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Wednesday, August 18, 2010

Google keeps getting social - and stands to make money from it

Google has been in the limelight quite a bit lately. The main reasons are as follows:
  • Google's supposed repudiation of its commitment to "net neutrality"
  • Oracle suing Google over an alleged violation of the terms of the Java license
  • In the most recent quarter, smartphones using the Android operating system actually outsold Apple's iPhone and RIMM's Blackberry
For those of you who have not yet come up to speed on these news items, the following links provide some excellent reading:
My two cents on the net neutrality issue is that Google is a public company with shareholders. It should be no surprise that they have chosen to "play along to get along" in the mobile space, an industry on which they are increasingly staking future growth prospects. As for Oracle, the company needs to call off the lawyers. It's sad to see a company that has championed innovation in the past starting to rely on legal wrangling to extract a few million dollars out of a competitor. Finally, though the growth rate of Android is surging, the operating system has a long way to go before it it's total market share exceeds that Nokia, Apple or RIMM. Still, Android seems to have the wind at its back.

OK, enough of that. I wanted to focus on a less noticed event involving Google - their acquisition of a small company named Jambool/Social Gold. The company provides a platform for purchasing virtual goods and currency online and managing virtual holdings. Why is this significant? Because a pattern is emerging.

Google recently acquired Slide, a company that makes some of the most popular games on Facebook. They have also made a $100 million to $200 million investment in Zynga, probably the leading producer of social games, many of which are also featured on Facebook.

So it is clear that Google is building strength in social gaming and, with the acquisition of Jambool, Google now has a payment platform to directly profit from gaming. This allows Google to go beyond advertising. In addition, with Picasa they have photo sharing and with Google Profiles they have a database of personal information. These could all be considered the building blocks of a fullblown social site to rival Facebook. And indeed, there are rumors galore that Google is planning to roll out a social site or at least a social gaming site.

What is also an interesting is that Jambool has an API that allows the payment process to be embedded in games or any other kinds of applications. And that suggests to me that it could just as easily be embedded in games or apps that run on Android. So this acquisition supports Google's mobile strategy, as well.

In any case, even if Google doesn't go head to head with Facebook, they now have a set of properties that provides Google more ways to profit from the social web and even use Facebook as a platform. Which brings to mind an old saying: "If you can't beat em, join 'em."

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