Battle for Market Share Rages between Facebook and Google

Brittney Barrett  |

Facebook has caused concern with its privacy violations, which allow ads purchased on the site to be directed at the niche audience they are most relevant to. This has made Facebook an advertising powerhouse, but has dismayed users who felt conned into sharing their information with corporations. Certainly, the latest development at the Silicon Valley Internet goliath will not be received anymore enthusiastically. Last week Facebook began to slowly roll out Sponsored Story Ads that appear directly within the homepage’s main news feed.

Facebook, like many blogs that feature paid advertising, attempts to conceal the ad by likening it as much as possible with editorial content. Gawker and the fashion blog WhoWhatWear are both well known for their sponsored posts, which a person may not realize are ads until examining them more closely.

Facebook’s version of this; however, is arguably more invasive, as it likens itself to content created not by a company, but the user’s online friends. Furthermore, the information they are leveraging is specific to the individual user. The company defends its decision to permit the appearance of ads in the news feed by stating that marketers will only be able to reach Facebook users who have actively liked their page. Still, the paid content that appears on their friend’s pages is likely to also be visible to the larger community within the news feed.

Facebook has inserted ads in the news feed before, from the period between 2006-2009 but discontinued the practice, only to reintroduce it now. It’s possible that the desire for Facebook to begin using the ads again is related to the company’s upcoming IPO. The potential featured content could serve as a major revenue source that would allow the company to raise even more money for its initial public offering expected in the third week of May according to speculators.

Facebook is not alone in introducing misplaced content into its pages and causing some alarm surrounding antitrust issues. Around the same time that Facebook unrolled its new ads, Google (GOOG) introduced personal search results into its repertoire of practices that began to set off alarm bells.  The results include both comments and photos from Google+ users and Picasa networks. The company has encountered some degree of opposition for excluding the results of other networks and highlighting its own platform, which seems to be struggling to take flight in spite of millions of users. The decision seems an act of self-promotion potentially to compete with the new ad appeal Facebook has to offer.

"Google is an entrenched player trying to fight off its challenger Facebook by using its market dominance in a separate sector," Marc Rotenberg, executive director of the Electronic Privacy Information Center said in the Los Angeles Times. "I think that should trouble people."

Facebook’s decision, especially as a role model for a number of other tech companies, could be changing the game in terms of stretching the level of privacy people are comfortable abandoning. Facebook users are often intensely attached to the platform as a means of getting in touch and providing a resource for the past. Google seems to be betting that users are equally entrenched in their Google and Gmail accounts and will be unlikely to stray in spite of some question regarding privacy. Beyond the privacy there is the additional issue of detracting significantly from the user experience and the question of how many disruptions in organic content the user will be willing to accept.

How far the general public will allow them to go and the extent that tech companies can pursue these methods to become more appealing to advertisers; however, are two different stories. The Senate recently held a hearing regarding Google’s use (or potential abuse) of its role as top dog within the search market. The manner in which it alters search rankings to give preferential treatment to its own video content and other options have come into the news and could result in new rules for the tech companies. Late in 2011, privacy groups demanded a similar investigation over Google’s invasion of privacy and use of user information but the company received more of a slap on the wrist than any kind of action. If the companies continue to manipulate content, whether their own, advertisers' or user submitted, they could run into trouble again.

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