Facebook takes on Google and Yahoo in Web messages

SAN FRANCISCO Mon Nov 15, 2010 7:32pm EST

1 of 5. Facebook CEO Mark Zuckerberg speaks at a news conference where he unveiled a new Facebook messaging system in San Francisco, November 15, 2010.

Credit: Reuters/Robert Galbraith

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SAN FRANCISCO (Reuters) - Facebook rolled out an all-in-one messaging service that for the first time allows its half-billion members to communicate with people outside the social network, intensifying a battle with Google Inc and Yahoo Inc for users' Internet time.

Addressing speculation the world's largest social networking site was planning a "Gmail-killer," Facebook Chief Executive Officer Mark Zuckerberg said the new system will let users own "@facebook.com" addresses, but stressed it went beyond mere email.

The new feature -- to be rolled out over coming months -- lets users send and receive instant and text messages in addition to standard email and Facebook notes.

"This is not an email killer. This is a messaging system that includes email as one part of it," Zuckerberg told reporters at the St. Regis hotel in San Francisco.

Zuckerberg, who said more than 350 million of Facebook's half-billion users now actively send and receive messages on his website, did not expect people to stop using traditional email tomorrow.

But he hoped more and more will shift to an integrated, cross-platform mode of communications over the longer term, such as the service he debuted Monday.

Analysts say that email users are particularly valuable to Web portals like Yahoo, which seek to funnel the traffic into their other online services.

Facebook and Google's intensifying rivalry is expected to play a crucial role in shaping the future of the Internet. The industry is closely watching their pitched struggle for Web surfers' time online, advertising dollars, and increasingly costly Silicon Valley talent.

RAISING THE STAKES

Forrester Research analyst Augie Ray said the new messaging service will help Facebook in its quest for user-engagement.

"What this allows is Facebook to become more central to people's communications, and with that they have more (of people's) time, they have more page views, and with that they have the opportunity to serve more ads," Ray said.

More than 4 billion messages get sent everyday through Facebook, whose backers include Digital Sky Technologies, Microsoft, Hong Kong tycoon Li Ka-shing and venture capital firms Accel Partners, Greylock Partners and Meritech Capital.

Its new product will automatically route messages from a person's most frequently-contacted acquaintances into a main inbox, with messages from other contacts pooled in a separate inbox.

It also does away with some traditional email customs, such as the "subject" line. Instead, all the messages between two people are threaded together into one long-running conversation.

Users will also be able to view Microsoft Word, Excel and PowerPoint documents as attachments to their messages, without having to download or pay for the software. Licensed users can create and send such documents as attachments.

Should all of Facebook's active users adopt the new service, the social network would begin to approach the number of users now on Microsoft Corp's hotmail, the most popular Internet email service.

Google, which controls roughly two-thirds of the global search market, offers the third-most popular Web email service, behind second-placed Yahoo, according to Web analytics firm comScore.

Last week, Google began blocking Facebook from importing user contact data from its Gmail email service -- until Facebook reciprocates with its own trove of personal data.

In terms of potential privacy concerns, Zuckerberg stressed that the new service may actually be less intrusive than others'.

For instance, it would not automatically scan the contents of people's email to display ads based on similar keywords, as is done by many of today's popular Web-based email products like Gmail, he argued.

"Email is still really important to a lot of people. And we just think that this simpler kind of messaging is going to be how a lot more people shift a lot of their communications," Zuckerberg said.

(Writing by Edwin Chan; Editing by Gerald E. McCormick, Richard Chang and Bernard Orr)

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