Google takes on Facebook

October 31, 2007: 12:58 AM ET

By Josh Quittner

If you can't beat 'em, join 'em. And if you can't join 'em, get all your friends to band together—and gang up on them!

In a move that some Silicon Valley pundits are deriding as desperate, Google (GOOG) has unveiled a plan to fight back against social network Facebook. A dozen companies, including social networks LinkedIn, Ning, hi5 and Google's own social network Orkut, have aligned together under Google's "OpenSocial" banner to "make the Web more social," said Joe Kraus, who's managing the project. Business software makers Oracle and Salesforce.com also joined the alliance.

The announcement was supposed to hold until Thursday, but the New York Times never agreed to the embargo and broke the news in today's edition (see here). You can read Google's press release, dated Nov. 1, here.

The goal is to lure software developers back to the open Web from Facebook and create standards for applications that can run on any social networking site. In June, Facebook opened its site to apps makers, allowing them to launch their own applications on its social network, and make money from them. Some 5,000 applications were launched enabling Facebookers to do everything from play Scrabble to engage in virtual food fights. And that caused the young site to take off, with membership growing at the healthy rate of 3% a week. It now has some 50 million members and is expected to unveil a new advertising platform next week that, many believe, will cleverly target "social ads" at users, mining their connections for useful information. If it works, it could be a huge breakthrough in online advertising.

And that's what's got Google taking the offensive. Google's business model hinges on selling ads targeted against search—a diminishing activity while people are cavorting within the closed-off walls of Facebook. Adding insult to injury, last week, Microsoft (MSFT) beat out Google and bought a minority stake in Facebook—valuing it at $15 billion. That secured Redmond's role as the social network's sole partner in international advertising, and potentially much more.

Google's OpenSocial project aims to do Facebook one better: It's opening the entire Web to developers and making it even more remunerative for them to create cool applications. How? For starters, Google will be sharing critical APIs—in this case, datastreams that divulge a user's profile information, who their friends are and what applications they install. (Among other things, that info helps applications spread virally since people see which applications their friends just installed.) While Facebook does the same thing within its closed network, twice as many people are in the Google alliance—100 million—and it's just getting off the ground. Better yet for the developers, Google isn't extracting a penny from them. They can keep 100% of the revenues from advertising or referrals. Finally, while developers need to learn a special programming language to write apps for Facebook, they can write widgets in HTML and Javascript—the common language of the Web.

"It's a little bit of an apples to oranges comparison, but the full application we've built on Facebook took us six months to write," said Ali Partovi of iLike, one of the better-known music applications. "The one that we're demoing here took us a matter of days to write." (It also looked very slick.) Partovi said that since OpenSocial uses the common languages of the Web, it will also make it easier, and cheaper, to hire programmers. Developers such as iLike will continue to work with Facebook.

Ning founder Marc Andreessen applauded Google's move. "This is more like what we always used to do at Netscape -- someone does something proprietary, so we create or embrace an open alternative and get lots of people to support it," he wrote in an e-mail. " We did that originally with HTML (!!) and Javascript."

While a hand-full of demonstration projects will be unveiled Thursday, Kraus said the goal of the announcement today was to invite in the developers and get them started on rolling out new apps. He said it would be about a month before consumers started to see the first OpenSocial apps. Ultimately, the widgets could run on virtually any website that elected to participate.

"They were totally desperate," one Silicon Valley financier observed yesterday. "Google isn't making a dime from this. It was just a way of keeping people off Facebook."

Kraus said that Google's interest was in preserving the open Web. "By making the web a better place to be, Google ultimately benefits because people spend a lot of time on the Web searching," he said. Asked whether Facebook could join the alliance, Kraus said, "Obviously we would love to have them participate." He declined to say whether Facebook was ever invited, however.

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