Yesterday Facebook unveiled not a phone or a new messenger, but a new service called Graph Search.  Before you conclude that Facebook has a new search engine and is challenging Google, I’ll stop you before you make a fool of yourself.

Graph Search is different from web search as it relies on phrases, not keywords, to get a set of people, places, photos or other content that’s been shared on Facebook within your social graph.  It focuses on people, photos, places, and interests, and you can start your search by entering phrases such as “my friends that like music,” or “Chinese restaurants that my friends like,” or “places my family has been to.”

Graph is still in serious beta mode, and will be rolling out very slowly since they have a lot of kinks to iron out and privacy matters to be addressed.  Interested people can try the Graph Search here and sign up for the waiting list to be the first to get it when it finally rolls out.

New Revenue Opportunity?

Facebook already had a search feature before Graph Search, but it’s not that helpful or informative.  Graph Search boosts the original feature and, based on the demo, it’s quite informative.  The thing is, your query will still be based only on content that’s actually on Facebook.  So when it launches, Facebook users will have a pretty fun way of discovering people, places, and interests.  But is that the only use for Graph Search?

According to Eden Zoller, principal analyst at Ovum, Graph Search will play a huge role in targeted and personalized advertising.  Advertisers can get a clearer picture as to what people on Facebook are interested in and use it to their advantage.  But of course, the issue of privacy also comes in play – I doubt anyone would be pleased to know that others are looking into what they are searching for on Facebook.

“Before the arrival of Facebook’s Graph Search, the search function on Facebook was basic and as such, a wasted opportunity given Facebook’s imperative to strengthen advertising revenues. Facebook Graph Search will no doubt leverage member data to provide advertisers with more targeted, personalized advertising opportunities going forward. But Facebook needs tread very carefully here and be mindful of user privacy. It claims to have built Graph Search with privacy in mind, but Facebook has a mixed track record on this front and is in the habit of pushing privacy to the limits of what is acceptable.

“Facebook Graph Search is not a web search engine, but a search tool designed to enrich the Facebook platform and experience for both users and advertisers. This is sensible as a full blown web search engine from Facebook would inevitably have to compete with Google search, and given Google’s dominance of the search market it would be hard for Facebook to make a serious impact – and win advertising dollars,” Zoller stated.

This could be a great development for Facebook as it seeks new avenues in this area.  Investor relations have improved since Facebook first launched its IPO last fall, but the network will need to continue to develop its business model moving forward.  New features have bombarded Facebook users in recent months, but the new search brings fresh promise to Facebook’s potential as an ad revenue-generating entity.

Aside from advertising, privacy is still a potential issue for users as it may be even easier to stalk people on Facebook, especially since it appears you’ll be able to save searches with their own URLs, complete with editable titles.  Call me creepy, but that’s what I see in this new tool – an easier way for people to stalk others on Facebook.

For more analysis on Facebook’s new Graph Search and what it means for their business, here’s Senior Managing Editor Kristen Nicole, who dropped in this morning’s NewsDesk segment with Kristin Feledy.