Why All the Buzz?

Google has good reasons for getting into the social media business.

In the summer of 2009 I published a piece on this site that effectively said Twitter and Facebook should develop search capabilities, quit competing for subscriber mindshare, merge services to provide a unified user experience, and thus earn sustainable profits. I also said that it may be a good idea to sell out to either Microsoft or Google in order to leverage the respected profit centres of search and advertising, something Facebook and Twitter lack and Microsoft and Google have largely mastered.

So, lo and behold, out Google comes with Google Buzz, basically a social networking aggregator that seeks to leverage Google’s Gmail customer base into a large subscriber community. The launch prompted The Economist to comment, “Google’s move is a sign that the world of social networking and that of other online services, such as e-mail and search, are rapidly converging.” The launch of Buzz basically reinforced my point, not that Google gave me any credit for it.

Early consensus seems to be that this was a good thing for me.

Buzz v1.0 appears, by most accounts, to be a bit of a train wreck. Google first got into all sorts of trouble when it automatically signed everyone using Gmail up for a Buzz account and then used private contact lists to build social networking lists. This effectively revealed who Gmail users talked to the most (insert Tiger Woods joke here).

That practice drew fire from the Electronic Privacy Information Centre (EPIC), which filed a complaint with the FTC. Other privacy watchdogs, including the Office of the Privacy Commissioner of Canada, are looking into Buzz as well. Google promptly eliminated the automatic sign-up feature and now just encourages Gmail users to try it out.

Meanwhile, many users aren’t feeling the interface. One blogger thoughtfully referred to it as “a total and complete inundation of commentary that sprawls and grows faster than the most insidious of weeds.” Speaking for myself, I find Buzz mildly interesting, but yet another point of friction in what I want to be a seamless web journey.

This early “buzz” (sorry) prompts a fairly obvious question – What the heck is Google doing? Why bother trying to present a new social networking alternative to the ridiculously fast-growing and widely used Facebook and Twitter?

I can see a number of reasons for doing so. The first is that Google has what Facebook and Twitter don’t: a great chat and email program, which creates a better unified user experience on the web. Add to it the ability to mix in the search and advertising secret sauce to sweeten the revenue pie, and you get a viable tool, largely because of their base of email users (176 million-plus, as of December 2009, according to comScore). The ability to leverage that user base got them a little ahead of their skis at the outset, but the longer-term effects are very interesting.

Google, whose core mission is to index the entire internet, can’t ignore the fact that it has access to nearly 200 million “users” through Gmail, and that they all likely subscribe to a social networking service. They also know what people want: few clicks, fewer “home bases,” (home pages) and more aggregated content from multiple sources in one spot – Buzz was a first stab at achieving this.

Buzz is also a bit of a defensive play. Facebook is said to be developing its own email program. If successful, such a program could push a lot more eyeballs to Facebook, though they still lack the ability to “monetize” those eyeballs the way Google has with AdWords and even Gmail. Meanwhile, Twitter has morphed from a means of spewing terabytes of useless space junk into the blogosphere into a genuine content aggregator, thus threatening Google’s dominance as a web content provider. Buzz can be seen as a counter-attack to these developments.

The final reason is perhaps somewhat obtuse, but I think Google is also trying to stay one or two moves ahead of regulators, internet watchdogs, and the market as a whole. Google knows it is quickly becoming a utility. Its massive server farms have basically created a digital “copy” of all internet content. Its search share is 65 per cent-ish in North America and by some measures as high as 80 per cent in Europe. If you have all the content and mostly control the means of accessing that content, you become a web utility (think Ma Bell).

Utility is a bad, bad word in this business. It means regulation, constant government intervention, ubiquity, and low margins. Buzz is part of a broader strategy to hedge against “utilitization.” Google has the business model and scale to spread its tentacles deliberately, scoop up decent chunks of market share, and invest relatively little to do it. So if they do in fact become a utility or are forced to cede share by decree, they have a number of other potential profit centres they can turn to. Entering the social networking space with Buzz is just another way of avoiding the utility trap.

Google is the chief intermediary (even de facto provider) of content on the web – finding it, getting it, buying it, consuming it, you name it. Linking the services together by standardizing the format using Google’s OpenSocial API would allow for the interoperability of social networking systems. And they can monetize this connection the way they have with Search, AdWords, and providers like YouTube to make it a viable endeavour.

The end result of all of this is fairly obvious. Short-term, I have enough cohesiveness online to satisfy my immediate desire. Longer-term, consumers will begin to subtly push for standardization as they reject any element that doesn’t fit in.

And I still maintain that the economic realities of this desire for cohesion (and the refusal to pay for it) will either force Facebook and Twitter to merge or go public to satisfy the capital required to truly challenge Google for web dominance, lest they become mere social networking utilities.