This week, we saw some significant developments related to Facebook (NASDAQ:FB) & Google (NASDAQ:GOOG).After months of speculation, Facebook finally went public on Friday, May 18. It priced its IPO at the upper end of its revised range of $34 to $38, raising $16 billion by selling 421.2 million shares at $38 each. Its stock saw a small pop in the initial hours of trading and is trading comfortably above $40.
Right after it priced its IPO, it was one of its biggest lawsuits yet — it was sued today by some of its users in an amended class-action lawsuit which claims that it invaded their privacy by tracking their internet usage even after they logged out of their accounts. They are claiming up to $15 billion in damages, just about the amount Facebook raised in its IPO.
In other news, General Motors, one of Facebook’s largest advertising clients, decided to stop advertising on the social networking giant, stating the its paid ads on Facebook had little impact on its targeted consumers’ purchases. While GM’s departure won’t hurt Facebook much if this move signals the beginning of a trend which will see many more advertisers leaving Facebook, it could lead to a significant decline in Facebook’s ad revenue growth.
Facebook also started testing a “Pay to Highlight” feature which lets users pay a few dollars to have their posts appear to more of their friends. Facebook ensures that the desired status update reaches all of the user’s friends. It could potentially generate a significant amount of revenue from this feature.
Google was in the news this week primarily because everyone was comparing Facebook’s IPO to its IPO nearly a decade ago.
However, there were also a couple of other significant developments related to Google. It rolled out a major upgrade to its core search offering called the Knowledge Graph, which lets users discover new information easily. It uses semantic search technology to offer more relevant results than just text based string matching. Now, if you search for anything, Google tries to guess what you’re searching for and narrows it down using semantic search. It aids information discovery by displaying other results related to your search results, thus improving your search experience.
Secondly, Google may be trying to change its Nexus device strategy in the coming months to expand the reach of its devices and try to wrestle control of its devices from carriers yet again. It will give five device OEMs early access to future versions of Android and sell those devices directly to consumers. Besides improving the Android ecosystem, Google could also generate a modest profit on the sale of each device. This would be in addition to the benefits it already derives from Android, which include higher mobile advertising revenue and greater reach of its services.