Today, half of Facebook's 750 million worldwide users log on to the site every day. That's roughly the entire population of the U.S. and U.K combined. More than 250 million people engage with Facebook in some form on outside websites each month around the world.

They do this by clicking the ubiquitous "like" and "recommend" buttons on news and other sites or by logging on to websites using their Facebook passwords.

Google's chairman and former CEO, Eric Schmidt, has acknowledged that the company failed to respond to Facebook's threat fast enough. His successor, Google co-founder Larry Page, has made social networking one of his top priorities since he took over in April.

"We don't think it's a coincidence that (Google Plus) was introduced less than three months after Page returned to the CEO post," said Standard & Poor's equity analyst Scott Kessler in a note to clients.

Facebook's greatest advantage is the immense trove of information that its users have shared about themselves through about 4 billion posts and connections they make collectively every day.

Facebook knows what people are reading, eating and watching. It knows who is friends with whom, and which friends people trust for recommendations on what shoes to buy and which plumbers to hire.