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Google Plus is on the Wrong End of Network Effects

http://www.slate.com/articles/technology/technology/2011/11/google_had_a_chance_to_compete_with_facebook_not_anymore_.html

Writer Farhad Manjoo (of Slate.com) is certain that Google Plus has missed its opportunity to establish itself as a major contender in the social networking market. And by “major contender” I mean a competitor of Facebook of course. Manjoo believes that one of the major reasons that Google Plus is doomed is because it was released prematurely into the market. Google Plus was heavily advertised (every Google visitor saw an ad for Google Plus) so it had no trouble attracting people to their site. In fact, the site attracted 40 million people in their first month making it the fastest growing social networking site ever. However, the reason Google Plus is having trouble competing is due to the lack of features that keep users coming back for more. Traffic-analysis firms are reporting that Google Plus has “fallen precipitously from its early peak.” This is most likely due to the fact that users have gotten bored with the lack of features. One concrete example of this involves the fact that Google Plus just recently released a feature called “brand pages” which allows companies to create profiles. This is certainly a beneficial feature of Google Plus, but Manjoo believes it is too little too late. Social networking sites (especially those competing with Facebook) have to make a great first impression. If Google Plus wasn’t ready for brand pages and other features, then it shouldn’t have been launched so soon.

We have discussed the powerful influence of network effects on many products and services such as Facebook, cell phones, and fax machines. This article discusses how Google Plus is not able to capitalize on the positive externalities associated with network effects. Of course, social networking sites are very susceptible to the number of people using their service. As the number of users increase, the overall experience for users generally increases also due to more interactions with more of their friends. Manjoo elaborates on a direct result of network effects by stating: “a social network needs a critical mass of people to be successful—the more people it attracts, the more people it attracts.” This is a prime example of the rich-get-richer phenomenon. This phenomenon comes from the fact the probability of a product or service gaining popularity is in direct proportion to its current popularity. However, as Google Plus has clearly seen, it is extremely difficult to obtain the current popularity that is needed to get the ball rolling and benefit from the positive externalities of network effects.

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