First comes games, then comes payments…Google+ takes another step into FB territory

Facebook is the uncontested King of Social Networks at present, but Google has quickly positioned its Google+ platform as a potential usurper to the Facebook reign, as demonstrated by its recent launch of social network games. The games feature will include high-profile game designers like Zynga and Rovio (the Angry Birds developer), and many others. In case you didn’t catch Javelin’s recent report on virtual currency and social network payments, here’s one of the basic premises: social network games are profitable.

You may be wondering at this point, “Ok great, but why should Facebook be worried?” Sure, Facebook has more than 700 million users, compared to an approximate 20 million for Google+. Facebook understands how to monetize the social game space, as evidenced by the success of Facebook Credits, its virtual currency that is a required payment option for all game developers on Facebook. But Facebook has also angered a number of developers as of late by taking a 30% commission on all Facebook Credit transactions on games and applications. In addition, an antitrust complaint was filed with the FTC in June, arguing that Facebook was engaging in anticompetitive behavior by banning game developers from selling their virtual goods and games on other platforms for less than advertised on Facebook. Facebook quickly altered its policies to allow for more competitive behavior, there are a number of restrictions still in place on game developers.

Here’s where Google+ has the chance to overpower Facebook. First off, Google is extremely well positioned to enter the virtual currency space – powered by Google Checkout, the payments platform, the Google Wallet, the mobile wallet, and its 2010 acquisition of Jambool, a virtual currency software company. Google is well seasoned to the payments realm, and unlike its rival Facebook (see my blog regarding the security of Facebook transactions here). I don’t think that it will take Google long to introduce their own virtual currency, if Google+ remains popular. Secondly, the scale of the Google platform (the entire Google platform, I mean) allows it to integrate the Google+ network seamlessly into the overall online experience (just imagine what that could mean for online shopping!).

But what may be the real home run is that Google simply doesn’t need revenue like Facebook does. Which means that Google is free to price competitively (good for developers!), to invest in security (great for consumers!) and is free to innovate the social network space. Of course, we can’t forget Google’s list of failed social media attempts, including OpenSocial, FriendConnect, Lively, Google Wave, and Google Buzz. Whether that’s a signal that Google should just leave social networks alone, or whether practice will make the perfect platform, only time will tell. Personally, I say let’s bring on the social networking competition!

Category: Dynamic Payments

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