Google Challenges Facebook

by Ryan Cole

Google Challenges Facebook

by Ryan Cole, Investment U Research Analyst

Monday, July 4th, 2011

Two big names in the tech sector are once again stepping on each others’ toes.

Microsoft and Apple have been going at it for years over PCs, MP3s, and smartphones.

And Apple and Google had a slightly acrimonious separation when Google expanded into phone software. When Android was first announced, Google CEO Eric Schmidt more or less had to resign his post on Apple’s board.

Now, Google is threatening another heavyweight: Facebook.

A New Way To Network

Early this week, Google announced Google+, which looks to be a direct competitor to Facebook.

And Facebook should actually be concerned about Google’s announcement. For years, the social network has overreached when it comes to users’ privacy. This has led to many instances where a mass exodus of users has taken place.

But the bulk of users have remained with Facebook through the tough times. Not for love of Facebook, but because there hasn’t been a strong alternative for keeping in touch with friends, relatives, and colleagues.

LinkedIn is too niche, focused on business. MySpace shrunk to such a degree, News Corp recently took a $500 million hit and sold it for just $35 million. Friendster has been dead for years – at least in the West.

But Google+ might change that.

Upon hearing the news, tech blogs lit up with comments from users praying the service works well – because they’re dying to escape Facebook’s invasive service.

Two Strikes… Or Eight Strikes…

Google has made some tepid attempts to enter the social network fray before – and failed miserably. It tried to buy Friendster in 2003; launched Orkut in 2004, a social network that gained some traction overseas, but none at home; acquired Dodgeball (which became Google Latitude) in 2005, a location-based network for mobile devices, much like the more successful Foursquare.

In 2005, Google launched Gmail and chat, with a number of social network applications that have mostly gone unused; acquired Jaiku in 2007, a site much like Twitter; launched Open Social in 2007, an attempt to tie numerous social networks and connections together… and the list goes on.

Google has tried to crack into social networking numerous times, with generally weak results. While Gmail is fast becoming one of the most popular email services, and Google Chat and Voice are both quite popular, none of those applications are close to filling the role of Facebook.

But Google+ might be different.

For one thing – it is an overarching architecture that ties everything Google provides together. Whether you are talking about contacts on Gmail, partners you work with on Google Docs, recommendations from Google Buzz… it’s centralizes everything in one place.

That may seem intimidating – but Google+ also has a much better way to stream who sees what (and what you see as well). Facebook has friend lists, but they are a bit cumbersome, and lack granular control. Google Circle, however, is a much more streamlined, elegant solution.

All the things Facebook can do, Google+ can do, and more. For instance, Google Sparks is a simple way to share recommendations… while Google hangout is a place you can video chat with numerous friends at once.

Google+ is far from a finished product – it’s in a real beta testing period, is open only by invite, and Google itself still refers to it as a project, not a product.

Still, the first reviews are generally positive. The public is hungry for a Facebook alternative. This could prove to be Facebook’s first real challenge.

With that in mind – don’t be surprised if we see the Facebook IPO sooner rather than later, as the company may want to get its payday before Google+ can build too much steam.

Good investing,

Ryan Cole

comments powered by Disqus