Yesterday at the Wall Street Journal’s “All Things Digital (D9) conference” in Rancho Palos Verdes, Eric Schmidt, the ex-CEO of Google was the first to be interviewed by Walt Mossberg and Kara Swisher. He made some interesting points which made it clear that Facebook is Google’s number 1 competition now. He admitted that he made a mistake by not taking the Facebook threat seriously four years ago.
He talked about the “Gang of Four” meaning – Google, Facebook, Amazon, and Apple (hey, no mention of Microsoft). These four have common characteristics in that they are all exploring platform strategies, and they all focus on a consumer brand with aggressive scaling and globalization as key themes. The unique part of Facebook is their hold over the consumer “identity” by connecting to friends and relatives.
Eric acknowledged that he and other executives failed to take Facebook seriously four years ago when the social networking site had around 20m active users. Today, with more than 500 million users and growing, Facebook has become a magnet for online advertising, and continues to stunt Google’s financial growth.
Mr Schmidt said that Google, with co-founder Larry Page now at the helm, is pushing to develop more ways to connect people with their friends and family. “I think the industry as a whole would benefit from an alternative [to Facebook],” Mr Schmidt said.
He added that attempts by Google to negotiate a partnership with Facebook were repeatedly turned down, with the networking site preferring to partner up with rival Microsoft, which owns a 1.6pc stake in the company. Google also has ties to Facebook. One of its former executives, Sheryl Sandberg, is Facebook’s chief operating officer.
Facebook poses another problem to Google, as much of the information on Facebook’s website cannot be indexed by Google’s search engine. This restriction threatens to make Google less useful as more people form social circles online which could make it more difficult for it to understand a user’s personal preferences, which benefits advertisers.
Apple’s platform tends to be more proprietary, but it has built a huge franchise of developers for its iPad and iPhone applications. Google’s Android is much more open and is rapidly building a huge developer community for tablet applications. Amazon pioneered the cloud computing infrastructure and hence provides the elaborate AWS (Amazon Web Services) platform for ts infrastructure.
The lack of mention of Microsoft in the Gang of Four is interesting, as it lags the consumer brand of internet and seems to move more towards enterprise computing. I am sure the leaders at Microsoft would disagree with this characterization.