Last week, Facebook was caught red handed using a prominent PR firm to engage in a smear campaign against Google.

Burson-Marsteller, which is owned by WPP, was retained by Facebook in an effort to call attention to a number of privacy-related issues with Google.

That Facebook would do this is somewhat ironic given that its own privacy track record isn't so great either. In retrospect, Facebook's effort is very much a reminder of the old adage, "Those who live in glass houses shouldn't throw stones".

It's unclear whether or not Facebook's faux pas will result in serious harm to the company's brand.

Facebook, after all, has been here before, surviving even the most embarrassing revelations about its founder, Mark Zuckerberg, and his past behaviour. But that shouldn't be its biggest concern.

The real concern: that Facebook is increasingly taking its eye off the ball. By focusing in on a rivalry with Google which may or may not be meaningful, it risks losing sight of the things that really matter. Yes, the company is on top of the world, but that doesn't mean that it doesn't have its problems.

On the consumer side, there are hints that Facebook growth has plateaued in some of its most important markets. That, of course, is to be expected eventually, but what should be concerning is that growth has gone negative in some instances.

Is this a harbinger of a significant decline? Maybe not, but it's still clear that Facebook will need to shift a good amount of its attention from 'recruiting' to 'retention' sooner than later.

On the platform side, there's increasing talk that Facebook is losing its edge as building a profitable app becomes more challenging.

User acquisition costs are going up, and with Facebook set to take a piece of all the virtual currency action (past promises be damned), it may be harder for all but the largest existing players to participate profitably in this ecosystem.

While this may not seem like a problem (Facebook doesn't necessarily need anyone but larger developers), it will change the platform's position in the market and possibly not for the better.

These are but two of the things that will present challenges in the near future. Yet while clouds form on the horizon, Facebook is apparently busier worrying about Google's stance on privacy. That may prove to be a serious mistake because if a company doesn't handle its business, the company's business may just handle it.

Patricio Robles

Published 16 May, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)

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Nick Stamoulis

I don't know if Facebook ever thought it could get as big and powerful as it has. Suddenly they are on par with Google and they've decided to see if they can beat Google at their own game. By joining with Bing, they have a whole new set of goals to accomplish.

about 7 years ago

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Xanax Withdrawal

Here is why FB will never compete with Google - at least in the search world.

People go to Google to find things. People go to Facebook to upload pictures of their kids and vacations or to catch up with Friends. I thought it was funny that SEO specialist would think that Facebook ads could work better than Google's Adwords. No way man...

I see Google to win big over FB in the long run. The only challenge they have is from Bing...at least when it comes to search.

about 7 years ago

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