UPDATE 3-Google targets Facebook with new social service

Tue Jun 28, 2011 5:26pm EDT

* Google+ service launches in field trial

* Google betting privacy features will set it apart

* Service lets users share info among circles of friends (Rewrites first paragraph, adds analyst comments, Facebook comment)

By Alexei Oreskovic

SAN FRANCISCO, June 28 (Reuters) - Google Inc (GOOG.O) is making its boldest move to take on Facebook in the fast-growing social networking market and to maintain its dominance on the Web.

Google, which has been frustrated by a string of failed attempts to crack the social networking market, introduced a full-fledged social network on Tuesday dubbed Google+. It is the company's biggest foray into social networking since co-founder Larry Page took over as chief executive in April.

Page has made social networking a top priority at the world's No. 1 Internet search engine, whose position as the main gateway to online information could be at risk as people spend more time on sites like Facebook and Twitter.

"They had the luxury of making mistakes in the past with their social initiatives. They don't really have that luxury now," said Ray Valdes, an analyst at research firm Gartner, referring to Google.

"Companies that are successful with the social web will get the page views, they'll get the engagement and they'll eventually get the advertising dollars that are so important to Google," he said.

Google+, now available for testing, is structured in remarkably similar fashion to Facebook, with profile pictures and newsfeeds forming a central core. However, a user's friends or contacts are grouped into very specific circles of their choosing, versus the common pool of friends typical on Facebook. ( here )

Enticing consumers to join another social networking service will not be easy, said Rory Maher, an analyst with Hudson Square Research.

"They're going to have an uphill battle due to Facebook's network effects," said Maher, citing the 700 million users that some research firms say are currently on Facebook's service.

"The more users they (Facebook) get, the harder it gets for Google to steal those," he said. But he added that Google's popularity in Web search and email could help it gain a following.

To set its service apart from Facebook, Google is betting on what it says is a better approach to privacy -- a hot-button issue that has burned Facebook, as well as Google, in the past.

Central to Google+ are the "circles" of friends and acquaintances. Users can organize contacts into different customized circles -- family members, coworkers, college friends -- and share photos, videos or other information only within those groups.

"In the online world there's this 'share box' and you type into it and you have no idea who is going to get that, or where it's going to land, or how it's going to embarrass you six months from now," said Google Vice President of Product Management Bradley Horowitz.

"For us, privacy isn't buried six panels deep," he added.

Facebook, which has been criticized for its confusing privacy controls, introduced a feature last year that lets users create smaller groups of friends. Google, without mentioning Facebook by name, said other social networking services' attempts to create groups have been "bolt-on" efforts that do not work as well.

Facebook, in an emailed statement, said "we're in the early days of making the Web more social, and there are opportunities for innovation everywhere."

Google+ started rolling out to a limited number of users on Tuesday in what the company is calling a field trial. Only those invited to join will initially be able to use the service. Google did not say when it would be more widely available.

Google, which generated roughly $29 billion in revenue in 2010, said the new service does not currently feature advertising.

LEARNING FROM BUZZ

Google's stock has been pressured by concerns about rising spending within the company and increasing regulatory scrutiny -- not to mention its struggles with social networking. The U.S. Federal Trade Commission, among others, is currently reviewing its business practices.

Its shares are down almost 20 percent this year after underperforming the market in 2010.

To create Google+, the company went back to the drawing board in the wake of several notable failures, including Google Wave and Google Buzz, a microblogging service whose launch was marred by privacy snafus.

"We learned a lot in Buzz, and one of the things we learned is that there's a real market opportunity for a product that addresses people's concerns around privacy and how their information is shared," said Horowitz.

Google drew more than 1 billion visitors worldwide to its websites in May, more than any other company, according to Web analytics firm comScore. But people are spending more time on Facebook: The average U.S. visitor spent 375 minutes per month on Facebook in May, compared with 231 minutes for Google.

Google+ seems designed to make its online properties a pervasive part of the daily online experience, rather than being spots where Web surfers occasionally check in to search for a website or check email.

As with Facebook's service, Google Plus has a central Web page that displays an ever-updating stream of the comments, photos and links being shared by friends and contacts.

A toolbar across the top of most of Google's sites -- such as its main search page, its Gmail site and its Maps site -- allows users to access their personalized data feed. They can then contribute their own information to the stream.

The company has combined the Facebook and Twitter models of social networking in Google+: A person can have friends in their network with whom they share information and they can also follow certain people, say a movie critic, as occurs on Twitter.

Google+ will also offer a special video chat feature, in which up to 10 people can jump on a conference call. And Google will automatically store photos taken on cell phones on its Internet servers, allowing a Google+ user to access the photos from any computer and share them.

When asked whether he expected people to switch from Facebook to Google+, Google Senior Vice President of Engineering Vic Gundotra said people may decide to use both.

"People today use multiple tools. I think what we're offering here offers some very distinct advantages around some basic needs," he said. (Reporting by Alexei Oreskovic; Editing by John Wallace, Gerald E. McCormick and Phil Berlowitz)

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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