U.S. Markets open in 2 hrs 22 mins

Facebook, Google Rivalry Enters New Arena: Search

MENLO PARK, CALIF. — Facebook (FB) announced plans to offer its own search engine on the site, the company said Tuesday, upping its rivalry with Google. (GOOG) However, Facebook executives say the social network isn't yet going head to head with the search leader.

Facebook CEO Mark Zuckerberg unveiled the feature at a media event at company headquarters in Silicon Valley. He said Graph Search would roll out over the next several months to most English-language users.

Graph Search aims to help Facebook users search the No. 1 social network for specific content that's been publicly displayed or posted by friends, such as photos, interests and locations.

"You want a search tool that can help you get access to things people have shared with you," said Zuckerberg, wearing his usual blue hoodie sweatshirt at the presentation.

Graph Search launched Tuesday in a limited beta release to hundreds of thousands of users.

"It's a great addition to Facebook," said Gartner analyst Brian Blau, who attended the launch event. "I think it's a natural fit, something that's going to enhance the user experience.

Search results will be supplemented with content from Microsoft's (MSFT) Bing, the No. 2 search service to Google. Zuckerberg says content from Bing will show up as supplemental results when information isn't available from user profiles. Microsoft and Facebook are among Google's biggest rivals.

"We don't think a lot of people will come to Facebook to do Web searches," Zuckerberg said, "but if we can't find what you're looking for, it's good to have" the Bing backup.

Facebook's search, however, has at least one big difference from Google, Bing and Yahoo (YHOO) search engines, says Blau. Graph Search focuses on "natural language" queries, encouraging users to ask questions, such as: "What movies do doctors like?" or "Which friends have been to Madrid?

"I'm a little worried about how easily people will get used to doing natural language searches, instead of the keyword searches they're used to," Blau said.

But, he says, natural language might bring better results.

Before Graph Search was introduced, Facebook users' data were mostly contained to their pages. Using the search is "an entirely different way of exploring your social network," Blau said.

The new feature is "moving in the right direction," RBC Capital Markets analyst Mark Mahaney wrote in a research note.

"(It) could be the first step toward expanding into Web search," Mahaney wrote. It represents "a significantly larger revenue opportunity, but one that could be an extremely difficult segment for Facebook to compete in.

Investors might have hoped for a bigger bang from the announcement. Facebook shares fell 2.7% Tuesday. Google rose a fraction.

Graph Search is designed to enrich the Facebook platform and experience for both users and advertisers, wrote Eden Zoller, an analyst at research firm Ovum. She says that before, search on Facebook "was basic and, as such, a wasted opportunity given Facebook's imperative to strengthen advertising revenue.

Zuckerberg called Graph Search, which for now doesn't include Facebook's Instagram photo-sharing app, the third pillar for Facebook. The first, News Feed, is a continual scroll showing what others are posting. The second pillar, Timeline, presents a history of all postings by an individual user.

Graph Search is intended to break the walls of user content on the social network. It will let users display their friends' data in a new way, says Lars Rasmussen, engineering director at Facebook.

Users will be able to search the website for any publicly displayed content. Say, for example, a Facebook user wanted to see photos of the fall of the Berlin Wall. That user could use Graph Search to find photos from their friends and from historical associations and other users who've posted public photos, Rasmussen says.

The feature might threaten Yelp (YELP), a site where users post reviews of places they have been to and products they have purchased. Yelp shares fell 6.2%. Users might use Facebook's search instead of Yelp to find recommendations from people they know.

Facebook emphasized privacy, a subject that's caused it problems in the past. Executives several times on Tuesday said the new feature won't affect user privacy settings, and that nobody unwanted would be able to see users' content. Privacy is "deeply built into" Graph Search, Zuckerberg said.

But Graph Search will let Facebook provide more data to advertisers that seek more targeted, personalized ad opportunities.

Facebook needs to tread very carefully here and be mindful of user privacy, wrote Zoller. "It claims to have built Graph Search with privacy in mind, but Facebook has a mixed track record on this front and is in the habit of pushing privacy to the limits of what is acceptable.

Speculation about what Facebook would announce Tuesday was widespread. This included a Facebook smartphone, a move into cloud computing and e-commerce or a new data center to better serve its billion-plus customers, more than double what it had two years ago. Search "wasn't what anyone expected," Blau said.