Following news last week that Microsoft will take a $240M stake in popular social networking site Facebook (full story), The New York Times reports Google and several social networking sites including LinkedIn, hi5, Friendster, Plaxo and Ning, will form an alliance to create common standards for software developers to write applications for the sites. Facebook opened its service to outside programmers this past spring and has generated heavy buzz over the thousands of available programs being shared across its estimated 50M users. The Google-led alliance dubbed "OpenSocial," with twice as many users as Facebook, is set to be announced Thursday. An anonymous source told the Times the alliance "is going to forestall Facebook's ability to get everyone writing just for Facebook." Meanwhile, Silicon Valley pundits are calling the move a "desperate" ploy by Google after being outbid by Microsoft for the minority stake in Facebook, noting Google will not earn any advertisement or referral revenues from the applications. Still, Google stands to benefit from greater exposure of Orkut, its social site and Brazil's most-popular, and it seemingly can generate more traditional ad revenue pending the growth of OpenSocial sites.
Commentary: Microsoft to Take $240M Facebook Stake, Become Exclusive Ad Platform • The Lawsuit That Could Cripple Google: Will American Airlines Ruin Everything? • Google in Talks with Verizon, Sprint on Phone Software
Stocks to watch: GOOG. Competitors: MSFT, YHOO
Earnings call transcript: Google Q3 2007, Microsoft F1Q08
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