Google In Social Media: It's All About The Data

| About: Alphabet Inc. (GOOG)

Google (NASDAQ:GOOG) is one of the world’s most successful companies, its name a verb synonymous with search, adopted by all the world’s languages, its coffers overflowing with cash, and regulators in the EU and America seeking to describe its dominance as a "monopoly."

So how in the world can mighty Google be considered an underdog? Well, in taking on King Goliath (Facebook) in the social media realm, Google enters the arena as David.

When I first upgraded to my Android Phone, I found myself surprised to be registering for a new gmail account (which I found vastly superior to Yahoo (NASDAQ:YHOO)), and using the Google search engine on an even greater frequency (like 100% where before I interspersed Yahoo/Bing). I came to love the phone, and became exactly the type of consumer Google was trying to capture by giving away the Android operating system to phone-makers.

My life became so “Googlefied” I felt compelled to purchase the stock.

Now Google branches out to social media, in what is a necessary step, not necessarily to compete directly with Facebook, but rather, to defend its search engine moat, which I will explain below.

I was very curious as to what Google + would bring to the table, so when I got my invitation to join a few months ago, I did so eagerly. And G+ has some cool features; the elegant idea and graphical interface of circles for one, and "hangout" where you can chat with multiple friends via video at any given time, are novel and up the ante.

If this was 5 years ago Google + would obliterate Facebook, because Google has the traffic and clout to more rapidly build its network, as demonstrated by its recent traffic and sign-up figures. But the truth is no matter how many people join, that doesn’t necessarily mean they are going to become active users.

The center of gravity in social media is Facebook. It is the sun, and nearly everyone on a computer sees the company’s light on a daily basis. The larger Facebook becomes, the greater its gravitational pull, and the more people (planets) end up orbiting this star.

Switching away from Facebook isn’t nearly as easy for an individual as switching search providers. If someone comes along with a search engine that you as an individual deem superior, all you have to do is type the new domain into your browser. It’s independent of what anyone else chooses to do, your objective being only to find the most relevant search results for yourself.

But in social media, even if Google Plus were to become the superior platform, it's still hard to switch over to this brave new, barren world, because the purpose of posting is to share and socialize, and everyone else is still on Facebook. In my three plus months on Google Plus, only two of my real friends have made any type of posts on it (one each), though I have maybe over 100 pe in my Google Plus circles.

In fact, the only reason I post on Google Plus with any regularity is to give the search engine spiders more links to my travel blog.

Google + is still a desolate lifeless world, being actively explored almost solely by Google scientists and engineers, trying to build some form of infrastructure to accommodate a few brave explorers, along with mercenaries promoting some sort of product in an effort to gain favor with the all powerful Google Search Engine.

The fun of Facebook is the interaction between multiple friends, and the significance and connection one gains from having their posts commented on/shared. On Google + it feels like you’re shouting into a vacuum. Now, I mentioned above that a large part of the reason for Google’s development of this platform was to defend its search engine moat. At this point in time, as I mentioned above, SE wise, it absolutely has the best mouse trap in the business.

Charlie Munger of Bershire Hathaway (NYSE:BRK.A), Warren Buffett's famed elder partner, stated in 2009, "Google has a huge new moat, In fact I've probably never seen such a wide moat. I don't know how to take it away from them. Their moat is filled with sharks."

Well, Charlie Munger is really smart, but he doesn’t understand technology and how rapidly it advances. This ain’t Coca-Cola (NYSE:KO), their secret formula, and their advertising dollars. Who can jump the moat most easily? The answer: Facebook. Why? Well, to pull the words right out of the mouth of a Google executive recently stated; “We don’t necessarily have the best algorithm, we simply have the most data.”

If that’s the secret, guess who’s accumulating the most data? Where do people spend upwards of a couple hours a day online whispering into Goliath's ear their exact preferences, who they like, what they like, where they are currently located, etc.

You don’t think Facebook, in conjunction with its minority owner Microsoft (NASDAQ:MSFT), has the ability to create a personalized search engine, where instead of ranking things based on links between pages, it could design a nearly personalized engine based on a user’s known desires? Why do you think Google developed its +1 button? Because personalization is the next step of search.

I don’t know how it’s possible for Google to overtake Facebook in social media, because whatever Google does Facebook can copy very quickly. No matter how hard Google Plus tries to disrupt people’s orbital loop around Goliath, that sun simply is too big, the gravitational pull too strong, and management too smart to screw it up like Fox did after buying MySpace.

So rest assured, Google’s strategy in entering this arena is not with the hope and prayer that it will be able to knock out Goliath with its slingshot and stone. It's doing this to protect its search engine moat, because for Google, in the long run, it's all about the data.

Disclosure: I am long GOOG.