Facebook's big reveal

The big reveal at Facebook was a new friends-based search tool that lets its billion users find people, photos and places within their social network.

The idea is that users can tailor their searches by, for example, specifying music or restaurants that their friends like. And it's limited to information that's been shared with them- a clear nod to privacy concerns.

That could spell trouble for local sites like Yelp- and even for Google.

S&P Capital IQ's Scott Kessler:

SOUNDBITE: SCOTT KESSLER, INTERNET EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING:

"People are spending less time with more traditional web applications in some respects and more on social networks. Clearly this would say to us that when people maybe would go to the web to conduct a search maybe now they will use Facebook and the search capability as opposed to going to the broader web to find out information."

But while users might appreciate the new tool- and rivals will be keeping tabs- investors maybe not so thrilled. Currently there is no plan to make money off the new tool. Shares of Facebook moved lower on the news.

Another hiccup- it's also not mobile-yet.

SOUNDBITE: SCOTT KESSLER, INTERNET EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING:

"Yeah, I mean initially they specifically indicated this was going to be a desktop product. Over time clearly there are tremendous opportunities for mobile if you think about kind of layering things like recent activities, location, updates and then kind of combine that with a real-time search capability. Yeah that could be really powerful for Facebook. But one step at a time and they are just starting this in a very limited fashion."

Another interesting wrinkle: their relationship with investor Microsoft- when the graph search doesn't come up with results- users will see information from Microsoft's Bing search engine.