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Facebook Finds a Friend in Google Rivalry

After failing to acquire Twitter last fall, Facebook went shopping for what may be the next best thing.

On Aug. 10, Facebook said it had acquired FriendFeed, the Mountain View (Calif.) social aggregation service founded by Google (GOOG) alumni Bret Taylor and Jim Norris in 2008. The deal, which The Wall Street Journal reported to be valued at nearly $50 million in cash and stock, gives Facebook top talent and advanced technology in an area many see as the next great frontier on the Web: real-time search.

The deal was seen by many as an assault on Twitter, a site that, like FriendFeed, lets users discover what people on the Web are saying about a certain topic at any given time. (Twitter turned down a $500 million offer from Facebook last November.) But experts say the pickup may be geared just as much toward a showdown with the king of Web search and the former employer of Taylor and Norris: Google. "In one fell swoop, Facebook gets to buy up Google's best-known superstars," says technology blogger Robert Scoble.

Pulling in Real-Time Data FriendFeed's founders and staff of mostly ex-Googlers earned their stripes building Google Talk, Google Maps, Gmail, and other free Web services. When they launched FriendFeed to the public in February 2008, they designed the service to help users organize their online social lives—everything from Twitter updates to pictures posted on Facebook to Netflix rentals—in one place. To help members scour through all this information, the company developed an advanced search engine that pulls in real-time data from many different sites around the Web. It lets users search keywords that only certain friends have mentioned, or only for posts that have been "liked" by a certain number of people on the site.

This search engine may be a big part of what Facebook is after. Currently the social network has a limited search engine, which only retrieves data from certain types of pages within its own site. "They could plug the [FriendFeed] search engine into Facebook and have a huge win," Scoble says. If the site succeeds in building compelling search, more Web users may turn to Facebook for everyday searches, rather than general search engines like Google.

More effective search of current conversations and popular topics could lead to more profits for Facebook, which has taken criticism for focusing more on growth in the number of its users than in generating revenue. "Being able to get a taste of what consumers are doing on 50 different sites can be very powerful," says David Berkowitz, director of emerging media and client strategy for digital marketing agency 360i, of FriendFeed's search. By contrast, he says Facebook's search tools have not been as effective for marketers.

Beefing Up Search Tools Buying FriendFeed opens the possibility of more refined search, though Facebook has not commented on what aspects of the site will be integrated into its own. "We haven't had the opportunity to have an in-depth, thoughtful dialogue on what to do over the long term," says Facebook spokesman Larry Yu.

Another reminder that Facebook wants to beef up its search tools came the same day the FriendFeed deal was announced. A new tool will let users search the last 30 days of information posted by their friends. It will also let users search postings even by nonfriends, assuming those people have opted to make their material public.

In recent months, Facebook has introduced a number of features aimed at getting users to share more publicly, and the FriendFeed acquisition shows the company is committed to that goal, says Forrester Research (FORR) analyst Jeremiah Owyang. "FriendFeed is public and Facebook is not. We should expect Facebook to continue this trend to make users public," he says. More public sharing would mean more data that's searchable, which marketers would also appreciate.

While a battle with Google looms, Facebook's acquisition has created a more immediate concern for the company: keeping existing users of FriendFeed from defecting to other sites. No plans to shut down the site have been announced, but many users are nervous. "If Facebook does take FriendFeed down, chances are I'll migrate with many of the other social media and programming pundits to a similar service," says programmer Christopher Charabaruk. "Or if there isn't one, I'll probably help start one."
MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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