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While Facebook Struggles, These Rivals Steal Market Share

By , Contributing Writer, Money Morning •

As Facebook (Nasdaq: FB) continues to struggle with growth and mobile strategies, its rivals keep moving forward in both areas.

GREE, Japan's $4.7 billion online media behemoth and rival to Facebook and its gaming counterpart Zynga Inc. (Nasdaq: ZNGA), moved further into Facebook's territory Monday with the purchase of social gaming company App Ant Studios.

GREE already enjoys a prominent position in social media. It's quickly gaining on other social networks, namely Facebook, since the bulk of its users already access the site via mobile devices - an arena in which Facebook lags.

With a strong focus on selling virtual goods, and with a variety of other superior services and mobile games, GREE is vying for sustained growth by expanding beyond its home turf -and is succeeding.

"GREE strives to build the world's leading global mobile gaming ecosystem. The acquisition of App Ant Studio will help GREE reach its goal of having 1 billion users worldwide as it expands its robust portfolio of games on GREE Platform," a company statement read. GREE gushes the new Platform will deliver exclusive social gaming experiences, in addition to offering developers access to a rising and engaged worldwide audience.

Facebook Rivals Going Mobile

Add GREE to Facebook's growing list of global rivals, many of which are here in the United States.

Just look at LinkedIn Corp. (NYSE: LNKD). The head-hunting career networking site is transforming into a social networking leader.

A few weeks ago the company rolled out a new notification system and launched an update for its Apple iPhone, iPad and Android apps. The updates now inform a member when someone likes or comments on one of their status updates-just like Facebook.

The new notifications are in response to the flourishing traffic generated from smartphones and tablets, which has jumped to 23% from just 10% a year ago, and are forecast to grow much larger still.

LinkedIn has been quick to capitalize and embrace the explosive growth of the mobile trend, unlike Facebook which has notably lagged in the dynamic drift. LinkedIn also does a much better job of monetizing its members than Facebook has done.

Furthermore, the Mountain View, CA-based company is making significant strides in China, a vigorous market which Facebook has been shut out from and says has no immediate plans to penetrate.

Google Inc. (Nasdaq: GOOG) likewise leapt further ahead of Facebook on Monday when it snapped up Nik Software, the company behind the top iOS photo app Snapspeed. The strategic move was in response to Facebook's recent acquisition of Instagram, a popular photo-sharing app.

The fresh purchase from Google is a way for the Internet giant to distinguish itself from Facebook with more innovative photo editing on its growing Facebook-like site Google Plus.

Of most interest to Google is Nik's mobile and online tools, and how they will enhance Google Plus.

"We want to help our users create photos they absolutely love, and in our experience Nik does this better than anyone," Vic Gundotra, senior vice president at Google, wrote on Google Plus.

Facebook's Mobile Dilemma

In contrast to these rivals, Facebook is on the cusp of amassing one billion users - but the milestone is a fruitless one.

Facebook members are spending less time on the site and don't spend money while they are there.

In addition, studies have shown that its massive user base growth has hit a roadblock.

And then there is mobile. Facebook has long been underrepresented here. Recognizing more and more of its members are accessing their accounts on mobile devices, Facebook has been working on a revenue-producing strategy that acknowledges the shift.

In mid-September, in his first public address since Facebook's fumbled initial public offering, Zuckerberg stressed the company was morphing into a mobile one.

But, he also added it is a slow-going process.

"Now we really are a mobile company. All the code we write is [for] mobile," Zuckerberg noted.

Facebook is still working out the kinks of its mobile ad plan. Facebook's product teams are mulling new features with advertising fundamentally integrated.

"I think we know that we're going to do well on that. The question is getting there," Zuckerberg added.

Facebook stock rallied more than 6% today (Wednesday) to close at $23.29, 39% lower than its $38 IPO price.

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