Must-know: Can Facebook survive its increasing competition?



Facebook’s competition

Facebook faces high competition from companies operating in the social media space that provide tools to facilitate information sharing. It also completes with companies that develop applications, particularly mobile applications, that replicate discrete capabilities such as photo-sharing, messaging, and micro-blogging. Plus, Facebook faces competition from traditional and online businesses that provide media for advertisers to reach their audiences or develop tools and systems for managing and optimizing advertising campaigns.

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Some of Facebook’s main competitors include Google+, owned by Google (GOOG), LinkedIn (LNKD), Twitter (TWTR), Yelp (YELP), Groupon (GRPN), and Tumblr, which was recently acquired by Yahoo (YHOO). Facebook also competes with unlisted companies such as Pinterest, Snapchat, Flickr, and Myspace. Facebook’s also include large regional social networks that have strong positions in particular countries, such as Mixi in Japan, Renren in China, and vKontakte (VK) or Odnoklassniki in Russia. There are also other niche social networks that cater to specific user interests, including Dogster for dog lovers, Classmates, and Goodreads for book lovers.

A study on “Social Login Trends Across the Web” for 4Q 2013 by user-management platform Janrain found that Facebook continued to maintain its lead at 45% from 3Q 2013. Google increased its share from 33% to 35% in the same period. According to the report, the emergence of Google+ and Google’s efforts to integrate each of its services—such as Gmail, Google+, YouTube, and Android—under a single Google identity has led to consumers placing more affinity in their Google identities, with social login preferences following suit. Another study last year by Searchmetrics predicted that social sharing activity on Google+ could exceed that of Facebook by 2016, if current monthly growth rates were sustained.

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Some of the above-mentioned competitors don’t directly compete with Facebook but own resources and better competitive positions, due to which Facebook’s users reduce their engagement in favor of these other products and services. Facebook said in its 3Q 2013 filing that the best data available suggests that while use from U.S. teens overall remains stable, there has recently been a decline in daily average users (or DAUs) among younger teens in the United States.

According to a Pew Center for Internet and American Life survey, the strongest growth over the past year for Facebook came from users over age 65. News reports stated that teens are migrating to other social media sites and using Vine, a video-sharing mobile application, Instagram, Whatsapp, Snapchat, Pheed, AskFm, and Twitter. However, analysts believe the teens are a very small percentage of the total user base and Facebook can develop services like messaging that can attract teenage users back to the network.


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