Product Management Incubator: Google v. Facebook

Product Management On Display and Ecosystem Product Marketing Opportunity

So just like that Google has cut off Facebook from the API that allows access to Gmail contacts. Watching the ever intensifying conflict between Google and Facebook evolve is truly a rare opportunity. Moves like this speak volumes of where the tensions between the two companies exist, and some foundational truths behind strategy, product development investment, and priorities. I think it also illustrates the fact that we are still in the infancy of the digital age of communication.

Consider this line from Addy Dugdale’s Fast Company piece, “. . . after all, user data is the single most important currency on the web”. It is a foundational truth under which both Google and Facebook operate. Owning the internet user equals incredible amounts of money from advertising. For those of us who lived through the dot com bubble and all the ink (it was still ink back then) that was given to the gold rush of racing to the web and transforming business, over a decade after the crash the web has matured significantly yet the underlying revenue model for arguably the two largest internet companies is all about one thing – the advertising dollar.

Consider that in 2009 Google’s $23B in revenue was almost completely earned through advertising of some sort (97% to be specific) and as of Q3 2010 this continues to be the case. By many reports Facebook may exceed 1.28B in revenue this year (nearly double 2009), and while more difficult to discern some reports have advertising as the soul revenue source. More simply put, in the short run Facebook places at least a percentage of Google revenue at risk, and in the long run threatens to one day completely overtake Google’s lead. The two don’t play well together and so we have today’s announcement that Google has eliminated Facebook’s access to Gmail contact information.

What makes it interesting to observe  from a product management perspective is Google’s penchant for rapid and continuous development. Their rapid fire product launch schedule clearly articulates the fact that they are more than a little concerned over protecting their ownership of the internet as a verb. Consider the dawn (and in some cases sunset) of recent Google Labs production: Buzz, Wave, Places, Social gaming partnerships, and early reports on Google Me.

Product managers should pay close attention to every single announcement and development that comes from both Facebook and Google. It will highlight priorities and strategies. It will clearly define the varying approaches that both these companies take. Google, the route of rapid, open and constant innovation while Facebook keeps things relatively closed and focuses on  launching services that have already been established in the digital community.

From a product marketing perspective I think neither of these firms invests much time on marketing their products for the business to business value they inherently represent, and really why should they? The eyeballs matter most and the advertisers come along for the ride. That said, however, Google’s license revenue (approximately 3% of their total revenue according to their earnings report) amounts to nearly $500M. But the battle ground doesn’t exist there just yet. The skirmish over owning search, content and social interaction digitally rages on. This creates opportunity of course for the related ecosystem. With Google tied up in defending their turf and rapidly developing tools that internet users will integrate into their daily web surfing routines, serving the business community with functionality that helps target, indentify, mine, and sell through and into the Google owned masses will continue to mature.

UPDATE:

Check this post out by Robert Scoble regarding some history here between him and TechCrunch’s Mike Arrington over open data sharing from Facebook.  Particularly the post itself not so much the transcript.

photo credit: Steve Jurvetson