Google sites to add social networking in "layers"

PARADISE VALLEY, Arizona (Reuters) - Google Inc plans to gradually introduce social-networking features starting this fall, reviving attempts to compete with Facebook after pulling the plug on its stillborn Wave project.

Chief Executive Eric Schmidt told reporters on Tuesday the Internet search leader intends to work in “layers” of social networking to its sites, rather than unveil a flashy product. To propel that effort, he intends to sustain its pace of acquisitions.

“We’re trying to take Google’s core products and add a social component,” Schmidt told a select group of reporters at Zeitgeist, a gathering of business partners and high-profile industry figures.

“If you think about it, it’s obvious. With your permission, knowing more about who your friends are, we can provide more tailored recommendations. Search quality can get better.”

Google has struggled to find the right touch in creating the types of social networking services that have become increasingly hot online.

It declared the demise this year of Wave, a high-profile online communications tool launched last year. And Orkut, its early online social network, has failed to catch on outside of Brazil and India.

Media reports now peg Google as developing a new social networking product -- dubbed Google ME -- in a bid to take on Facebook, which has more than half a billion users worldwide. Others speculate it might be looking for an acquisition to get into social gaming.

“Everybody has convinced themselves that there’s some huge project about to get announced next week. And I can assure you that’s not the case,” Schmidt said.


Analysts point to recent acquisitions as signs the company is steadily beefing up its social-network capabilities.

The company this year undertook a series of small to mid-sized purchases, including a $182 million deal to take over social networking firm Slide, and a $700 million offer for airline ticketing firm ITA Software Inc.

Schmidt expects the last deal to win regulatory approval. He said the level of scrutiny it has drawn is similar to that for Google’s acquisition of Admob, which won a green light.

Analysts have attributed a recent flurry of tech-sector acquisitions to a perception that valuations remain low, a product of a sputtering economy as well as persistent doubts about the strength of the tech sector recovery.

In an exclusive interview with Reuters on Tuesday, Schmidt said he did not expect another recession soon, but warned of slow, or even zero, growth over the next few years.

“It’s unlikely we’ll have a double dip for all the reasons people talked about. A much more likely scenario is slow or no growth for a few years,” Schmidt said in the interview.

“High tech is different. High-tech seems to be benefiting from new product cycles, lots of new investments,” he added. “So high tech will probably have a different outcome from the average American (consumer).”

Additional reporting by Chrystia Freeland; Editing by Gary Hill and Steve Orlofsky