Facebook COO Sheryl Sandberg says FB don’t compete with Google for advertising dollars. This is utter nonsense. The issue is simple economics. They’re both offering you ads and your time is a limited resource. The more time you spend on FB, the more of your data it gathers (rather than Google) and the more ad revenue is being diverted away from Google. There’s a clear correlation between network value and time spent. Planning a paper on this topic in early 2012 but the 100Bn dollar (or less) question is what FB’s IPO value is.
The more content you add to facebook instead of the “open” web, the more value you’re diverting value away from the web, in turn diminishing the value of a tool that generates wonga based on searching the open web for stuff. FB is huge, pervasive and it’s effectively creating a social overlay on the web, transferring value from Google to FB in the process. That’s why Google hope that G+ gains significant traction. Social was Google’s lacuna & they can’t afford to be left behind.