New FaceBook feature challenges LinkedIn

Professionals are flocking to Facebook ,and soon they'll be able to divide their business life from their social life.

By Lindsay Blakely, Fortune

(Fortune) -- A seemingly innocuous change is coming to Facebook that could pose a threat to business networking site LinkedIn: the ability to separate your work "friends" from your social ones.

This may not sound significant, but as Facebook's appeal spreads beyond college students, professionals are joining the social networking site to keep in touch with colleagues and business contacts. Facebook, which already hosts networks for employees of companies from Apple (Charts, Fortune 500) to Zales (Charts), says the new feature "is in the works."

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Facebook CEO Mark Zuckerberg.

If friends can be grouped according to whether they are social or professional contacts, and profiles tailored for each, Facebook could replace the need to maintain a separate account on LinkedIn for strictly business networking, according to some observers.

"They've got to see this as a major threat," says Jupiter media analyst Barry Parr. "At some point people are going to want to simplify" their networking activities. "The open question that no one is really prepared to answer yet is how many networks do you really want to belong to?"

Facebook and LinkedIn haven't competed head-on because they both promised different value for their members. Facebook was for communicating with friends; LinkedIn was the place for making and keeping business contacts.

LinkedIn is betting that distinction will remain clear. "We consider ourselves a professional network," says LinkedIn communications director Kay Luo. "The thing about Facebook that prevents it from being useful the way that LinkedIn is useful is the search capabilities." A search on LinkedIn will reveal some resume information. (For instance, a search for Mark Zuckerberg shows his current position as CEO of Facebook and his education history -- he quit Harvard to work on Facebook.)

Though Facebook recently decided to allow the public to search its member database, privacy controls mean that the results are usually limited and not as useful for, say, recruiters or job-seekers.

"Facebook has historically been more about privacy," says Jeremy Liew, a partner at Lightspeed Ventures and an investor in startups like widget company RockYou. "It would be odd to open it up to messaging from people who don't know you. Even if this capability appeared, it might not be culturally accepted by Facebook users."

Though Facebook lacks LinkedIn's more detailed search capabilities, that hasn't stopped professionals from moving over to the social network for business purposes.

In July, blogger and Internet phone pioneer Jeff Pulver made a public showing on his blog of switching over to Facebook. "Why use a static site where the fun stops at the profile when there is a wealth of opportunity for vibrant interaction between users and groups of users on Facebook?" he wrote. "I find that the interactions I have through Facebook are at once more rewarding and more nuanced and meaningful than what I experienced on LinkedIn."

The new grouping feature could mean more people will opt to do all of their networking on a single site. What's LinkedIn to do? Parr says the professional network would do well to respond quickly to the Facebook threat by opening up its platform so that third-party developers can build features and improve the site. Luo says this is in the works, but don't expect LinkedIn to open up the way that Facebook did in May.

After all, the Facebook practice of "poking" your friends to say hello probably will never be part of the LinkedIn experience. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.