Google recently announced that they were ceasing development of Google Wave, which was released in 2009 as a sort of realtime communications platform. Google has tried social networking a few times, but they’ve mostly approached it by creating communication infrastructure – chat, messaging, calendars, links, photos – without unifying their tools into a central offer a la Facebook.
That may be changing; there are rumors swirling about “GoogleMe”, a Google social network being developed to compete directly with Facebook. Google has gone so far as to buy a social gaming company this week.
Why goes Google care?
As a company built entirely on ad revenue, it matters tremendously to Google where the eyeballs go. Social networking and social gaming are the most popular online activities.
But the “Like” button also represents a threat to their essential search service. Facebook’s partnership with juggernaut Amazon will likely mean Facebook can tell advertisers the ROI of a like .
If consumer behavior continues to move from self-discovery through search to community-discover through social recommendations, Google won’t be an important e-commerce partner for very long.
Why will Facebook win?
The main challenge for competing with Facebook is the network effect of social networking; the value isn’t in Facebook, but in that everyone I know is on Facebook.
Facebook has a big first mover advantage in universal online identity, the holy grail for both for optimistic geeks and wily advertisers.
For geeks, one of the big hurdles for new web services is getting users to sign up with a new username and a new password. Allowing users to log in via a universal identity mitigates this problem.
For advertisers, the valuable behavioral data on users (“Johnny lives in Topeka, likes fast cars, reads CNN, and his birthday is next week”) is spread out across different unconnected accounts.
Facebook-login (and apps built in Facebook) is quickly making Facebook the universal identity for web users.
Google has a decent foothold – you’ve got a Google Account if you’re a member of Google Mail (or Youtube, or any of their other services). But Google is banking on the fact that people want a universal identity based on their email address. This is the crux of why I think they’ll “lose” to Facebook.
The difference between communicating via email and communicating via social networks is the level of interruption and access our social norms have given these modes of communication.
You have to already be my “friend” to message me on Facebook, but anyone can email me. A stranger’s email is given the same level of priority (“unread”) as emails from my family.
As with my social security number, once a deadbeat learns my email address, I’m screwed.
As bad as Facebook’s privacy settings are, Google’s future social network – assuming they continue to build their services around Gmail at the center – is weakened by the way email fundamentally works.
Not all online behavior is the same. Google Buzz bothers me as a service just because it adds a number of unread messages right below my unread emails, something deeply upsetting to anyone who likes to get things done instead of living in their email inbox.
If the advertisers go, what does Google have left?
Too busy to read the whole post? Here’s the summary:
- Social networking is by far the most frequent online activity.
- Google’s business is built entirely on advertising from search, which is less popular but easier to monetize.
- Technology is advancing and consumer behavior is shifting so that social networking is on a trajectory to become more important than search to advertisers.
- Google sees a future of their core business being cannibalized, so they are building a social network.
- Facebook has a huge head start on something that derives it’s value from being “big.”
- Anyway, Google’s social network will be built on email. Bad move; email is different.
- Therefore, in advertising, Facebook wins and Google loses. Google makes money… how?