Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) restructured the company several years ago to separate its early stage businesses and moonshot investments -- or "other bets" -- from its well-established Google operations. It still makes practically all of its revenue and profits from Google's advertising business.

Similarly, Facebook (NASDAQ:FB) generates about 98% of its revenue from advertising. But like Google, Facebook is looking for ways to diversify beyond advertising. The company bought Oculus in 2014, and it's launched several virtual reality (VR) products under the brand. It also started selling Portal devices last year for easy video chatting.

But Facebook has quietly launched its own "other bets" group -- the New Product Experimentation Team, or NPE Team -- as The New York Times' Mike Isaac uncovered. For now, the NPE Team is focused on mobile software, including the launches of Aux, a social music app, and Bump, a matchmaking app for students. But its mandate is to "build the future of Facebook, whatever that may look like," Isaac says.

Diversifying away from advertising

Facebook is at the forefront of one of the biggest trends in media: the shift of advertising from media like television and print to online outlets. The tech giant still holds a lot of currency on the digital ad exchange -- page views and user data -- as does Google.

But there are good reasons for Facebook to look to other forms of revenue besides digital advertising. First and foremost is the increasing pressure from regulatory bodies. Facebook faces antitrust concerns regarding its ownership of Instagram and WhatsApp. Developing new products in-house could protect it against the government rolling back those acquisitions. Meanwhile, multiple governments and consumers have expressed concerns about how Facebook handles user data, which may curb its ability to collect and use data for advertising.

Facebook has even taken those matters into its own hands. It's increased its focus on private communication, instead of the public sharing Facebook is able to mine for data. A part of that focus is to integrate the messaging backends of WhatsApp, Messenger, and Instagram to make the apps messaging features interoperable. Some say the move is a ploy to deepen the ties between all three platforms in order to make it harder to break up the company.

Low capital intensity

The NPE Team is focused primarily on software, which means it's not investing huge sums of capital in order to fund its moonshots. The team is currently developing products like planning and booking travel itineraries, a podcast-listening app, and a newsletter platform. It's also working on enterprise software, including a new version of email, an automatic transcription service, and a version of PowerPoint based on Instagram Stories.

The NPE team will leverage Facebook's unique technology and data to differentiate its products. For example, it could provide travel itineraries featuring the most Instagrammable spots or a feed of podcasts personalized based on your Facebook News Feed. Its transcription service can use the same technology Facebook uses to auto-caption videos.

For now, that means the NPE Team doesn't require a ton of capital to get its ideas off the ground. By comparison, Alphabet's "other bets" often require huge capital outlays. It built expensive fiber networks in some cities to provide high-speed internet and television service. Google Fiber, now part of Access, has been scaled back considerably in recent months. Waymo, Alphabet's autonomous vehicle company, required over a decade of expensive research and development before launching a service late last year. It now generates a small amount of revenue from the 1,500 Waymo users with access to the service in Phoenix.

But Facebook and the NPE Team shouldn't be afraid to take on projects that require big capital investments. The company ended the third quarter with $52 billion in cash and equivalents on its balance sheet, and it's produced nearly $16 billion in free cash flow through the first nine months of the year. If the company is truly looking to diversify away from advertising and more hesitant to do so via acquisitions, it certainly has the cash to take on some big moonshots like Alphabet.