as a villainous and morally corrupt beast, and to warn internet users of their plan to control the users social graph and enslave their internet experience. Advertisers had to be warned that Google were crooks – and it was very unwise to do business with them. Facebook has cast itself, it would appear, as the Rebel Alliance from Star Wars – fighting for good and Internet freedom against the evil Galactic Empire of Google. The really fucking dumb plan executed by Facebook has nothing to do with right or wrong – it is all down to advertising. Facebook was hoping torpedo Google with a covert operation that would unseat them has the reigning masters of the Internet universe. Google, it is fair to say, is most likely the subject of more government and law enforcement investigations than even the largest of criminal enterprises. The bigger the corporation, and the more money they make, the more interested entities like the US Dept. of Justice get in them – because they have money and shareholders. It is going to take more than a really fucking dumb plan to sink Google – and all this plan from Facebook has done is expose them as small minded, petty, and amateurish. Given the almost absolute certainty of this really fucking dumb plan being exposed (as proved by its actual exposure) there must have been a pretty big motivation to warrant its graduation from really fucking dumb idea that floats around a boardroom and is immediately dismissed out of hand to a really fucking dumb idea that is executed with executive approval. The motivation can be answered with the third question.

Why are Facebook so Scared of Google…?

It is possible that Facebook is not as solid as the hedge funds, venture capitalists, and investment fund managers would like to think it is. It is old news that Facebook is valued in excess of $60 billion, even though Facebook is reported to have had 2010 profits in the region of $600 million. With there being a very obvious gap between valuation and profits – Facebook is almost certainly under pressure to improve its financials. Thus far – the only people who have managed to make money with any continued success with Facebook are the people who own Facebook (Zuckerberg). Unless you want to sell coupons or the opportunity to become a virtual farmer then there is not a whole lots of cash changing hands. We can use Starbucks’ Facebook page as an example. Starbucks has +21 million ‘likes’ on Facebook – but are these people who are existing customers who always drink their coffee and will continue to drink their coffee, or are they new consumers who have been converted from drinking Dunkin’ Donuts or MacDonald’s coffee? ‘Who knows?’ is the simple answer. All Starbucks knows is that they have +21 million people who like them. You can best the bosses at Starbucks are asking someone ‘so did we sell more coffee…?’ and the answer that someone is giving (and I will paraphrase here) is ‘who knows?’ Virtually everything that Facebook does and is done on Facebook is based on experiment – not on hard numbers.  Conversely – if the bosses at Starbucks executed a paid campaign on Google’s Adwords program and they asked the same question ‘so did we sell more coffee…?’ the answer could be a very definite yes or no.  Facebook, and to a certain degree all social media, is taking on the same characteristics as TV advertising. Google fucked with the magic of TV advertising by providing metrics and measurability – if you spent $1 million with Google you would know if you sunk like a stone or took off like a rocket. If you spend a $1 million on TV advertising and asked ‘did it work?’ you would get the same ‘who knows?’ response as with Facebook spends. This is why Facebook is scared – and they have good reason to be. Google, at present, has barely any penetration within the social media / networking world – however they have declared this arena the focus of all new activity. This has Facebook very scared, and scared enough that they are prepared to execute the really fucking dumb plan. Facebook is fragile – and they are at the mercy of market analysts. Another year, this year, of low ball profits will put their $60 billion valuation is serious jeopardy. Analysts do not care about the number of likes Starbucks has – all they care about is money (as do the bosses at Starbucks). If you tell them you are worth $60 billion and you make $1 billion a year they will call bullshit. Google has the upper hand in this fight with Facebook – they have the revenue, they have the profits, and now they are enjoying being portrayed as the victim of Facebook’s douchebaggery. Google has a lot of work to do to get anywhere close to Facebook’s domination within the social space – and Facebook has a similar amount of work (perhaps more) to do to make as much money as Google does. If Facebook’s valuation were to collapse to a half, third, or a quarter of where it is currently valued a chain reaction of events could unfold where Google could end up paying cash for it (and not even blinking) and owning it outright. This is why Facebook is scared, and is prepared to do really fucking dumb things to win.