Five Ways Facebook Is Not Like Google (And Why It Matters to IPO Buyers)
5. Facebook owns its audience.
Facebook. With a billion members it is approaching the size of the Catholic Church as one of the biggest institutions in the world. With a following that large it will have immense power. Its user data alone will have huge value.
Google. Google tried to crack the social media space with limited success. But it’s been able to move quickly in response to user preferences. It has been aggressive in pursuing mobile with its Android system, which shows promise.
What it might mean for shareholders. At its IPO, Google’s business model was just emerging. It has been helped by the ‘network effect,’ which says that the more people using a service the more valuable it gets. “Facebook hasn’t even started to do things like use search,” said Pachter. “They will do that soon. There is still a lot of upside.”
Hamadeh is more skeptical. “Google is the starting point to the Internet, and it grows in proportion to it use,” he said. “Facebook is a walled garden. That will limit its growth.”
Both companies rely on advertising dollars, and both will have major adjustments to make in adjusting to the mobile world, where ad space is shrunk dramatically. Both companies are moving aggressively to monetize the small screen. Google had years of unfettered growth without such a factor. As his company debuts, Zuckerberg faces the upheaval of this major technology shift. He says it is his No. 1 priority as his company goes public.