Should Facebook Be Worried About G+?

Google's strategy: It's forcing users of its other services to use G+

   

In today’s trading, Facebook (NASDAQ:FB) shares are so far up around 2%, to $29.50. In fact, since early September they’ve gained about 68%.

But of course, Facebock is facing some threats, such as Google (NASDAQ:GOOG). According to a recent piece in The Wall Street Journal, it looks like the G+ social network may become a headache for Facebook.

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Facebook’s Poke Fizzles

Google’s strategy is fairly straightforward: It’s requiring users of its many popular services to sign up for G+ to use its other products, such as Zagat guides, YouTube and Gmail. The result is that about 235 million people used G+ features in December, up from 150 million in late June.

It’s true that Google’s social network still pales in comparison to Facebook. A typical Google+ user spends about three minutes per month on the network, while for Facebook, that figure is a staggering 400 minutes.

But over time, G+ is likely to start closing the gap. The fact is Google has a wide variety of time-intensive apps. In addition, it has the benefit of the fast-growing Android platform.

No doubt, Facebook has been deft at repelling threats. It effectively destroyed rivals like MySpace and Friendster. And it acquired Instagram, which allowed Facebook to maintain its dominance of the vitally important photo-sharing market.

The problem is the threats keeping emerging. Besides G+, there is also Snapchat, which has become an instant phenomenon. The service allows users to send messages and photos that quickly delete themselves. Yes, it’s popular for “sexting.”

Facebook tried to topple Snapchat with its own app, called Poke, which was essentially a knock-off and, well, failed miserably.

It also looks like the Snapchat has no interest in selling out to Facebook. So, could Google or Twitter or even Yahoo (NASDAQ:YHOO) instead pick it up? Perhaps so. A deal would probably be a nice boost for any of them as they battle Facebook.

But one thing is always certain: The social networking market is highly competitive and vulnerable to breakout hits. And the threats can come from either start-ups or mega-operators.

For investors, such things probably won’t be a problem in the short term. Facebook looks poised to reinvigorate its growth rate as it continues to aggressively monetize is 1 billion-plus user base. But looking out the next couple of years, Facebook certainly could come under much more competitive pressure.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/should-facebook-be-worried-about-g/.

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