Yesterday Facebook announced its long awaited search offering which they are calling graph search. It is the logical way to make the graph data that Facebook has been accumulating on its own and through its open graph accessible to users. Graph search is launching in beta with the obvious types of searches: people based on interests, places, movies, books, music, etc based on people. This is of course what Google has been fearing and why Google has been doubling down on Google+ at every turn (and I happen to agree with Brad Feld that Google's patience has the potential to pay off).

At this point then it couldn’t be clearer that Facebook and Google are on an epic collision course. What is disappointing to me is that both are pursuing a vision which seems counter to the spirit of the internet as a collection of small pieces loosely joined. As an enduser I would much prefer a rich ecosystem of competing smaller services that work on specific problems, such as foursquare and yelp for places, netflix and vudu for movies, rdio and spotify for music, etc. The desire for a network of networks has also informed how we have invested.

I continue to believe that smaller services focused on specific areas can ultimately deliver a richer experience for endusers and also avoid a concentration of power. But the individual players are up against the powerful effects of supermodularity of information based production functions. On the margin I can make a better recommendation for say books if I also have information on movies. The big question then is whether the resulting complementarities doom us to face a few highly integrated players or whether it is possible for independent services to be sufficiently differentiated as to offset this advantage.