Paul Rosania

As Facebook gears up for the biggest IPO in history, it faces unprecedented challenges to future growth. With expansion rates in the US and Europe stabilizing, Facebook relies more and more on emerging markets for growth. And yet, there is a big black hole in Facebook’s social graph, right where China should be. The Senate and FTC are eyeing Facebook as keenly as ever. To top things off, Facebook’s largest competitor has made an open declaration of war.

Of all these things, competition with Google is perhaps the area over which Facebook has the most control. Make no mistake, Google is putting everything on the line to gain a foothold against Facebook. For this reason alone, Google is the competitor to watch in 2012. Apple’s recent announcement that OS X 10.8 Mountain Lion will have deep Twitter integration is perhaps a cause for concern, but Apple’s userbase is dwarfed by the billion-plus people that visit a Google property each month. Add Google’s deep talent pool, healthy balance sheet and insane profitability ($3.5B in Q4), and you have a company with a tremendous amount of stamina. Google is gearing up for a long war.

Anyone who doubts Google’s intention of dominating the social space need look no farther than Google+. Its deep integration across all Google properties was a clear indication that it’s here to stay. Now, with “Search Plus Your World”, Google is upping the ante. Search is Google’s golden goose, historically unmarred by the complexity that seems inexorable in other Google products. Now all of that is at risk as Google+ integration threatens its simplicity and result quality.

Whether Google+ will be a success remains to be seen. According to Google, 90mm users are on Plus already. How many are active? Google has a huge incentive to mask the true DAU and MAU numbers until they reach a menacing level. If Plus performs like a more typical social site (not Facebook) it’s safe to say MAU is in the 20mm range, and DAU is well under 10mm. (Excluding interaction with the omnipresent Google+ notification menu, which seems unavoidable.)

If Google can make using Google+ a natural part of using Gmail, it can cut pretty deeply into the reasons for people to use Facebook, at least in theory. For most of us, a Gmail tab is at least as likely to be open as Facebook at a given moment, if not moreso. For many demographics, Gmail chat is more popular than Facebook chat. And yet, we open Facebook compulsively to see what our friends are doing, and to share and view photos. If Google can make these behaviors a fluid part of the Gmail experience they could prove to be quite a menacing figure.

Data from Google+ benefits Google search as well. Picking a dinner venue and inviting friends could be done at once. A search for ‘skiing’ could show photos of friends' recent trips, as well as ski conditions for local resorts. (And maybe even when your ski buddies have free weekends, leveraging Google Calendar.) None of these niceties is enough on its own, but the combined utility of everything in one place will be tough to beat.

At this point, as long as the masses are using a Google product (Gmail and search in particular) Facebook is at a severe competitive risk to Google+. Google has shown before that they don’t necessarily have what it takes to get products done right. Their engineering culture may be too academic; their obsession with complex problems may be too much of a negative influence on user experience design. But with Google betting the business on social, Facebook can hardly rest easy.

Creating an alternative to Gmail and Google search should be an urgent strategic priority for Facebook. The timing has never been better: Google’s “Search Plus Your World” initiative has temporarily shifted the privacy spotlight from Facebook to Google. At the same time, the much maligned redesign of Gmail (along with other Google products) presents a window for Facebook to introduce a winning email experience. Last year’s Facebook messaging redesign means many Facebook users already have @facebook.com email addresses.

If Facebook can steal a big minority share of email away from Google, they take a massive amount of momentum away from Google. As mentioned, Gmail is Google’s primary portal platform. Without it, they would be forced to rely on search — and while many people search each day, they aren’t in the social mindset while doing so, like they are when they use Gmail.

Once a Facebook email service is in the market, a Facebook Search product would be a killing blow. In 2012, the core concepts behind search relevance that Google pioneered are largely public and widely understood. What’s missing is social relevance, and Facebook already has all the social relevance data it needs: nearly 3 billion likes and comments are added each day.

Perhaps most important are the behavior changes Google or Facebook would require in order to win the war. Google+ requires us to reframe our conception of what Google is about and simultaneously migrate there with all of our friends. On the other hand, Gmail and search are utilities. If a better version exists, users will switch — and they can switch one-at-a-time, whereas switching social networks requires critical mass.

With all of these considerations, it seems inevitable that Facebook will make moves to kill Google in 2012. The first move will be a Gmail replacement, and search will come shortly thereafter. We may view Google as socially inept, but they are a multi-billion dollar company and they employing some of the smartest people in the world. There is too much at stake for Facebook to wait.

What do you think? Let me know @paulrosania or paul@rosania.org.