Googlehubris

A few weeks ago there was much ado about Google+ and the figures concerning the growth of this service that the CEO of the company, Larry Page, delivered under an earnings conference call on January 19.  After delivering a row of figures that, intentionally or not, were confusing for most of the audience, it is now clear that Google+ had at that time 90 million registered users. The point is precisely the word registered.  Page did´t give concrete figures around the engagement of the users of Google+ and mixed the engagement of all Google services in one big pot.For those like me that have been following Google for a while, this is not good news for Google+. The company has historically been a real magician when it comes to PR stunts and is not shy of delivering blast figures that underline its undeniable success.The fact is that not even Google can ignore the laws of First Mover´s Advantage, a über-used concept in business development but ill-defined most of the times. This brings us to the core of the issue: What is a First Mover Advantage and why is its effect so powerful that not even Google has been able of stealing a significant market share of active users from Facebook, the man to beat? (By the way, Facebook has now 800 mllion active users and growing)

There are only three types of First Mover´s Advantages: Either the First Mover has a proprietary superior technology, or the company has secured preferential access to resources (including customers or partners) thereby blocking competitors, or it enables a switching cost for the customer or the user once acquired.

Shall we play the check box game?

Has Facebook a superior proprietary technology? Not really, but neither has Google+ (Features are not technologies and they are easily copied, like the circles feature of Google+)

Has Facebook preferential access to resources vs Google? The answer is probably yes. As the number of active users grow, due to network effects they do it exponentially, securing access to an ever-increasing wealth of the most valuable resource for a social network: The number of active users. However, Google has many different services and hundreds of millions of users engage with Google actively in search every day.

Does Facebook enable a switching cost for the user once acquired? And here, the answer is a clear yes and this makes the whole difference.

In the very moment I have all my friends in Facebook and I communicate with them via Facebook and I KNOW that they are active and waiting for me on Facebook, I, as a user, have a tremendous switching cost when considering walking away from Facebook. By doing so I walk away from the place my friends are and I have to start building my social network from scratch again. In addition, if I walk away I have to bear the risk of not knowing whether my friends, that I know are active on Facebook, will be active on Google+ too. (or on any other newcomer)

In order to successfully compete with Facebook, Google has probably to start offering such a compelling additional benefit so intimate bundled with the Google+ service that it forces Facebook users to migrate. That´s why Google is now bundling Google+ with any other service they offer.

Whether this strategy will yield significant results is though highly uncertain. It depends on how Google will be able able of providing enough additional value through this bundling and whether Google will be able to erecting switching costs of its own through that. The laws of the First Mover´s Advantage are difficult to break.

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