Why does Google want a struggling search engine and technology company with an over-sized price tag, when it can snap up a few social media bargains for just $1.7 billion?
Industry speculation has Google circling social media companies Bebo and Plaxo. While everyone else is wondering whether Microsoft will produce the $57 billion for Yahoo!, Google has been quietly focusing on a more social direction.
Bebo is a social network that allows users to create profiles, connect with other users, whilst also providing a platform to view and share photos, video and audio.
- Started in July 2005
- 34 million registered users
- Largest social networking site in UK, Ireland and New Zealand
- 3rd Largest in the US behind Facebook & MySpace
Plaxo is a free service that helps users maintain an up to date address book by tapping into their various communication tools such as Outlook, Messenger etc. Plaxo more recently introduced a social network named Plaxo Pulse which aggregates user information from other social networks.
- Started in July 2001
- 20000 new users per day
- 15 million users as at Sep 2006
So what do Plaxo and Bebo offer a search giant like Google, given the established issues of monetizing similar social media offering?
Bebo could be used in conjunction with Google’s existing social network Orkut, to increase its grip of social network markets outside the US. The Bebo acquisition would instantly double Google’s share of the social networking market and provide it with valuable search exposure in the UK and commonwealth nations.
Plaxo on the other hand offers Google a chance to tap into the professional social networking space with the likes of LinkedIn and lesser so, Facebook. As Plaxo already provides an open social policy with most of the major social networks, it would be a great way for Google to tap into these indirectly (assuming these connections remain after a Google takeover).
Okay, so the acquisitions will increase user numbers in the social networking space, provide increased reach for its advertising network and help in penetrate some regional markets that it lacks social presence in – but will they provide bottom line benefits to the search engine giant.
Given the failed attempts to bolster revenue through the MySpace advertising deal, I’m not sure these acquisitions will provide a short term gain from advertising, but perhaps it’s all a part of a bigger picture.
NOTE: both companies are a part of the OpenSocial project. So perhaps it’s a pure play at Facebook and an attempt to control the revenue opportunities that OpenSocial style apps will provide in the future.