FB Launches Facebook Camera – An Instagram-Style Photo Filtering, Sharing, Viewing iOS App

Insta-who? Today Facebook begins rolling out Facebook Camera for iOS to English-speaking countries, a standalone photos app where you can shoot, filter, and share single or sets of photos and scroll through a feed of photos uploaded to Facebook by your friends. Developed by Facebook’s photos team without the help of Instagram because the acquisition deal hasn’t closed yet, Facebook Camera looks a lot like the app TechCrunch leaked images of a year ago, and is designed for quicker publishing than Facebook’s multi-featured primary mobile app.

Facebook Camera lets you rapidly pick one or more photos, apply filters, tag friends and locations, add a description, and post. While its 14 filters, batch uploads, and streamlined interface are a big step up from Facebook for iOS, the design isn’t as beautiful as Instagram and neither are the photos you’ll see in it. When asked if Facebook Camera would become a direct competitor to thephotosharing network it bought last month, a spokesman told me “As Mark asserted, we’re committed to building and growing Instagram independently, so I anticipate some healthy competition.”

Though for now Facebook Camera is just for iOS in English-speaking countries (and will become available as soon as Apple can populate the App Store with it, if you don’t see it already) it will roll out internationally over the next few weeks as Facebook gets it translated. As for versions for Android, BlackBerry, and Windows Phone, I’m told “While we don’t comment on future products we are carefuly looking at what might make for agood Facebook photos experience across other platforms.”

But now Facebook has three apps for consumers — its primary app, Facebook Messenger, and now Facebook Camera (plus Facebook Pages Manager for Page admins). That means users might have to choose which to keep on their home screen, or could end up sticking all three in a folder and become less likely to use any of them.

The app’s homescreen includes a camera button for shooting new photos, and quick access to the last few images in your camera roll for instant uploading. By default you’ll see a feed of photos from your friends that’s basically your news feed but only photo posts. You can also view a feed of just photos you’ve taken or been tagged in. The feeds update in real time, you can Like with a single click, and the comment button pops up as an overlay rather than forcing you to load a separate screen. The browsing experience is smooth, though browsing can only be done in portrait mode so standard photos appear square with their sides or top and bottom cut off. You have to click them and sometimes turn your device to view them in full.

How It’s Better Than Instagram

The best feature of Facebook Camera and its one real selling point over Instagram is multi-photo uploads. This helps you tell a story or share the best photos from a day’s outing in a single post. It’s great for if you can’t decide which shot is best and don’t want to go through the sharing flow over and over. The feature basically steamrolls Batch, a photosharing app specifically designed for uploading sets. Browsing multi-photo stories is smooth too, as they appear as one story in the feed showing the first photo, but you can swipe side to side to view the rest of the set.

Rather than having to wait for a photo to load when you browse by like on Instagram, it appears as a blurry placeholder at first and then sharpens up, which is nice. Facebook Camera’s 14 filters are also more sensibly named with titles that describe how they change photos, such as Bright, Emerald, and Copper, rather than Instagram’s less indicative Hudson, Sutro, and Brannan. Facebook’s photos product manager Dirk Stoop tells me “We do hope to bring the best stuff from Facebook Camera to the other app” so filters, cropping, and batch uploads could appear in the main Facebook app soon.

How It’s Worse

Unfortunately, there are several flaws in the current version of Facebook Camera that seem especially glaring compared to Instagram. Like and comment icons and counts are overlaid on the photos, disturbing their appearance. When you click to view existing comments on a photo they take a few seconds to load, which can fool you into thinking they aren’t there. Instagram also has more filters, 17, plus light adjustment and tilt-shift that Facebook’s new app lack.

But the first thing you might notice is the photos are decidedly less beautiful than what you’ll see on Instagram. Most weren’t uploaded with Facebook Camera but rather through Facebook’s web interface, primary app, or other third-party apps, so they’re unfiltered, and weren’t necessarily taken with artistry in mind.

While Facebook may be late to the standalone photo app scene, you have to remember that while Instagram has hit 50 million downloads, Facebook has over 500 million mobile users, and somewhere around 220 million on iOS and Android. As the social network’s user base shifts to mobile, the app will be crucial to keeping people engaged.

Facebook Camera may not be perfect, but for those who don’t want to start a whole new social network for photosharing on Instagram, and want an app that sucks in photos shared by their Facebook friends from anywhere, including Instagram and Path, Facebook Camera could earn a spot on the homescreen.

Download Facebook Camera here

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Facebook Browser Is Imminent [RUMOR]

Are you ready for a Facebook browser that integrates the social networking behemoth into your online life more than ever? That’s exactly what could be on the way soon, according to one report.

A Friday Pocket-lint report cites a “trusted source” that Facebook wants to buy Opera Software — manufacturers of the Opera web browser, which claims more than 200 million users worldwide. The Facebook browser would include default menu bar plugins, further permeating Facebook into users’ general web experience, according to the report.

A Facebook spokesperson declined Mashable‘s request for comment.

A custom browser would be a significant step toward Facebook becoming your web, as opposed to just an Internet site you visit and service you use. Opera’s mobile browser has received strong reviews online, meaning a functional Facebook browser using it could be even more powerful. Facebook has struggled to penetrate mobile use as deeply as many think it should be able to — and will need to in order to sustain long-term growth.

A Facebook browser would also bolster the newly public company’s competition with Google. Google Chromerecently became the web’s most-used browser, but Facebook’s gigantic user base of more than 900 million people would present a potential serious threat down the line. It would be interesting to see Facebook try to battle Google for browser dominance as Google+ struggles to play catchup in social networking.

We’ll see if the Opera rumors are true, but if Pocket-lint‘s “man in the know” is even remotely hooked in, it’s not hard to imagine the arrival of a Facebook browser being only a matter of time.

How could a Facebook browser help the company take over the web — or can it? Share your perspective in the comments.

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Post Facebook IPO, Your Brain And Its Data Are Worth $91.44 To Mark Zuckerberg

Facebook’s lukewarm IPO may have created fewer millionaires than some hoped. But it’s cemented Mark Zuckerberg’s position as the richest man in America in the business of herding attention spans and siphoning personal details from human brains into corporate servers.

Now that the dust has settled and Facebook has traded on NASDAQ for a day, it’s possible to gauge more precisely than ever before how much the company is worth, and with that number, how much of its value derives from its relationship with each of the 900 million people who visit the site on a regular basis, gaze at and click on its ads, and feed its databases with some of their most private bits of information: By my count, an average of around $91 per user.

Facebook ended its first day of trading as a public company with a market capitalization of $104.9 billion. Subtract out its assets like real estate, servers, and cash from that total value of the company, as well as the payment business that accounts for close to 17% of its revenue, and Facebook’s entire advertising business is worth $82.3 billion. Dividing that by the roughly 900 million active users that the site last disclosed, I calculate that each of those individuals’ advertising value is $91.44.

 

That number, the average value Facebook’s shareholders now place on the eyeballs, personal preferences, and shared secrets of its users, is subject to wide variation, of course: Users in developing countries and inactive users are probably worth less, and high-income, well-connected, click-happy and oversharing users are likely worth far more. The privacy-focused Web firm Abine released a tool prior to the IPO that allowed users to enter details like where they live and how many friends they have to determine their value to Facebook, though that calculator also included Facebook’s revenue from virtual payments, which have less to do with users’ personal data than Facebook’s advertising business.

In a talk last March at the American Bar Association’s antitrust chapter, Senator Al Franken reminded the audience that free services online like Google and Facebook have more user data than ever before, and less incentive than ever to respect users’ privacy as they seek to cash in on it. ”You are not their client,” he said. “you are their product.”

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Did Facebook Overpay For Instagram?

Facebook recently acquired Instagram for $1 billion. For those unfamiliar with Instagram, it is a smartphone application that allows users to take a photo and transform their photograph using 11 different filter effects. Users can then instantly share the picture through social media outlets such as Facebook, Twitter and Tumblr. Although the application allows users to follow other users, Instagram is widely used to only upload pictures to other social media applications.

So how does this application make money?

Well, at the moment it doesn't. Prior to the acquisition, Instagram had no business model to make revenue. The service is completely free and no advertisements are displayed to users, although there is definitely potential to monetize the company in the future, through ads or charging for additional effects. Instagram was surviving on venture capital funding.

History

Instagram is a company less than two years old, with zero revenue, and yet Facebook felt the startup was worth $1 billion. Are we missing something here? Facebook was not the only company to put a high price tag on Instagram; this company has been blessed with angel investors prior to launching. 

The first round of funding came back in March 2010 when Instagram, then known as Burbn, received $500,000 in seed capital. The second round of funding was received about a year later, this time for $7 million. At the time, Instagram had attracted roughly 1.75 million users in the four months since the launch. Funding round three came just recently, when Instagram closed a $50 million deal just days before the Facebook acquisition. With approximately 35 million users, made up of roughly 30 million iPhone users and about 5 million Android users, obtained in six days, Instagram was valued at $500 million.

Did Facebook Overpay?

This is a question that only time will tell. Facebook is a dominant force and photo sharing is one aspect it has always focused on, so acquiring the most popular photo sharing application should really not be much of a surprise. When you take a look at the price Facebook paid for Instagram compared to other tech acquisitions over the years, Facebook may not look so insane.

Facebook bought Instagram's approximate 35 million users for $1 billion, or just over $28 per user. Yahoo acquired Geocities in 1999 for $3.57 billion. At the time, Geocities had around 4.3 million users, meaning Yahoo paid about $830 per user. Skype was acquired by eBay in 2005 for $2.6 billion, working out to roughly $240 per user. Google bought YouTube for $1.65 billion, or nearly $49 per user, and Yahoo acquired Broadcast.com for $5.7 billion at over $10,000 per user. Comparing those numbers to the Instagram acquisition, it appears that Facebook may have got a bargain.

The Bottom Line

A billion dollars for a company that has not made a single dime still sounds ludicrous, but in today's age, information can sometimes be more valuable than revenue to companies such as Facebook. Instagram's user numbers have been impressive since inception and if the trend continues, Facebook may have made a wise strategic move. If anyone could have success taking a non-profitable popular application and monetizing it into a billion dollar corporation, Mark Zuckerberg would be the person, and it wouldn't be the first time he did it, either. 

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Trolling Could Get You 25 Years in Jail in Arizona

One of the Internet's basic tenets—the right to be as much of a myopic, infantile asshat as humanly possible—is currently under attack in Arizona. A sweeping update to the state's telecommunications harrasment bill could make naughty, angry words a Class 1 misdemeanor. Or worse.

It's a dangerous precedent, yet another bill written and supported by legislators who fundamentally don't understand the nature of the internet. And I'm not just being a, well, you know.

Arizona House Bill 2549 passed both legislative houses last Thursday and is now awaiting approval from Arizona's governor Brewer. The statute states that:

"It is unlawful for any person, with intent to terrify, intimidate, threaten, harass, annoy or offend, to use a ANY ELECTRONIC OR DIGITAL DEVICE and use any obscene, lewd or profane language or suggest any lewd or lascivious act, or threaten to inflict physical harm to the person or property of any person."

Emphasis added. If the electronic devices and means are employed to stalk a victim, the penalty bumps up to a Class 3 felony.

For those not intimately familiar with Arizona penal law, a Class 1 misdemeanor is punishable by a $2,500 fine and up to six months in jail (it's the most aggressive misdemeanor charge the state can bring). A Class 3 felony, meanwhile, carries a minimum sentence of 2.5 years for non-dangerous offenders with no prior record. And a max of 25 years in jail.

Opponents of the bill argue that the wording is overly broad and could easily be interpreted to include not just one-on-one communications but public forums like 4Chan, Reddit, and anywhere else that allows commenting. You thought the banhammer was bad? Try handcuffs.

It could also have a chilling effect on free speech by prohibiting shocking or "profane" language online. And since the bill stipulates that the offense only has to occur on Arizona soil (since a Facebook comment is definitely a geographic place, right?) that basically puts the entire Internet on notice.

The bill's supporters argue that the steps are necessary to prevent online bullying. Despite the public outcry, the bill has seen very little resistance from elected officials. However, given how well Arizona's other recent, short-lived, and generally draconian propositions—-including itsracial profiling, anti-gay adoption, and anti-immigration bills—-have fared, House Bill 2549 might not be a law for long, assuming Governor Brewer even signs it.

In the mean time, feel free to leave your thoughts on the matter on Brewer's Facebook page. You know, while it's still legal. [Arizona State House of Reps via CBLDF]

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The 5 Reasons Why Facebook Is Worth So Much Money

How did Facebook become worth so much money that it could file for the biggest IPO in tech history? By building a highly defensible product, platform, and advertising business on top of brilliant talent and valuable data. It now has several competitive advantages that protect it from disruption and could give it a long life as the primary online identity provider. Here are the 5 components that make Facebook a smart long-term bet for investors, regardless of its exact IPO pricing.

Network Effect

Displacing Facebook as the mainstream online social network would be next to impossible. It brought authenticated identity to the internet –a crucial utility that compelled users to join. No other service may be able to add on top of Facebook something as valuable as what Facebook added to Myspace, friendster, and other services where you didn’t have to be yourself.
Facebook’s ingenius distribution strategy, detailed in The Facebook Effect by David Kirkpatrick, allowed the service to capitalize on this value-add and spread to the farthest reaches of the globe. Eventually the network effect took hold, with Facebook’s ever-growing user base making it ever-more valuable and attractive to new users.


                               

And now inertia has set in. Users have invested considerable time into Facebook building their profiles, walls, interest graphs, and most importantly, their social graphs. As Facebook handles a wide range of use cases and a critical mass of any person’s friends already using it, a competing social network can’t just be as good or better, it would need to be massive improvement to lead users astray. The insulation to competition provided by the network effect makes it a safe long-term bet for investors.

The News Feed’s EdgeRank Algorithm

For five years, Facebook has been collecting data and refining its EdgeRank algorithm, which determines what of all the content your friends share ends up in your news feed, and how prominently. By using Likes, comments, and shares to determine what’s most relevant, Facebook had developed arguably the best automated content curation engine in the world. The news feed also gets to draw on the web’s largest database of photos, and the friend tags they feature which helped Facebook go viral.

                              

For new users without tons of data points, Facebook can still predict what they might be interested in seeing. For existing users, especially veterans of the site that actively use its feedback mechanisms, the news feed consistently surfaces relevant content. EdgeRank creates that the highly addicting experience that drives Facebook’s enormous time on site, return visit rate, and engagement. Even if Twitter or Google+ had all the content of Facebook, it could take them years to develop an algorithm that produces such a relevant feed.

Talent

Mark Zuckerberg sees the future. His product vision allows Facebook to release features that users grow into rather than out of. Zuckerberg has integrated progressive home brewed ideas as well as those that couldn’t reach their full potential when launched elsewhere. He has pushed the service to constantly reinvent itself, allowing it to stay cool and relevant 8 years after launch.
Zuck’s dedication to making the world a better place through interconnection and openness has also attracted other visionaries. COO Sheryl Sandberg‘s efficiency has made the company very profitable, and her willingness to experiment means Facebook will continue to revolutionize advertising through behavioral targeting and social content-infused ads. VP of Product Chris Cox has led Facebook’s social design movement, where 1st and 3rd party products are made to leverage Facebook’s data and community from the start, rather than bolting them on.

                                   

With the promise of changing the world and a lean, fun-loving company culture, Facebook has been pulling top engineering, product, and business talent away from larger companies like Google that are saddled with product bloat and bureaucracy. It’s also been aggressively acquiring disruptive startups such as Paul Bucheit and Brett Taylor’s FriendFeed, Blake Ross’ Parakey, Sam Lessin’s Drop.io, and Josh Williams’ Gowalla. The rockstar product designers and executives ensures innovation will continue to flow from within Facebook.
The IPO will provide Facebook more cash for acquisitions and give its talent the liquidity they deserve. Though there’s always the chance they could cash out and leave, the ability to sell a little stock and upgrade their lifestyle might keep employees happy enough to stick around.

The Apps and Games Platform

Facebook has created a gaming platform proven to offer viral growth. While the service has curtailed some of loudest viral channels, organic growth opportunities remain and on-site advertising for games has produced high returns on investment for companies like Zynga. Facebook has fostered an enormous community of developers that pay while populating the site with engaging apps and content, and that won’t ever disappear overnight.

                       

Facebook games are often infinite building simulations or twitch puzzlers, have long session lengths, and let users make vanity purchases so they can show off while simultaneously hooking them deeper into a game. They readily produce “whales”, or people who spend orders of magnitude more than the average player. Mobile is emerging as a lucrative platform for Apple and Google, and Facebook is just getting started there, but it does have an enormous install base to work from.
By attracting developers early with free growth, clamping down once they had invested, and then taxing them 30% through its virtual currency Credits, Facebook has turned its games platform into a consistent money maker. Now some developers are experimenting with digital media sales and rentals, pay-per-view, as well as offering virtual currency microincentives, showing potential for platform monetization beyond games.

Ad Targeting

Age, gender, current city, hometown, employers, education, friends, interests, and now in-app activity and ecommerce habits. When users share this data with friends, they’re also sharing with Facebook. This gives Facebook possibly the most accurate and robust set of ad targeting data in the world. With both an self-serve tool and ad reps handling premium accounts, Facebook can provide effective advertising solutions to both local business and international brands.
Facebook has developed eye-catching ads by combining this targeting with social-content infused ad creative. Viewers see the names and faces of friends who Like an advertised brand. Interactions between their friends and brands, such as Likes, app usage, and checkins, can become the ads themselves through Sponsored Stories. These trump, and are increasingly pulling spend away from more cookie-cutter display and search ads targeted through cookies and keywords.
Facebook has only begun to monetize through ads. The sidebars where ads primarily appear have been kept small and unobtrusive. Facebook is now mixing ads back into the web version of the news feed, where they’re sure to be seen between organic social content. Facebook has yet to show ads to its hundreds of millions of daily mobile users, but Sponsored Stories could show up there soon too. Finally, it could one day create an ad network that allows other sites to pay to show logged-in Facebook users the same highly targeted social ads they see on Facebook.com.

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Facebook IPO Crashes SEC Website

It appears that the excitement over the Facebook IPO has crashed the SEC’s website. The link to the Facebook SEC filing, previously available here, is no longer loading. Instead, we’re seeing a “this webpage is not available message” when attempting to load the site using Google’s Chrome web browser, and similar errors in other browsers. This has gone on for several minutes now, as everyone is clicking through to read the filing. That’s too bad for anyone coming late to the news – you’ll have to wait for those who already had it loaded up on their screens to tell you what it said.

For what it’s worth, the entire SEC.gov website is not down – the main page still loads. But when you click into the EDGAR section, things start to slow down quite a bit. For example, try doing a search for company filings. Click, then wait and wait.

Update: The page is loading again now, but slowly. In fact, it’s been loading for many minutes now and has not finished downloading content. We wouldn’t be surprised to see it up and down throughout the day and more news hits.

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Google, Facebook, Privacy — And You

Editor’s note: Guest author Keith Teare is General Partner at his incubator Archimedes Labs and CEO of newly funded just.me. He was a co-founder of TechCrunch.

Like millions of other people, I got an email from Google this morning. It was entitled “Changes to Google Privacy Policy and Terms of Service”. The first sentence describes the intent of the changes as shortening 60 policies into one, and improving their readability.

Then there is a longer explanation captured in the graphic above.

The email goes on to assert that Google has not changed its privacy policy and will not sell our personal information to third parties – “Our privacy policies remain unchanged”. So what is going on here?

Facebook is the shiny object that Larry is focused on.

This is a week where Sheryl Sandberg – Chief Operating Officer at Facebook – spoke at Hubert Burda’s DLD conference in Munich and stated that we were in the middle of 3 trends. First, a trend “from anonymity to real identity”. Secondly, a trend from “wisdom of crowds to wisdom of friends” and third, a trend “from being receivers of information to broadcasters of information”. See the video below for the actual points she made. It was a thoughtful and at the same time a polemical speech, a speech with a strong point of view. In thinking about Google’s privacy policy changes it helps to listen to Sheryl’s remarks and reflect on the context.

Facebook is saying that the Internet as a pure information retrieval mechanism is dead. That the “readwrite” web that began as long ago as cheap web site hosting in 1998, has entirely replaced the read-only web. That the identifiable author has replaced the anonymous one. We are broadcasting and we are identifiable. That reading what friends say is now dominant in that world. Facebook envisages a future in which we all broadcast almost everything to almost everybody.

Google’s problem.

In that world, Google’s PageRank algorithm is seriously out of date. It promotes pages based on the number of links to it. Today, pages are no longer the unit of publishing. Far smaller items than a page dominate our senses. And those smaller messages are produced in huge quantity and in real time. So the signals that make something relevant have now changed. Facebook (and Twitter) have oodles of such signals. Google, until recently, had none.

Google’s solution.

The changes in Google’s terms and conditions are primarily focused on providing the company with an integrated set of data capable of feeding it signals about what is and is not relevant to each of us as we search the vast amount of data produced by the second. In that sense it is not only the right strategic move, it is a question of life and death. Google is doing a pivot, in order to remain relevant. It’s hard to disagree that this is necessary. It also seems clear that neither company is being intentionally “evil”. However, there is a dilemma for both Google and Facebook as we go down the “we are all broadcasters now” path. How can they gather the signals that feed insight without making decisions for the user about what is private, selectively shared or public?

We, the people!

There is a discernible and growing reaction against both Facebook’s new sharing paradigm and Google’s policy changes. As implicit sharing, or as Sheryl Sandberg calls it, broadcasting, replaces conscious sharing, many are growing disillusioned with Facebook taking liberties with their behavior. The same instinct is making many people focus on the assumed bad intent behind Google’s modifications. Broadcasting our “real identity” is not something anybody wants as a default, and many don’t want under any circumstances.

Privacy is becoming a product issue, not only a policy issue.

In the past privacy advocates on the Internet were primarily focused on privacy as a policy issue, and the privacy lobby was mainly made up of policy professionals. In the period since Facebook’s 2011 F8 conference, we have seen consumers begin to have strong opinions about the use of their data. The past week has accelerated this trend. Product managers now need to think long and hard about the assumptions built into their products and ensure they are serving consumers not just in words but in fact. Consumers are at a tipping pointy in not tolerating all-inclusive policy decisions by service providers that impact who sees their stuff.

Google and Facebook are between a rock and a hard place.

There is a big structural problem for both Google and Facebook as they contemplate the product consequences of consumer reactions to their product roadmap. In a centralized platform it is incredibly hard to create easy-to-understand controls that give each user the ability to control, at a granular level, what they share and who with. Grand policy shifts, like that which came out of F8 and which we are now seeing from Google, tend to assume all users are the same and will want the same thing.

In reality, users are more complex. I might want to save a private video to a personal storage space one moment, share something with a select group of friends another moment, and broadcast something to the world five minutes later. The web services infrastructure that both Facebook and Google are based on does not easily permit such fine grained control for users without also imposing serious effort. As we all know, that leads users to stick with the default settings most of the time.

So, despite good intent by the teams at both companies, one-size-fits-all decisions are the norm.

Mobile to the rescue?

Structural problems usually require structural solutions. What it seems consumers are asking for is a world in which we all know what we are sharing and who with — but where we don’t have to do a huge amount of work to achieve that. Google Circles seems to be a nod in this direction as are Facebook’s groups. But neither is really easy enough or sufficiently integrated into the flow of the products to really solve the problem. Both require a huge management overhead.

As I argued earlier this week in “Google, Look Out Behind You!“, the spread of smartphones may be part of the solution here. Hundreds of millions of consumers are now carrying around connected still and video cameras with lists of contacts in the address book, often already organized into meaningful groups. Decentralized decision-making is very easy when there are decentralized software clients under the unique control of each user. The ability to be private one moment, selectively share the next and then publicly broadcast a few minutes later is easy to achieve in this decentralized software architecture. And service providers can never become bad actors — simply because they do not own our information or the full social graph. The cloud becomes a means of delivering messages to the phones and the place where we store our media. But it’s not the place we need to trust to make decisions about what gets shared and who with.

Software can truly reflect the wishes of each human being in each moment in this world. It couldn’t be structurally more different from the past 10 years of centralized web services.

What’s Next?

Products will need to become increasingly more human as they become more mobile. Privacy can go away as an issue if that happens. All decisions about where data can travel will be able to be made by the individual, each time they produce data. We will all be able to be private, share selectively or choose to broadcast with relative ease.

We are moving to a period where it will be considered intrusive and unwelcome if our service providers have any point of view about our sharing behavior. “Just trust us” will not be necessary and certainly won’t cut it. Capturing moments in one’s life, with the choice of whether to share, and as importantly, who to share it with, will be in the hands of each individual. The service provider will merely execute the user’s wishes. If you think about it, it’s kind of like what email service providers do today. I can’t wait.

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Facebook Vs. Google: The Battle For Internet Dominance

Google and Facebook will continue to duke it out over the top spot in the display ad market.  Mark Zuckerberg’s social network remains one of the main competitive risks to Google’s absolute dominance of the Internet.

“Facebook has posed serious problems for Google, most notably by walling off the social network’s content from Google’s search engine,” explained
Baird’s equity research analysts in a note on Friday.

The problem, for Google, is that its business model relies on its ability to “index the web.”  Thus, when Facebook walls-off its site, it’s essentially blocking a significant, and growing, portion of the web.  “Google’s index has been faced with an ever-increasing blind spot for search,” wrote the analysts.

Google remains the undisputed king of the Internet.  It clearly dominates search advertising, with over 65% of the U.S. market and more than 50% of the global market (Yahoo has 16% share in the U.S. while Microsoft’s Bing has been growing fast and now accounts for 14%).  It has one of the fastest growing mobile operating systems, Android, where its share is even larger than in PCs and growing faster than Apple’s iOS.  In 2012, Google will rake in more than $36 billion in revenue.

But Facebook is creeping up.  Mark Zuckerberg’s social network has risen to become the second most important online property, behind Google.  Facebook reaches about 43% of the web over the last three months, according to Alexa, and counts with more than 5% of global page views.  It makes the difference in engagement, though: users spend an average of 24 minutes and 45 seconds on Facebook, compared with 11 minutes and 52 seconds on Google.

Facebook’s social networking model creates a host of problems for Google.  The social network counts with more than 750 million users, 50% of which log on daily.  This translates to about 700 billion minutes of usage per month, or about 16 hours per user, with about 70% of those coming from outside the U.S., according to Baird’s analysts.

This directly undermines Google’s communication tools, particularly Gmail, both in its chat and e-mail forms.  While the company founded by Sergey Brin and Larry Page has launched its own social network, Google+, a report by Enders Analysis from December 19 suggests it will “remain niche.”
Furthermore, Facebook could jeopardize Google’s online dominance by developing its own search capabilities.  Currently, Facebook’s search capacities are very limited, but “theoretically [Facebook could] enter the market by first creating a vertical search engine focused on social, and then broadening the scope to encompass more generic search capabilities,” explained Baird’s research analysts.  Thus, Facebook would count with a differentiated search product aided by the “valuable social signals [that] could be used to improve search relevance.”

Google seems set to continue to grow its businesses in 2012 and beyond, particularly given its dominant position.  There is little doubt that Google will loosen its hold on its highly profitable search business in the medium-term, but it definitely faces a powerful challenger with Mark Zuckerberg’s Facebook.  The social network is one of the largest display players, and, sitting on the number two spot of the web, has the opportunity to eat into Google’s formidable share.  The battle for Internet dominance promises to be an interesting one.

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2011 - The Year In Tech

Okay, last workday of the year. It’s nostalgia time. Let’s take a quick glance in the rearview mirror at the year in Tech, before we speed forward again in 2012. There were defining moments, epic battles, new product introductions, and major corporate screw-ups. Mobile and social drove many of the changes in tech, and we’ve certainly gone through our own major transition here at TechCrunch (but I’ll save that for another post). Below is our list of 11 events in tech that made 2011 memorable.

1. End Of An Era: Steve Jobs Passes Away

The defining moment of 2011 which transcended tech was the passing of Steve Jobs. It shook the world not because it was unexpected, but because Jobs was at the height of his creative arc and his work was far from finished. He had pulled the tech industry into the post-PC era with the iPhone and iPad leading the charge, and the rest of the industry following. But Jobs always liked to surprise people with “one more thing,” and he set up Apple to keep creating those things far into the future. It is telling that his last public appearance was in front of the Cupertino City Council outlining his plans for a futuristic new Apple headquarters. (Other tech luminaries no longer with us include Dennis Ritchie, Bob Galvin, and Ken Olsen).

2. Google Goes Social

After many previous half-hearted attempts to take on Facebook, Google finally got serious about social in 2011 with the launch of Google+. Larry Page, who took over as CEO this year from Eric Schmidt, put it front and center by weaving it into Google’s other products and pushing it to an estimated 65 million people. With its Circles and Hangouts, G+ is forging its own distinct identity. The more that social threatens search as the way people find things in the Web, the more important G+ will become to Google.
 
3. The Kindle Lights A Fire

Amazon entered the tablet race this year with the Kindle Fire, a media tablet based on Android that serves as a window into all the digital media Amazon is trying to sell us—books, movies, music, apps. The $200 Kindle Fire is the best-selling Android tablet out there. Amazon sold more than 4 million total Kindles over the holidays (including the E-Ink versions). Amazon just wants to get as many Kindle Fires into people’s hands as possible so that it can deliver digital books, movies, and apps right into our hands.

4. The Year Of The Pivot

The one thing startup founders learn very quickly is that failure is okay as long as they learn from it. With the cost to create a product lower than ever before, lean startups can afford to try again. This is known as the “pivot,” an over-used term which became a survival strategy for some, even fat startups (see, Color). The two most successful pivots which come to mind are Turntable.fm (formerly Sticky Bits) and Fab.com (which went from gay social network to design-oriented e-commerce site).

5. Netflix Screws Up

This was a tough year for Netflix. Its stock went from $300 to $70 as it tried to speed its transition from a DVD rentals business to streaming online video. Along the way, it introduced price hikes to some of its customers and tried to split off its DVD-by-mail business before backing off and apologizing to customers. (Although, the price hikes remained). Viewers are spending more time watching Netflix movies streamed over the Internet, but the company still has a lot of work to do to repair its once-shiny brand image.

6. Tech IPOs Come Back (Sort Of)

After several years of almost no activity, 2011 was a big year for tech IPOs. We had LinkedIn, Pandora, Groupon, Yandex, and Zynga. And don’t forget about Chinese Internet IPOs like Tudou and Renren. Most of these didn’t perform that well for public investors after initial pops, and even some private investors got burned (Zynga priced below its last private round). Now all eyes are on Facebook, which is planning to IPO in 2012.

7. The Private Billion-Dollar Club Gets Bigger

One reason tech IPOs aren’t performing so well is that much of growth in value is now captured before the IPO by private investors. Tech companies are pushing off going public further and further into the future, and raising huge rounds of funding from the same types of growth investors—DST, T-Rowe Price, Fidelity—who a dozen years ago would have waited for an IPO. As a result, many private tech companies are raising money at $1 billion valuations. We saw this trend take off in 2011 with Airbnb, Dropbox, Gilt Groupe, Square, and Spotify. And it’s not limited just to the U.S.

8. Google Buys Motorola, Microsoft Buys Skype, And Other Big Deals

2011 wasn’t just a big year for IPOs, it was also a big year for M&A. While the biggest tech deal of the year, AT&T’s proposed $39 billion merger with T-Mobile, was squashed by the government on antitrust grounds, some of the biggest tech deals of the last decade did go through. Google bought Motorola Mobility for $12.5 billion, Microsoft called in Skype for $8.5 billion, and eBay acquired GSICommerce for $2.4 billion. Other notable large deals included HP-Autonomy ($10.2 billion), RightNow-Oracle $1.5 billion), PopCap-Electronic Arts ($1.3 billion), ITA Software-Google ($700 million), Anobit Technologies-Apple ($450 million), Admeld-Google ($400 million), Efficient Frontier-Adobe ($400 million), Radian6-Salesforce ($326 million), Huffington Post-AOL ($315 million), and Kobo-Rakuten ($315 million).

9. The Patent Wars Get Ugly

The patent system is broken. Patents are increasingly used to block innovation in courtrooms rather than create innovations in the marketplace, and we saw this problem reach epic proportions in 2011. Patent trolls continued to extort tech companies large and small. But the patent wars spilled over to the major industry players themselves as everyone pointed their patent arsenals at Android. In July, Google failed to win a bid for more than 6,000 of Nortel’s patents, which went to an anti-Google consortium for $4.5 billion. Google responded by buying patent-rich Motorola Mobility for $12.5 billion. Microsoft started demanding patent licensing fees from Android handset manufacturers, which led to a very public tussle with Google which never seemed to end. And Apple did its part by continuing to sue Android manufacturers, including HTC and Samsung, for patent infringement. It’s a mess.

10. Android And Apple Win The Mobile Internet

All of this fighting is for a very high stakes game—the future of computing, which is mobile. Apple and Android emerged as the two superpowers of the mobile Internet (with 76 percent combined mobile OS share in the U.S.). RIM is in shambles. Windows Phone is still nowhere to be seen (except in TechCrunch writer Robin’s pocket). So far, tablets are all iPad, but the Kindle Fire is coming out punching to become a serious contender.

11. Social Media Fuels Social Protests

Whether it was the Arab Spring or Occupy Wall Street, social protest movements around the world were fueled by social media like Twitter and Facebook. Protesters self-organized using Twitter, Facebook, mobile phones and any other communications system available to them, which also functioned as a way to broadcast the protests around the world. These realtime technologies make it much easier to start revolutions, but they don’t make it any easier to finish them.

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Facebook For Android Gets An Overhaul, Now Looks Just As Good As Its iPhone App -

Back in October — after many months of speculation and rumors — Facebook launched its long-anticipated iPad application. The app was notable for two reasons: first, it was the first time the social network offered an official app for Apple’s tablet, and second, because it included an overhauled UI for Facebook’s immensely popular iPhone app as well.

Improvements include persistent messages and notifications on the top of the screen, and a nav bar that’s accessible from nearly anywhere within the app (you don’t have to keep jumping back to the ‘Home’ screen to access your Messages, Events, and so on, as you used to).

Now Facebook appears to have brought the same improvements to its Android application, with an update that will soon be rolling out. The update isn’t showing up for me on Android Market yet, so I haven’t been able to try it out, but based on screenshots in Facebook’s announcement it strongly resembles the iOS applications. When it does go live on Market, you’ll be able to download it right here.

Facebook’s blog post also says that photos are up to twice as fast in the new version of the Android app.

One other thing to look for: yesterday Engadget posted leaked screenshots of (what appears to be) this update. The Engadget photos also show a standalone Facebook ‘Nearby’ app, which Facebook’s blog post today does not mention — it’s unclear if this is a different app that hasn’t been released, or if it will be offered alongside today’s update.

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Facebook Memology 2011: Osama’s Death Is Top Status Update, Rihanna Is Most Listened To

Facebook tonight released a wealth of data about 2011′s most shared content, both globally and for specific countries. Across the world, Osama Bin Laden’s death was the most popular status update topic, followed by the Green Bay Packers’ Super Bowl win and the Casey Anthony trial.

When compared with the top spiking tweets of the year, differences between Twitter and Facebook become clear. Twitter’s real-time focus led entertainment awards shows, natural disasters, and sports to dominate, while Facebook’s discussion capabilities led world news and celebrity deaths to trend there.

The official Facebook Page currently features a Memology 2011 app that displays popular cultural phenomena from several different countries. In the US and Canada, the acronym “lms” (like my status) became a prevalent way to request a visibility increase for one’s content. This indicates that users at least vaguely understand how the EdgeRank news feed sorting algorithm works. Meanwhile, “tbh” (to be honest) gained popularity as a method of expressing that one was speaking sincerely — context that can be difficult to determine purely from text.

The top 6 fastest growing news outlets were: 1. CNN, 2. Fox News, 3. NPR, 4. The Onion, 5. The New York Times, and 6. Al Jezeera, showing the diversity of opinions and interests of Facebook’s user base. Rihanna’s “We Found Love” was the most listened to song. Facebook’s inclusion of song listening data underscores how its new Open Graph listening applications could become a way to accurately track song popularity beyond sales.

Here are some more interesting findings scattered across the memology study:

Top Status Trends

• US and Canada – lms (like my status)
• UK – The Royal Wedding
• India – The Jan Lokpal anti-corruption bill
• France - Sexual assault charges against the International Monetary Fund’s Managing Director Dominique Strauss-Kahn
• Italy – The required 40% voter turnout for June referendum votes to be valid
• Germany – The death of Amy Winehouse
• Brazil – Ultimate Fighting Championship mixed martial arts league
• Russia – Steve Jobs
• Spain – Indiginados economic and political representation movement
• Australia – Planking

Fastest Growing Pages

• Actors or TV Personality – Megan Fox
• Movie – Harry Potter
• TV Show – House
• Musician – Rihanna
• Athlete – Leo Messi
• Sports Team – FC Barcelona

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