"Here is what Ryan Singel says in a deep-dive post that gets to the meat of why Facebook scares Google so much.
Singel argued "it's because Facebook with its Like Button and other social plug-ins, has found "a way of placing ads anywhere on the Net with a granularity Google can only dream of -- in no small part because Google promised its users never to go down that path." Singel added:
"One, there's so much interaction and information being shared inside Facebook that it has become a decent-sized replica of the Web inside the Web. And Google can't crawl and analyze much of what happens in there. That's a problem when your goal is to organize the world's information. Google is blind to this because much of what happens on Facebook remains in Facebook. ... The problem is that Google built a wall between user search data and advertising -- and the mammoth financial success of AdWords proved that the separation was fine at the time.
"Two, Facebook knows who you are and has the right to use that information because you explicitly gave it to them. Google has different kinds of data that reveal a lot about who you are and what you are interested in -- some of it very private. But very little of that data is information you explicitly told the company to share, and they've assiduously promised not to use your search history and e-mail data to profile of you."
(For more, see Why Facebook Has Google over a Barrel: Social Ads, by Clint Boulton, 11/15/2010)