Facebook fires back at Google+ challenge

Friday, July 08, 2011

A little more than a week after Google unveiled its own social network, Facebook responded today with upgrades to its site, in an attempt to curb growing enthusiasm for the Google+ project.

After teasing last week that today's announcement was going to be "awesome," Facebook co-founder Mark Zuckerberg took the wraps off a partnership with Skype that brings video chat to the social network. The news was accompanied by the unveiling of a new group chat feature for the site.

The announcement seems to take a swing directly at Google+, which has a feature called "Hangouts" that supports online group conference calls. Facebook's response to that is to work with Skype for its own group call feature.



That, say industry analysts, is a sign that Google+ may be sufficiently compelling to have Facebook glancing a bit nervously over its shoulder.

"The Skype deal isn't something they cobbled together in a week, but Google's announcement might have accelerated this a bit," said Michael Gartenberg, an analyst at Gartner. "I don't think this takes the wind out of the sails of Google+. They're kind of different experiences."

Dan Olds, an analyst at Gabriel Consulting Group, said Facebook just might have succeeded in taking some of the luster off Google+.

"This is Facebook both responding to Google's announcement and pointing out to the market that Facebook has at least a 749-million-user lead over Google+," Olds said. "And Facebook also is signaling that they aren't going to stand still and watch Google+ come on. So, yeah, they are taking away some of Google's momentum."

While Google and Facebook have been competitors over the past year, Google's introduction of its own social network raises the stakes to a new level.

And that is where Microsoft comes into the mix.

Microsoft and Facebook have been partners for several years, and Microsoft bought an early stake in the social network in 2007. That was a fortuitous move, which has made Microsoft and its partner Facebook common enemies of Google. They can work together to battle Google, and the Facebook-Skype deal is proof of it.

In May, Microsoft agreed to acquire Skype for $8.5 billion. That deal hasn't closed, but when it was announced, there was immediate speculation that Facebook would benefit from it.

"We are going to see Facebook work with partners to try to circle the wagons against Google," said Gartenberg. "It does become a little of 'the enemy of my enemy is my friend.' Could Microsoft and Facebook find themselves in competition down the road? Sure. But right now they have a common enemy in the guise of Google."

But despite Facebook's partnership with Skype and Microsoft, Rob Enderle, an analyst at Enderle Group, said today's announcement does make it look like Facebook is chasing Google.

"Facebook may have started down this path first, but Google made theirs public first, so it makes it look like Facebook is catching up," Enderle said. "Still, both Facebook and Skype have a massive lead in their respective markets and that could render Google+ redundant regardless of how good it is. Facebook and Skype have a massive advantage with respect to customer reach against the very new and unique Google + offering."