Google to take on Facebook in battle for online gamers
Google is spoiling for a fight with Facebook over the fast-growing market for online games, part of the search engine giant's latest attempt to build a social networking business.
The move would pit two of Silicon Valley's most powerful companies into headlong competition, and Google is believed to have opened talks with several of the games developers that have come to prominence on Facebook.
Eric Schmidt, Google chief executive, yesterday stoked rumours over the new push in social networking by promising any Google service would differentiate from Facebook. "The world doesn't need a copy of the same thing," he said.
Google gets $28bn a year in revenue from selling advertising alongside search results, but faces questions about whether and how to diversify its business. Internet users are spending more time inside social networking sites, and linking to outside web-pages from there, potentially cutting Google searches out of the equation more often in the future.
Privately-owned Facebook celebrated the sign-up of its 500 millionth user this month. Its revenues have grown substantially in part because it takes a 30pc cut of any revenues generated by the games users play on its site.
And games developers have become some of the hottest properties in the technology industry, thanks to the popularity of so-called "social games".
Google has already made an investment in Zynga, maker of the game FarmVille, whose 60 million users run their own virtual farm, and is also reportedly in talks about partnership deals with other developers, including Playfish and Playdom. Disney agreed this week to pay up to $763m to acquire Playdom, maker of Sorority Life, in which users can pay to dress up their avatar and take her to online parties.
Google hopes to lure games developers to build for its new social networking platform, which rumours suggest will be called Google Me.
Reached by 'The Wall Street Journal', Mr Schmidt declined to indulge in anti-Facebook rhetoric, but said the social networking site's growth had been good for Google.
Shelly Palmer, technology consultant and founder of Advanced Media Ventures, said that Google need not feel threatened by Facebook -- but it ought not to think that cracking social networking is easy, either. Success in online searching, where the aim is to send users to the right part of the internet as quickly as possible, is the "polar opposite" to building a social networking site, where the aim is to persuade people to hang out as long as possible.
"Google is trying to understand what its capabilities are. Experimentation is part of its culture. It sees that there are a frightening number of people playing Mafia Wars and it says, 'You have got to go fishing where the fish are'. Now it is trying to answer questions like whether there is a business there. If they are not asking these questions, they are not doing their job," she said.
Google Me is expected to amount to a relaunch and extension of Google Buzz, the site launched by the firm this year but with disastrous public relations consequences.