Dark Days Ahead For Facebook and Google?

An anonymous reader writes "Dallas Mavericks owner and media entrepreneur Mark Cuban thinks he knows the reason for Facebook's disappointing IPO; smart money has realized that 'mobile is going to crush Facebook', as the world's population increasingly accesses the Internet mostly through smartphones and tablets. Cuban notes that the limited screen real estate hampers the branding and ad placement that Google and Facebook are accustomed to when serving to desktop browsers, while phone plans typically have strict data limits, so subscribers won't necessarily take kindly to YouTube or other video ads. Forbes' Eric Jackson likewise sees a generational shift to mobile that will produce a new set of winners at the expense of Facebook and Google."

Comments

Obvious

[Anonymous Coward]

Flame baitin article is flame baitin.

Mobile will destroy Google?

[MrEricSir]

It's too bad they don't make phone software or something that could help them pick up at least a little market share in that area, amirite?

Re:Mobile will destroy Google?

[ShieldW0lf]

You just don't get it. Mobile is going to hire Steve Ballmer to crush them. With a chair.

Re:Mobile will destroy Google?

[Trepidity]

Also, some of the most popular mobile services. Pretty much the #1 most useful thing about a smartphone is being able to access Google Maps while you're out.

Re:Mobile will destroy Google?

[MightyMartian]

The whole point of Android is to be a mobile search platform. You're not such an insufferably stupid moron that you think Google isn't making momy.

Re:Mobile will destroy Google?

[Anonymous Coward]

I don't know, maybe they are making your momy.

Re:Mobile will destroy Google?

[errandum]

Google does not make money licensing Android. But they make a shitload of cash serving adds, gathering info on android users, locking you into their ecosystem, etc.

Re:Mobile will destroy Google?

[Unoriginal_Nickname]

Giving it away for free, but making up for it in volume. That's not a very good business plan.

Re:Mobile will destroy Google?

[geekoid]

"Locking" is a pretty strong term considering you can extract your data, and move it to another ecosystem if you choose.

Re:Mobile will destroy Google?

[Anonymous Coward]

It's too bad they don't make phone software or something that could help them pick up at least a little market share in that area, amirite?

Exactly. Google is doing way more to get into the mobile business than mobile companies are doing to enter the search business.

Search? What search? How, exactly, does one do search in a mobile app, other than googling it?

Fuck I don't know. One thing we can all agree on: Facebook can't possibly die fast enough. DIE FACEBOOK DIE. May all its investors and employees weep and march penniless to the nearest welfare line. May Zuckerberg be followed around with a live TV camera everywhere he goes everything he does and i do mean everything. "Oooh he's taking a shit on Channel 3!" He does like his privacy you know. May his wife divorce him for a morbidly obese redneck truck driver after first cheating on him with his best friend.

Re:Mobile will destroy Google?

[hkmwbz]

That sounds a lot like Google's business plan for their search engine. Give it away for free, and make ads dirt cheap. But get enough ads and all those tiny sums turn into huge piles of cash. Why wouldn't that work with Android?

Re:Mobile will destroy Google?

[TheEyes]

If "locking" means "providing me with so much good stuff--including the ability to easily leave the second I choose to--that I don't want to leave, even though I can," then hell, sign me up!

Re:Mobile will destroy Google?

[tweakerbee]

Except that Google isn't profiting from Android *directly* as a mobile search platform. They have acknowledged this in their quarterly reports. FTFY

Re:Mobile will destroy Google?

[PopeRatzo]

Slashdotters fetishize market share above all else as if it's the one sign of victory in business rather than profit and influence.

Right. Everybody knows the true sign of victory in business is share price and how many workers they can shed.

Unfortunate for Facebook, that they can't announce the layoff of 10,000 workers, because that would surely send the stock into the stratosphere.

OK, OK, I'm just joking. The real sign of victory in business is successfully suing your competitors for IP infringement.

Re:Mobile will destroy Google?

[MightyMartian]

The real irony is that I'm using an iPhone to defend Android.

Re:Mobile will destroy Google?

[ThatsMyNick]

You dont understand. Google does not really care about Android being more popular. What they do care about is whether Google gets to define what a smartphone is and can hence get Apple to offer their services on iPhones. They might make more money out of iPhones, but it is often because of Android, they get to make money of iPhones.

Re:Mobile will destroy Google?

[Deorus]

Even indirectly, they profit more from iOS, a platform that they don't even waste resources developing. As far as business is concerned, Android is nonsense, they could be doing much better by partnering with Apple rather than antagonizing them.

Re:Mobile will destroy Google?

[Deorus]

Your post makes no sense. The only reason why they make any money from Apple at all is because Safari defaults to Google for search, nothing else; the interface doesn't change the slightest if you choose Yahoo or Bing instead. They aren't redefining anything, or influencing Apple in any way that's positive to them. As a matter of fact, they are actually antagonizing Apple, to the point that Siri has been implemented with Wolfram Alpha as its backend and Google Maps is slowly getting ditched in favor of both OpenStreetMaps and Apple's own maps, because Google's licensing is making it impossible for Apple to implement a decent Maps app.

But

[maroberts]

...at the same time mobiles are able to establish higher rate connections, and it would probably make sense for Google to purchase a mobile phone operator or assist an one into providing much larger data limits than currently exists. Then the limits discussed above disappear and Google/Facebook resume letting the good times roll .....

Re:But

[TheEyes]

I think that was their plan, but they can't now because they own Motorola. One of the US FCC's big firewalls (the only one, it seems, that they care to enforce anymore) is that a carrier cannot manufacture their own phones, essentially to prevent the kind of massive fail we saw in the 70s with AT&T.

As far as I can tell, Google's plan was to buy up massive amounts of darknet (already done), set themselves up as an ISP (pilot project in Topeka), and gobble up enough spectrum to make themselves a big player in mobile internet (T-mobile would make a good buy, and DT wants to sell). Unfortunately for us, the patent wars forced Google to look for a defensive portfolio, and Motorola leveraged their portfolio into forcing Google to buy them to get their patents (or else they'd all go to Microsoft/Apple; Motorola essentially held themselves hostage), so that dream is dead for now.

It may be possible for Google to spin the remains of Motorola back off as a separate manufacturer; they certainly don't seem very enamoured with the company, seeing as they're keeping the two businesses entirely separate in terms of management and workers, and aren't really even collaborating with them when making the new version of Android. Maybe they'll just shuck off the phone maker part of Motorola Mobility and continue on their grand plan; they've certainly got the free cash to pull something crazy like that.

people are over thinking this

[million_monkeys]

Maybe the smart money recognized hype when they saw it and is starting to think that hype isn't a safe investment?

Re:people are over thinking this

[Sir_Sri]

Or maybe the facebook guys did a really good job of getting the maximum value for their previous investors.

If you guess the value of a company as 110 billion dollars, and it turns out it's actually 95 that's a lot closer to reality than if you guess 20 and find out it's really 160. If you look at google, that opened at around 90 immediately jumped to 110 ish, then dropped to 100 not too long after, the next major local minimum is 243, which comes 3 years later, and it's now around 600. Feel free to pick your own preference for what counts as the 'correct' value of google stock, but pretty clearly the answer has been a hell of a lot more than 100 dollars a share for the last 7 years.

The point of the IPO was in part to get cash so they can build and capitalize on new ideas. I have no idea what those ideas are, but then I wouldn't have anticipated amazon's cloud service (and I have a close person friend who works on it, and was working on developing it). Facebook bought themselves time, with cash, both to get regulators off their back (fairly, you can't have that many shareholders and not be public for long) and to invest in and build new revenue streams. Again, no idea what those are. Mark Cuban clearly doesn't see them either, and he's presumably more credible on the topic than I am, but that doesn't mean Zuck is without a plan to make more money.

Of course you're right, the whole thing could be hype or stupidity. Zuckerberg might be a naive idealist who's happy to never pay a cent to shareholders and run Facebook like a charity with enough revenue to keep everyone paid and then nothing else. That would be a disaster for facebook stock in the not too distant future, but he does have a chance to make it into a proper greedy profit building enterprise, rather than just an invasive leech on your privacy.

Re:people are over thinking this

[AngryDeuce]

Why is "insider trading" illegal? Why shouldn't people be able to get inside information and then make well-timed stock trades?

Because insider trading is only profitable if someone is being scammed, i.e., the guy that doesn't have the insider information.

The more information all actors in a given market have, the healthier it is. Insider trading goes directly against that and makes a market unhealthy, as no one will participate in a market that allows bullshit like that to occur because they're probably going to get screwed by someone in the know.

You can't really say Caveat Emptor when one of the parties in a trade had no fucking clue that $STOCK was going to be worthless in 3 days because the company is getting ready to go bankrupt and nobody but a select few knows.

Facebook is just the new MySpace

[kheldan]

Rememeber MySpace? No? Vaguely, maybe? How about AOL? AOL isn't entirely in the same category but it's close. Facebook will go the way of the dinosaur just like AOL, and MySpace, and LiveJournal, and whatever comes after Facebook will sooner than you think Not Be The New Hotness anymore. What we're seeing with Facebook today is just the opening overture of it's swan-song, and I for one will not miss it.

Re:Facebook is just the new MySpace

[PuckSR]

Yeah....why didn't he compare google to facebook? Google is clearly acting like microsoft(another unprofitable company).
I mean, seriously, Facebook and Google are analogous. They both create a web page. It isn't as if one of the webpages(Google) is defined by patented technology while the other webpage(Facebook) is mostly just defined by copyright.

Also, they both have made software(wait, Facebook doesn't), so Google should be compared to these too. Don't you remember all of the facebook software?

All sarcasm aside:
At the end of the day, they are both advertising companies...but all webpages are advertising companies. There are 3 main types of web companies, those that create, those that innovate, and those that don't do either. Sites that produce content(every news site) are only as good as their content, and if that goes down the drain they fail. Companies that innovate(like Amazon and Google and Netflix) may not be producing content, but they are typically innovating new software and new ideas. This might be a new algorithm, a new bit of server tech, or a new content delivery method. These companies are as good as their innovation. The final category is those that neither are content producers or innovators, and these are your Facebooks and your Myspaces. They aren't actually doing anything but aggregating and serving regurgitated information. They might be really successful(like Slashdot), but at the end of the day someone can come along and surpass them just because they are more "popular"....and there is nothing that can be done about this because they aren't actually doing anything.

If you think I am wrong...name one "feature" that Facebook introduced that didn't exist in some way on some other site(perhaps identically).
Mark Zuckerberg doesn't scour the planet for the best minds to innovate or develop. It didn't take a genius to decide to add "photos" and "photo-tagging" to facebook. It just takes him looking at another site and saying "We should have flash games on facebook!!".

When you buy stock in Facebook, you are essentially betting that Facebook will remain popular for awhile longer. If people start leaving Facebook for something else, then Facebook cannot stop them(same thing happened to MySpace). Sure, you can add some features....but that doesn't bring back page views. If people stop using google search for something else, Google can improve their search results. If the search gets better, people use your product. Sure, popularity matters...but at least you have some competitive tool(Just look at what Microsoft is doing with Bing)

FB and Google are NOT in the same situation.

[blind biker]

One is the designer and developer of the most popular smartphone + tablet OS. The other has a garish social networking website.

Now which one do you think is better positioned to take advantage of mobile Internet users?

Re:FB and Google are NOT in the same situation.

[Mashiki]

The one making tangible products. FB is another dotbomb in the making, it's akin to the idiots that valued Yahoo's IPO above P&G's stock.

Re:FB and Google are NOT in the same situation.

[camperdave]

One is the designer and developer of the most popular smartphone + tablet OS. The other has a garish social networking website.

Now which one do you think is better positioned to take advantage of mobile Internet users?

All I know is that I have an Android phone, and I feel taken advantage of.

Re:FB and Google are NOT in the same situation.

[drinkypoo]

All I know is that I have an Android phone, and I feel taken advantage of.

Are you sore?

Re:I call shenanigans

[FoolishBluntman]

I will see your shenanigans and raise you 1 Bullshit. There's always some "expert" out there that can predict the future. Expert, Ex-spurt, Ex - someone who used to be something significant but is no longer. Spurt - drip under pressure.

I call your bullshit, but I don't have enough chips, I guess I'm all in.

I probably should have said something more insightful like, hmm, I didn't know facebook and google didn't work on mobile devices,
oh, wait, they do
In fact, I probably use google maps more on my iphone than on my desktop.

No Need For Elaborate Explinations

[pokerdad]

Smart money knows that no company in the world should be valued at $86 billion when its profits are just $1.8 billion.

Re:No Need For Elaborate Explinations

[ThatsMyNick]

Keep in mind, that within 2 weeks GOOG was 20% lower the opening. And the seemed to survive that.

Yeah keep repeating that, and it might become accepted as truth at some point. Google opening price was $100. It never went below $100 (I think the least was 99.xx). Even more interesting was that the IPO price was $85. It never came close to the IPO price. The initial investors of Google IPO were happy from the begining. Facebook on the other hand, you know.

Re:Google is invincible

[ackthpt]

A shift in usage from desktops to mobile will not take down Google; if anyone were in a position to embrace this sort of change, Google would be a top contender. As for Facebook, I would venture to say that it is reaching the end of its life-cycle.

Google is like a Road Map, which collects a little bit from any gas station, restaurant or hotel you ask about along the way. They are a starting point and make money on referal.

facebook is a destination. You go there to share pictures, natter a bit or nose around your connections connections connections. If you want to research anything to buy you go back to Google.

Re:Maybe, but more importantly...

[apsyrtes]

I agree! Just let me know when you're done building all this stuff so I can start using it for free.

Google's mobile Ad revenue

[v1x]

According to this article, Google is estimated to bring in $4 billion in mobile Ad revenue in 2012. Even if these estimates were off by (a generous) 25%, that still sounds like a lot of money. What exactly am I missing here that led the Forbes author to predict Google's demise? I must admit I don't know much about where Facebook stands in this regard.

Re:Google's mobile Ad revenue

[geekoid]

That he as a trollish ass that make money from stirring things up.
As if Google and facebook aren't mobile.

Wasn't it obvious?

[Hackysack]

Simple grade 3 math explained why the shares went down. It's hard to justify that kind of multiple of earnings. Their income growth rate makes it unlikely it'll ever sustain that kind of value. It's got nothing to do with generational shifts to mobile.

Facebook is different than Google, very different. Facebook is one well developed web app, with remarkable popularity. Google is founded on the strengths of their search engine. Search is key, search is where you start. Search means you're looking for something, and susceptible to being introduced to something else that you might not have been looking for. Facebook is a tool, an application. Ads in applications diminish my experience with my application, ads in my tools make me not use said tool.

Mark Cuban knows a lot about... Mark Cuban

[gavron]

It's true he invested money into Real networks (anyone use RealPlayer lately? Thought not.)
Mark is a good example of the write once-read-many kind of things.

Sadly, everything he's ever touched has ended up on the back end of a donkey.
Real-networks. Sorry, glad you made your buck back, nobody uses it.
The Mavericks? Yes, they won... nothing.
HDnet? That's like the ONLY US HD TV network never to succeed in HD.

Mark Cuban is the Charlie Brown of kicking a good investment to the... whoops,
Lucy just pulled it out from right under him. /. mods - suck it.

E

Re:Mark Cuban knows a lot about... Mark Cuban

[Anonymous Coward]

The Mavericks? Yes, they won... nothing.

Mavs are the defending NBA champions, although they were bounced out of the opening round of the playoffs this year.

They also made the finals in 2006.

Re:Mark Cuban knows a lot about... Mark Cuban

[Anonymous Coward]

"In 1995, Cuban and fellow Indiana University alumnus Todd Wagner started [what would become] Broadcast.com. In 1999, during the dot com boom, Broadcast.com was acquired by Yahoo! for $5.9 billion in Yahoo! stock. After the sale of Broadcast.com, Cuban diversified his wealth to avoid exposure to a market crash."

There is a reason that he is filthy rich.

http://en.wikipedia.org/wiki/Mark_Cuban

Why do people care what Cuban thinks again?

[EjectButton]

Yahoo stupidly paid a couple billion to Cuban for a worthless website at the height of the dot-com boom.

Since then he has goofed around with sports teams and had a bunch of failed business ventures. Apparently on Slashdot this makes you a technology genius who's every blog post is front page material.

I having a problem with credibility here...

[Genda]

Don't get me wrong, the forces that be, want desperately to make desktops go away... They can't be locked down or locked in the way mobile devices can be, and the people who use them well are unruly, demand their right and freedom, and typically don't play well with service providers walking all over them. So I understand the pundits claiming the PC is dead long live the mobile device!!!

The problem is that there's this peculiar thing. Its called a DISPLAY, and the one on a COMPUTER is just a wee bit larger than a hamster's cage mirror, sized display that passes for a screen on smartphones. I swear there will in 50 years be an entire generation of blind people dancing to their retro ringtones from devices long abandoned for the health problems. I personally want a great big, huge frigging display. One that won't make every person over 35 squint so hard, they look like they're doing a Clint Eastwood imitation. I want to see what I'm working on without having a microfilm reader's lens welded to my eyes. I like movies and art that fill my field of vision. I like lots of windows up so I can code, and debug, and document, and browse, and email, and edit pictures all at the same friggin time.

If the price of my great big display is that it sadly that leaves room for greedy clowns to slip advertisement into my field of view, so be it, I have to keep getting more creative to keep the stupid stuff out. This is a request for the world at large. Someone out there. Provide commercial media without commercials and people will gladly pay the premium. I would, in a heart beat!

Re:I call shenanigans

[sideslash]

I probably should have said something more insightful like, hmm, I didn't know facebook and google didn't work on mobile devices, oh, wait, they do In fact, I probably use google maps more on my iphone than on my desktop.

How much do you pay for using Google maps? Do you follow ads a lot? If the answer is that you don't pay anything to Google for your mobile maps, and you don't follow ads, then how is Google making money off you? The same observation applies to Facebook.

Re:Google Lumped in with Facebook?

[RedDeadThumb]

It makes sense if you realize Mark Cuban has a burr up his butt over Google.

Re:You're showing them!

[AngryDeuce]

I'm curious what exactly makes a user "active". I know so many people with Facebook accounts that abandoned them ages ago...they didn't go through the bullshit hassle of deleting the account, but they stopped logging in.

This is one of the reasons why I really wondered about Facebook's valuation being accurate or not. I know for a fact that I had multiple accounts (before I deleted them), so to FB, I was 3 separate people (work, play, and politics). I know many other people that have a work account and a personal account to keep their private lives private.

Based upon my own off-the-cuff observations in my circle of friends and family (obviously not scientific, but just for the sake of estimation) I would guess that 2/3, maybe 3/4, of the active users are actually real, individual people. When you're talking about 900 million "active users", that's 225-300 million bogus, worthless accounts. How would an advertiser know that they were targeting ads at real people and not an alternate account? How would they know that all their "likes" were legitimate potential customers and not someone just fucking around on a throwaway account they don't care about?

The mobile customers are probably legitimate, I'll grant that, because most people aren't going to tie a troll account to their mobile device. But that still leaves 450 million accounts that are very questionable in my opinion.

I know Facebook would never really release numbers on the numbers of people that have abandoned their service or the number of potentially duplicate/troll accounts because it's just negative publicity with no positive gain for FB in doing so, but it would be nice to know if I'm completely off my rocker or if I just happen to know an inordinate number of people that have multiple accounts.

Because it doesn't have the surface area

[SuperKendall]

That sounds a lot like Google's business plan for their search engine. Give it away for free, and make ads dirt cheap. But get enough ads and all those tiny sums turn into huge piles of cash.

The point is that even IF Google continues to be the search engine of choice on Mobile (as it will on Android), they still make way less than they do on the desktop. Think of how much space on the desktop Google they devote to ads in the result. Now do a search on a mobile device - there is hardly any space left for ads anywhere after you display the results, perhaps one or two...

So that's an order of magnitude reduction in ad revenue for Facebook and Google, even IF they remain sole search provider...

But as we have seen from other past stories, Google being the primary search engine outside Android is possibly a thing that will pass. Already Siri acts as an intermediary that can pull results from things besides Google and certainly does not do advertising with Google. And I'm not just talking about Siri, if voice driving searches take off where does Google put the ads even if they are the ones doing the Siri like service on Android (it has something like it today).

Even if you think about desktops, increasingly people are using iPads or netbooks - and THOSE have smaller screens as well, so even with a desktop browser you cannot display as many ads.

All that is why it is hard to think that Facebook or Google can possibly maintain the revenue they enjoy now.

Re:Because it doesn't have the surface area

[ThatsMyNick]

Now do a search on a mobile device - there is hardly any space left for ads anywhere after you display the results, perhaps one or two...

So that's an order of magnitude reduction in ad revenue for Facebook and Google, even IF they remain sole search provider...

This would mean the top spot would pay an order or two more for the placement on mobile. One more flaw in your argument is Google is not paid per ad impression. Google is paid only if the ad is clicked. Google can collect lot more information about you on mobile than desktop, and can accurately determine which ad you are likely to click (in a less sinister way, which ad you would like). So if they work it out right, they might end up make more revenue on mobile than desktop (even considering only search, and ignoring all ad supported apps on the market)