How Facebook's Question Service Will Challenge Google and IAC

Facebook has just passed 500 million users, an auspicious time for the launch of the social intelligence service, Facebook Questions. With its massive base of extremely active users, Facebook Questions could be a powerful challenger to offerings from Google (GOOG) and IAC (IACI). Plus, it's a fantastic way for the company to target ads.

The service lets users ask questions that are broadcast to the Facebook community. The hope is that people will turn to their friends for advice instead of using traditional internet search. There's good reason to believe they will. Google's own research shows that people are much more likely to trust a recommendation from a friend than a search engine when it comes to making a purchase.

The economic reasons for getting into the question and answer business are simple. Selling targeted ads against specific questions is a strong business, because users are often posing a query related to a potential purchase such as where to stay on a trip or which gadget to buy. The same day that Facebook announced its new service, Barry Diller's IAC reported better than expected revenues, driven in large part by advertising revenue on its question site,

Social intelligence is a trendy field right now. Back in February Google acquired the question service Aardvark. Quora, a question service founded and funded by former Facebook staffers, launched to the public in June. And recommendation service Hunch was just featured in this month's Wired magazine.

But all these sites are working at a major disadvantage to Facebook. Hunch has to prime the pump by getting users to answer hundreds of questions to build their profile. has to pay staffers to field the questions and responses on its site. Facebook already knows the details of where to direct questions and won't have to pay users for their activity.

Will enough people volunteer their time to make the service worthwhile? In today's information economy building a personal brand on the Web is an important part of building many careers. In fact, the trickiest part for Facebook may be devising a system so that the best answers stand out from all the rest.

Image from Flickr user Marco Bellucci

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