The silly scandal of Facebook running off to Hillary Clinton's old campaign manager, trying to launch a privacy investigation over Google Social Circle, actually has a serious point behind it.
Facebook can't beat Google. And they know it.
The issue that has reporters Twittering is privacy and even the fact we're all talking about that means that Facebook has succeeded in its campaign, because we're talking about something Facebook has long had to deal with, and in that it can be seen as existing on a level playing field with Google.
But in evaluating the two companies that's not the real issue. Raw traffic is not the real issue. Ads are not the real issue.
The real issue is infrastructure.
Much lower. Maybe by a factor of 10, or more.
If you really want to use lobbies and PR to blow Google out of the water, and turn it into Microsoft (with anti-trust troubles) or AT&T (lazy, bullying, Washington-centered) this would be the way to attack it. Turn its most important feature into a bug. Get people wondering what it's going to do with its market power.
Google, to its enormous credit, recognizes this, and so it soft-pedals its advantages, refusing to capitalize fully on them, giving it away in the form of free services.
While Google used to talk about its PageRank ranking system a decade ago, and sometimes mentioned that it was building its server farms with base PCs rather than high-end servers, Google has kept largely quiet on the cost issue since then. It doesn't talk about all the dark fiber it owns. It doesn't talk about the “Google in a Box” it can truck to a Verizon POP so calls to its servers can be handled locally. It doesn't talk (much) about how much it's saving by opening the windows on its server farms or installing solar panels. But once you get back the capital costs of a solar installation, the energy is free, folks.
Facebook has done some things that minimize its cost disadvantage. By building through a small team, using open source, and hosting in the Cloud, it keeps its costs as low as possible. As time moves on, of course, everyone's Internet costs continue to drop (thanks to Moore's Law) so if Google stopped innovating, stopped pushing the envelope, it would fade quickly, and competitors like Facebook get “second mover advantage” on its innovations in any case.
But costs are the real issue. Privacy is a sideshow. Efforts to sic the government on Google – which are the aim of the patent bar and trolls like Scott Cleland demanding it be seen as a “monopoly” – need to be seen in this light.
My position is that if you want to beat Google, first compete with it on its own terms. You can compete with Google, by focusing on costs and following as closely behind its own innovations as you can. But unless you're willing to do things customers benefit from, have a nice big cup of STFU.