I find it interesting that Facebook is slowly starving Google of advertising revenue. Google has been singularly unsuccessful at developing a business outside of their search advertising business that makes them the sort of margins they need.

In my opinion Google is sacrificing their own search product[1] on the altar of staying alive looking for an answer that works. The challenge with that strategy is that a company that doesn't need search advertising to stay alive will have the freedom to compete with Google in terms of quality user experience.

One has to consider the question, what would the marginal cost of adding quality search to Facebook's infrastructure be? And what sort of margins would their search product need to return to support that? I can imagine a Facebook search product with the accuracy and reach of Google's but without the crappy pages that nobody really cares about anyway. With 15 - 30% margins instead of 80+% margins.

I remember watching IBM fade in the 1990's. It wasn't pretty and for as long as I could remember up to that point it had been the biggest fish in a very big market. The gorilla as some would say. I watched as an alliance of Microsoft and Intel decimated the retail business, Sun, HP, and later Dell decimated the server business. Nobody who mattered really thought IBM was dying or even threatened.

Google won by making Google a destination in every web browser, and Facebook is winning by making Facebook the destination on everyone's phone. And the desktop browsing experience is fading and fading.

Something will come along and derail Facebook but it won't be another social network. It will be something which changes a fundamental part of people behavior and interaction with their world.

[1] And to be clear it is creating a backlash by attempting to monetize so heavily the user experience is compromised as are the search results.