So. Question is, what does it mean for Google?
Let’s start with what it doesn’t mean. This doesn’t mean Facebook is eating Google’s lunch in the short term, because they’ve got two different core businesses. Facebook is the biggest display advertising player on the web – that’s basically brand advertising – and that’s stuff that you want people to spend a lot of time looking at.
Google, on the other hand, makes most of its money on search. Google wants people to find what they’re looking for as quickly as possible, click the best ads, and go. (We saw this fact illustrated in Google’s announcement this week of Google Instant, a feature that speeds up the search process.) If Google can get people to spend time on its sites that’s good, but efficient use of time is more important to Google than time itself. In the short term, Facebook’s win isn’t necessarily Google’s loss.
But here’s the challenge for Google: it needs to develop big new businesses beyond PC search, and so far it hasn’t figured that out – as you can see from the stock. Google execs are hoping mobile, music, video and even enterprise software might develop into real winners over time, and they’re investing Google’s search profits to try to turn those businesses into winners.
In the meantime, though, more of the world seems to be hanging out on Facebook. Eventually Google’s going to have to figure out how to either crash Facebook’s party, or start a cooler one.
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