Is Facebook building a Google rival — one that would use your location and your friends’ tastes?

Managing over 850 million users, the world’s largest social network, Facebook is now reportedly working on building their own search engine to dominate the internet in Facebook style. According to the reports from Businessweek, more than 20 Facebook engineers are now building a much better and improved version of a search engine within Facebook by collaborating with an ex-Google programmer.

The idea, according to two sources, is to take better advantage of the heaps of content Facebook users create on — and off — the site every day. With people sharing status updates and supporting brand pages on the network, as well as using Facebook’s “Like” button to mark articles and videos from external sites, there is certainly a lot to take advantage of.

Mashable contacted Facebook for more information and got this response from a company spokesperson: “We don’t comment on rumors and speculation around products.”

Google has boosted its presence in the social space recently, opening the Google+ network last fall and a “Search, Plus Your World” feature to tepid response earlier this year. So it’s interesting to see Facebook potentially make a stronger move into the search world.

A large-scale shift to a “semantic web,” where online data is is able to be delivered in more nuanced and complex ways, is gaining momentum among tech futurists. Wikipedia recently announced a project called Wikidata that aims to make its content smarter by cross-updating among Wikipedia pages when they are edited. A more robust Facebook search functionality would be another step toward that semantic web.

Facebook founder Mark Zuckerberg has consistently downplayed the level of direct competition between Facebook and Google. “I don’t think that this is going to be the type of situation when one company wins all this stuff,” he told Charlie Rose of PBS last fall.

If the Businessweek report is true, however, it will add yet another area of heightened competitive overlap between the two Silicon Valley giants.

Would an improved social search engine within Facebook make you use Google Search less? Read more ……