Google Girds for Facebook Fight

The No. 1 search engine is banding together with other sites and software developers to build its own social networking ecosystem

by Aaron Ricadela

Google has reached its share of dizzying heights—a share price of almost $700, a penchant for consistently beating Wall Street's financial expectations, and an outsize influence on the computer industry. It has done so by controlling the rich vein of advertising that flows from Internet searches. But there's a new online frontier Google (GOOG) has largely failed to tap: the rapidly growing world of social networks, which promises advertisers the ability to reach users where they live online.

While Google has concentrated mostly on placing ads based on what users are trying to find, social networking sites such as Facebook and News Corp.'s (NWS) MySpace have begun targeting users based on who they know—or more precisely, the tastes and demographic information they expose while socializing online. Aiding the social networks in that effort are legions of independent software developers who write so-called widgets, or applications such as games and quizzes, that can keep users glued to a site.

For software creators, it's a way to get their handiwork in front of millions of social networkers. For the networks, opening up to developers means more ways to engage users and the advertisers who want to reach them.

A Developer-Friendly Tool

Now, Google wants in on the action. On Oct. 30, the company announced the release of a tool called OpenSocial, which will let software developers write programs for a variety of social networking sites that support the technology. Today, that includes not only Google's Orkut, but also Ning, LinkedIn, and Hi5 Networks.

The idea is to create specifications common to all the sites, rather than forcing programmers to use separate standards for each. Google also has support for the technology from companies including Slide, the top maker of widgets for Facebook and MySpace, and iLike, whose software lets users compare musical tastes and find out about concerts. "The work is dramatically reduced," says Ali Partovi, CEO of iLike. Software vendors Salesforce.com (CRM) and Oracle (ORCL) have said they plan to use OpenSocial.

In the future, Google plans to let developers use OpenSocial to gain access to data from its own widely used applications, including Gmail and the iGoogle personalized home page, and share ad revenue with its partners. Google believes it has a trove of data on users' social relationships in its e-mail and other software, which it can mine to better target those ads. "That's certainly an area that's rich with opportunity," says Joe Kraus, a director of product management at Google.

Facing Down Facebook

If the plan is successful, Google could bring its leverage to bear on the social networking market and potentially slow the momentum of high-flying Facebook. "This is an open version of what Facebook has done," says Marc Andreessen, a co-founder of Ning, which provides tools for building social networks. Andreessen was the founder of Netscape Communications in the '90s. It's still unclear whether enough developers will cotton to Google's new platform to make it a success, but if they do, OpenSocial "poses a real challenge" to Facebook, he says. "The idea of a closed, differentiated Facebook network—this announcement changes that significantly."