• Fortune, Tuesday, October 16, 2007 11 AM

By even the highest valuation, Google is still more than 15 times the size of Facebook. With a market capitalization of $190 billion, Google could eat the social network for lunch, and yet it's Facebook that's got the Web giant running scared. Google understands that it needs to grab a foothold in social networking, but Facebook, frustratingly, isn't for sale. And given its ad ambitions, Mark Zuckerburg's Facebook reminds one of a pre-IPO Google, circa 2003.

Now, many analysts believe Facebook is planning an IPO sometime in 2008. The evidence: in July, Gideon Yu, finance chief of Google's video site YouTube, left to become Facebook CFO; Google Checkout engineer Benjamin Ling is the latest defector, heading to Facebook to oversee its software platform.

Google's Facebook war is about more than just talent: "The stakes here are about as high as they get in the Internet business," he says, adding that this war is the most significant since Microsoft challenged and beat Netscape for control of the Web browser. Social networking represents the future of the Internet--and that's where the next great Internet fortune resides, he says.

Read the whole story at Fortune »