“Mood” is defined as “a pervasive and sustained emotion that colors the perception of the world. Common examples of mood include depression, elation, anger, and anxiety. In contrast to affect, which refers to more fluctuating changes in emotional “weather,” mood refers to a more pervasive and sustained emotional “climate.”[1] While “affect” is an external and observable expression of emotion, “mood” is internal.

Assessing another’s person’s mood, even when physically present with them, can be very difficult. When in person, one can resort to verbal and non-verbal communication to make this type of assessment. One might simply ask someone questions such as “how are you?” or “is something wrong?”, but we all know this rarely produces a ‘verbal answer’ which actually matches a person’s mood. When it comes to non-verbal communication, one might try to draw conclusions about another person’s mood based on observations of his or her affect.

However, even when one can assess someone’s affect – through tone, gestures, and general demeanor – this may be incongruous with their mood. To complicate matters further, what’s considered an appropriate level of affect to display to the exterior world varies across cultures, situations, and personalities. With it already being so challenging to evaluate another person’s mood correctly in person, with direct access to the physical cues which make up ~80% of communication, think about the challenges of evaluating someone’s mood online.

Well, this is precisely what Apple claims it wants to do – assess your mood, for purposes of ‘mood based advertising’ – in the “inferring user mood based on user and group characteristic data” patent application (No. 13/556023) it filed this past January. Online advertisers already use a host of contextual factors – location, age, time of day, types of searches and purchases, and general browsing history – to target individuals, and knowing someone’s mood would add yet another powerful dimension to their arsenal. No one doubts how influential mood is in the way a person processes an ad, and how mood can impact purchasing behavior.

What might this form of advertising look like, though, you may be asking? Imagine if Apple could correctly assess in real-time whether you’re happy or sad – a brand such as Coca-Cola which wants to reinforce psychological association with happiness may only choose to show you ads when you’re happy, while a shoe brand may choose to show a certain ad to a lonely, sad young woman of a certain income category, who may be more susceptible to the ad at that time and engage in some impulsive retail therapy.

How does Apple intend to accurately measure something as intangible as mood, though?

According to its patent application, Apple’s system would collect and analyze a combination of physical, behavioral, and spatial/temporal data over a period of time to build a “baseline mood.”  This “baseline mood” will be used to assess ongoing data collected, to infer real-time moods by comparing against your profile using “mood rules” set along these dimensions. Behavioral data might include engagement with social media (what are you posting, looking at, and how often, for instance), online browsing, and engagement with apps (what and in what sequence), paired with age, gender, and spatial/temporal data such as location and time.

Physical data, and this is where it gets quite interesting, could include the likes of your heart rate, blood pressure, body temperature, or vocal expressions. Below are some of the diagrams from Apple’s patent application, giving a high level overview of their data process.

OE blog post image 1

OE blog post image 2

OE blog post image 3

What does it mean for advertisers?

If you think about traditional media, many companies held the belief that people in a good mood would respond better to advertising. Some psychological research suggests that in fact, people who are feeling low may be most vulnerable to advertising. With access to online advertising that can incorporate ‘mood’ as a metric, advertisers could potentially have more runway to test this hypothesis, considering the lower testing costs of online advertising versus TV advertising, for instance. Regardless of this type of testing, however, advertisers will jump on this type of data to further refine their desired targeting strategies – whether it is effective or not, harmful or not, remains to be seen.

What does it mean for consumers?

With privacy already being invaded in countless ways, who exactly will welcome this with open arms?

What data should be available to advertisers? How nervous will people be about Apple keeping this kind of data safe? What if it gets into the wrong hands? What happens if Big Brother knows my mood, location, age, physical characteristics, and interests – all in real time?

The challenge of recognizing ‘mood’ is something medical professionals have not yet untangled to their satisfaction. This begs the question – would something so potentially innovative not serve the world better in the realm of medicine rather than in advertising?? Maybe I’m in the “mood not to see ads” – what then? What is known of the potential effect such advertising could have on my mood? What will be done to protect against misuse, or even understand the scope of what that means?

The use of biometrics, were mood-based advertising become a reality, also makes me think differently about the iWatch.  Initially, I wondered what was so new about this product – how will it serve customers, who may already have an iPhone, in a truly new way? Is there enough to make someone go out and purchase the watch, in addition to their phone? Now, I see this is a first method for Apple to build its capability in collecting biometric data. It is indeed going to serve them quite differently, compared to any of their other products.

Final thoughts

How will Google respond to this? Some say they are venturing into the realm of incorporating data on our behavior in the physical world through acquisitions such as Nest, but have they done anything in the way of detecting and incorporating mood? Which one makes people more nervous, and is taking matters ‘one step further’? Other players such as Microsoft filed for their own patents for similar ‘mood-based advertising’ systems, which would rely on data collected online, as well as data collected through the Kinect sensor.

While there is no ‘real-time mood based advertising’ currently in use, and its use may be quite far off in time, the tale of The Apple and the Moodreader provides some important food for thought.


USPTO – http://www.google.com/patents/US20140025620

Business Insider – http://www.businessinsider.com/apples-mood-based-ad-targeting-patent-2014-1

The American Psychiatric Association – http://bit.ly/1zoDMfk

Apple Insider – http://appleinsider.com/articles/14/01/23/apple-investigating-mood-based-ad-delivery-system

GeekWire – http://www.geekwire.com/2012/happy-sad-microsoft-system-target-ads-based-emotional-state/

[1] Source: The American Psychiatric Association

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In 2011, Steve Jobs famously declared that he was “going to destroy Android because it’s a stolen product. [He was] willing to go thermonuclear war on this” and that he “will spend every penny of Apple’s $40 billion in the bank to right this wrong. [1]” Three years later, Android has arguably beaten iOS for smartphone market share, controlling 62% of the market compared to iOS’s 33%. Despite this seemingly resounding victory for Google, the war between Apple and Google is far from over; in fact, it has only begun as Apple takes the war to where it really hurts for Google—its core search and advertising business.

Google revolves around its lucrative advertising business. Significantly more profitable than any other line of business that Google operates in, advertising composes 96% of the company’s revenue [2]. Google’s advertising business is so important to them that every strategic decision they make can be traced back to helping their advertising business in three ways. Namely, every one of Google’s decisions does one or more of the following:

1.     Increases the number of times users see ads served by Google. For example, Google released Chrome and Android for free with Google Search as the default search engine to direct more users to Google Search, and thus, AdWords.

2.     Increases the effectiveness of ads served by Google. Google does this primarily by collecting more information about users, resulting in better targeting for their ads. Products like Gmail, Chrome, Maps, Google+, and a whole host of others help Google collect more information about users (and as a bonus provide other web properties where they can show display and text advertisements.)

3.     Increases the time users spend online. The logic here is simple: the more time a user spends online, the more they use Google, effectively helping point 1 and point 2 above. This is the rationale for projects like Driverless Cars and Project Loon, which appear completely tangential to Google’s core strengths until viewed from this lens.

These three priorities encompass the core of Google’s business, and Apple has begun to relentlessly attack each one.

First, Apple threatens to disintermediate Google’s search business. One way they do this is through Safari, the default web browser in all Macs and iOS devices. Safari attacks Google’s business in several ways. First, as of version 8, Safari suggests a top hit for users’ searches even if they have never gone to that page before. If a user enters a search term to Safari’s address bar, they go to a search result directly from the location bar, bypassing Google search completely. (See picture.) This is a huge threat for Google: if users get search results without going to Google’s search landing page, Google will not be able to show search advertisements. Incidentally, Safari search results are provided by a combination of Bing, Wikipedia, Apple Maps, Yelp, and iTunes, which gain the added benefit of user data from the queries.

Safari Search

Apple is also using Siri, iOS’s voice assistant, to attack Google on this front. When it launched in October 2011 as part of iOS 5, Siri was nothing more than a toy—novel enough to show friends and family, but not great enough to actually matter in the day to day lives of iPhone users. Since then, Apple has invested great resources into improving Siri, getting it to the point where most basic smartphone functions and many search inquiries (sports scores, weather, stock prices, restaurants, etc.) can be done through Siri. Guess which search engine Siri uses. Hint: it’s not Google. Every search that someone makes through Siri is a search that they are not making through Google, a particularly disturbing development for Google given that traditional desktop searches have remained flat while the majority of growth comes from mobile devices. As Siri continues to improve, it is only a matter of time before Apple brings Siri to the desktop, threatening Google’s desktop search business.

Recently, Google’s greatest defense has been its Chrome browser. By investing heavily in creating a technically superior browser to any on the market for much of its lifecycle, Google uses Chrome to keep its search engine as the default for users. Apple has neutered Chrome on iOS by severely hamstringing it. First, there is no way to change the default web browser on iOS from Safari to Chrome. This alone will stop many users from reaching for Chrome on their phones. The default search engine for Safari? Bing. But the big weapon Apple brings against Chrome on iOS is the control that it exerts over apps in the iOS App Store. Apple’s developer agreement bans developers from creating programs that interpret code, preventing Google from implementing its own Javascript engine for Chrome. Instead, Google must use the default Javascript engine for iOS apps, which is significantly worse in performance than Safari’s Javascript engine. As a result, Chrome’s share of the iOS browser market is insignificant. [3]

Apple also presents a huge threat to Google’s ability to capture information about users. The rise of the iPhone and iPad has resulted in an app based ecosystem on mobile rather than a web based one. Unlike on desktop computers, users spend a significant amount of time on individual apps rather than in a web browser on individual sites. Within apps, there are no cookies so an important spigot of user information for Google has been shut off. As users spend more time on mobile and time on desktops remains stagnant, if Google misses on this mobile data, it will find it much more difficult to accurately target advertisements and to reach these mobile users, as Apple’s iAd network dominates on in app devices. As Google spends lavishly on projects like Loon and Driverless Cars to increase the amount of time that users spend online, Apple attempts to capitalize by bringing these users spend their newly freed internet time into its app ecosystem through products like CarPlay and the Apple Watch, thus co-opting Google’s web capabilities.

Fortunately for Google, despite Apple’s considerable resources, Google has several options to counter Apple’s moves. Most importantly, the historical trends of the technology industry favor Google’s web-centric approach over Apple’s app-centric ecosystem. As hardware becomes more powerful and mobile browsers become comparable in performance to their desktop counterparts, webapps will become preferred over native apps, as users prefer easier web access and developers crave the cost savings of developing for the web instead of each smartphone platform. This same trend of decentralization has played out over and over again in the history of the tech industry, from the client-server architecture of the 1980s to the domination of the web browser in the 1990s to the rise of the cloud today. This scenario is Apple’s worst nightmare as it commoditizes its mobile operating system and plays directly to Android’s strengths. Unfortunately for Google, mobile web browser performance today is not yet good enough for this transition to occur. Google must accelerate this improvement as soon as possible. First, they must support a high performance open standard for the web in HTML5 to stimulate companies and developers to create bigger and better products for the web. Then, it must make high performance web browser technologies as widespread as possible, which Google does through the open source Chromium project. Next, Google must increase the performance of the underlying pipes, which they have done by introducing Google Fiber, a loss-leading project that has improved internet speeds at incumbent ISPs just through the threat of entry into a market. Finally, Google must partner with semiconductor manufacturers to produce microprocessors that will power faster and better web browsers. To this end, Google has entered into a partnership with Intel to create more powerful x86 mobile chips. By combining this with their relentless pursuit of the domination of Android, Google may head off Apple’s attacks in the long run.

Finally, there is an interesting opportunity for Google to disrupt Apple’s OS ecosystem from the low end. Today, Macs are more than powerful enough for the work that the majority of their users do: surfing the web, writing emails, etc. Google can develop a cheaper operating system with lower hardware requirements that can perform these jobs as easily. Thus, they can prevent the disintermediation of their business in the desktop by Apple products like Siri and also hurt Apple’s market share on the desktop. Google has begun to do this in their Chrome OS products, although they have yet to fully invest in this business. It will be interesting to observe the evolution of ChromeOS in the next few years and see if it can truly become a substitute for Mac OS X and Windows as the internet performance continues to rise.

Google faces attacks on many fronts from Apple as Tim Cook aims to complete the blood fued that Steve Jobs started. Though only time will tell which of these giants will win the thermonuclear war, it has been fascinating to watch these battles being fought in the last few years.

[1] Steve Jobs, Walter Isaacson, 2011

[2] http://investor.google.com/documents/20100331_google_10Q.html

[3] http://techcrunch.com/2012/09/13/chrome-for-ios-market-share-reaches-2-7/


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Want the right to be forgotten? Move to Europe.


In 2010, a Spanish lawyer named Mario Costeja sued to have Google remove certain website links that appeared when one searched for his name. These search results linked to 1998 notices stating that Costeja’s property was to be auctioned to pay off his debts. The search results continued to appear years later, despite the fact that Costeja had resolved his financial issues. The Spanish Data Protection Agency ruled for Costeja, and in May 2014, the European Court of Justice (ECJ) affirmed its decision. In addition to requiring Google to take down the links connected to Costeja, the ECJ held that citizens of the European Union, plus those in Norway, Iceland, Switzerland and Liechtenstein, have a “right to be forgotten.” This meant that such individuals could forbid Google from posting search results that are “inadequate, irrelevant or no longer relevant, or excessive in relation to the purposes for which they were processed and in the light of the time that has elapsed.” This right to be forgotten is based on the 1995 Data Protection Directive, which states that a person can ask for “incomplete” or “inaccurate” data to be deleted.[1] The ruling came out while European lawmakers were negotiating a privacy law with an even more powerful right to be forgotten that could include companies such as Facebook.[2]


As part of the ruling, the ECJ required Google and other search engines to set up systems for individuals to request that certain search result links related to information about themselves be deleted. Google created a web form, accessible through country-specific Google search pages, by which individuals could submit a deletion request. Each request requires: 1) the name of the requestor; 2) the links they want deleted; and 3) an explanation of why the links are “inadequate, irrelevant…or excessive.” Google is responsible for deciding whether to grant or deny removal requests. A large team of lawyers and others are in charge of reviewing the requests, and take into account: whether the individual is a public or a private figure; whether the link is from a reputable news source or government site; whether the individual originally published the information; and whether the information relates to political speech or criminal charges.[3] If it grants a request, Google removes the links on European Google domains and notifies the site hosting the links at issue, but the links remain on the global Google.com site and the web sites that host them. If Google denies a request, the links remain on Google search results, but the individual can appeal to national data protection supervisory authorities or national courts, which can overturn Google’s decision. Google does not release individual removal request decisions.

As of October 2014, Google has received 151, 226 removal requests, and has removed close to 42% of them.[4] It has received the highest number of deletion requests from France, second highest from Germany and third highest from Britain.[5] Google has removed more links to content on Facebook than any other website.[6] Profile Engine, a New Zealand social network, has the second highest number of removals and Youtube has the third. As a result of the ECJ ruling, some companies now offer to assist individuals submit deletion requests to Google in exchange for payment.[7]

The ECJ ruling raises several important policy issues:

Privacy vs. Free Speech

The Costeja ruling begs the question of balancing complete access to information and respecting the privacy of others. Which do we value more as a society? Furthermore, will that change as information becomes more accessible and durable? How privacy and free speech are prioritized is highly dependent on jurisdiction and sociopolitical context.

The U.S. has a long history of being on the side of freedom of information, as the First Amendment acts as a strong protection against censorship, with very few exceptions. As a result, the American public has for the most part been critical of the right to be forgotten ruling. However, for most of U.S. history, information was recorded on paper, and thus was not as quickly and easily accessible as it is today by anyone with access to the Internet. Our values with respect to this issue may change as we are increasingly able to retrieve information about one another at the click of a mouse and reliably store data using the Cloud.  For example, records of criminal convictions have long existed, but only in recent history have they become easily accessible by almost anyone via the Internet, making it much harder for convicted criminals to find housing or employment.

In Europe, on the other hand, these priorities may be switched. In many ways, Europe is much more sensitive than the U.S. with respect to the collection of personal information (notwithstanding recent events in the U.S. associated with NSA surveillance). This is likely due to Europe’s history, which is riddled with mistrust of Communist and Nazi governments. For example, in the 1930s, the Dutch government maintained a list with the name, address, and religion of every citizen in order to assist with welfare administration. This list was later used by the Nazis to find Jews and Gypsies when the Nazis invaded Holland.[8] It’s easy to see, then, why Europeans may covet privacy more than freedom of speech. This is not to say that some Americans have not tried to extend the right to be forgotten to the U.S. In June 2014, a Texas lawyer sued to have Google delete links regarding a Texas state bar disciplinary action against him, winning in trial court but ultimately losing on appeal.[9]

There are certainly some contexts in which we empathize with those who want content taken down. These might include racy personal photos of celebrities, videos of men killed by ISIS, or images of a gruesome car crash that a parent wants taken down from the Internet so as not to be reminded of the loss. Thankfully, U.S. copyright law has provided some relief in these contexts (although it is much more burdensome than filling out a removal form as copyright law requires ownership of the content), and Google already monitors its sites for, and often takes down, such content.

Slippery Slope?

Although the Costeja ruling is limited to EU member countries, other countries may look favorably upon the ruling and follow suit. In fact, on October 9, 2014, a Tokyo court ruled that Google must delete 122 search results tied to a Japanese man’s name because they were harmful to his personal life.[10] Another concerning possibility is that individual countries in the EU may impose their own, stricter requirements on search engines, leading to a complicated regulatory web. This could lead to unequal access to information varying across national lines. European data regulators have already signalled that Google should be restricted further, by removing disputed links from Google.com or not informing publishers when links are deleted.

Placing Google in Charge

A final question arises as to whether Google should be the arbiter of removal requests in deciding whether removal of particular content is in the public interest. Google itself does not want to be in this position. First, it’s unclear whether Google has enough information to make these decisions, as it often can only rely on information submitted by removal requestors. Indeed, Google has found that some requests contained false information.[11] Second, Google has little instruction from the ECJ as to what links should be deleted or retained. The ECJ’s guidance is extremely broad and ambiguous (what exactly does “inadequate,” “irrelevant,” and “excessive” mean?). As a result, Google is likely to err on the side of caution and accept difficult requests, rather than reject them and be subject to national regulators overturning Google’s decision. A European governmental body should be the one making these decisions and then guide Google accordingly, rather than require Google to take a stab at it, with the possibility of a national government later overturning Google’s decision if the requestor is unhappy with it.

It’s hard to say how the right to be forgotten will continue to play out in Europe and elsewhere. The ECJ ruling was undoubtedly motivated by the European political climate and overwhelming dominance of Google in the European search engine market (Costeja’s claim had asked for both Google and the newspaper website to take down the links, but the trial court only ruled against Google), and thus the exact contours of the right to be forgotten will likely change with the European political environment and the public’s perception of the Internet.

[1] 1995 Data Protection Directive, Article 12(b).

[2] N.Y. Times, Daily Report: E.U. Court Orders Google to Grant ‘Right to Be Forgotten’, May 13, 2014, http://bits.blogs.nytimes.com/2014/10/09/google-provides-details-on-right-to-be-forgotten-requests/?_php=true&_type=blogs&_r=0.

[3] Jeffrey Toobin, The Solace of Oblivion, New Yorker, September 29, 2014, http://www.newyorker.com/magazine/2014/09/29/solace-oblivion.

[4] Google Transparency Report, accessed on October 18, 2014, https://www.google.com/transparencyreport/removals/europeprivacy/?hl=en. The report allows you to browse the number of requests by country, example requests, and the websites most impacted by the deletion requests.

[5] Google Transparency Report.

[6] Google Transparency Report.

[7] Mark Scott, European Companies See Opportunity in the Right to be Forgotten, July 8, 2014, N.Y. Times, http://www.nytimes.com/2014/07/09/technology/european-companies-see-opportunity-in-the-right-to-be-forgotten.html.

[8] The Solace of Oblivion.

[9]Miriam Rozen, Court Won’t Force Google to Expunge Records of Nonsuited Disciplinary Lawsuit, June 12, 2014, Texas Lawyer,http://www.texaslawyer.com/id=1202659130283/Court-Wont-Force-Google-to-Expunge-Records-of-Nonsuited-Disciplinary-Lawsuit?slreturn=20140918201737.

[10] Ken Sakakibara, Tokyo Court Orders Google to Delete Search Results that Implied Criminality, Asahi Shimbun, October 10, 2014,http://ajw.asahi.com/article/behind_news/social_affairs/AJ201410100035.

[11] Mark Scott, Google Details Problems with Handling Right to be Forgotten Requests, July 31, 2014, http://bits.blogs.nytimes.com/2014/07/31/google-details-problems-with-handling-right-to-be-forgotten-requests/.

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Will Google’s Search Engine Run Out Of Steam?

It is difficult to believe that, in ten years’ time, Google may not still be the number one search engine, though there are a number of factors that are changing the way in which search operates and thereby who will emerge the final winner in this multi-decade saga. Google clearly beat its early rivals based on search quality – a new way of indexing websites compared to the antiquated (more game-able) Yaho/AltaVista methodology. However, as our recent class experience with Bing/Google showed, competition between browsers is increasingly based less on the quality of search results, and more around inertia and complements. This is changing the game, and Google may well not end up the final winner.

Searching via the OS

As mobile becomes increasingly important as a mechanism for search, the operating system and browser become the primary way for a user to search for content online. We have seen this shift with iOS 7 whereby a user simply types into the URL box to conduct a search – they do not have to type into a Google-branded search bar, or visit Google.com itself. It happens that Google is the default search engine used in iOS 7, but this need not be the case. Indeed, given the more limited Google branding within iOS 7, many consumers might not notice if iOS 8 shifts to Bing as the default search engine, searchable from anywhere within the iOS system (e.g., no need to open a browser, etc.). Apple seems keen to wean itself off the Google ecosystem (hence the introduction of Apple Maps) and so long as Apple remains a preeminent player in mobile, Google’s hold on search is not inevitable. It doesn’t require too much of a mental leap to envisage Microsoft paying significant sums to Apple for Bing to become the default search engine on iOS devices, thereby ending the Google monopoly.

Content is king

Across the entire online economy, we are increasingly seeing greater demand for premium content as a way to drive both users and revenues. In the search space, players are increasingly investigating new ways to attract users to one ecosystem over another. For example, one search engine recently explored licensing music and video content which would be offered to users on a gratis basis, ad-free, in return for search engine loyalty. Essentially, so long as a consumer only used search engine X, they would get unlimited access to a Spotify/Hulu equivalent. If they used an alternative search engine, they would be forced to pay for the content. This product has not yet been rolled out, but it points to the opportunity in search given how valuable each individual user/search can be to a major player. Given how similar Google and Bing currently are in terms of search results, it might not take much in terms of free content to convince users to switch default engine.

The importance of semantic search 

The last big change to search comes in terms of ‘semantic search’. This essentially focuses on delivering to users specific answers to questions, as opposed to simply algorithmic search results. Google is probably a front runner in this space, having recently announced its new ‘Hummingbird’ system which is designed to interpret the sematic meaning of the search itself in order to deliver a more attune result. For example, if I search for “what is 10 pounds in ounces”, Google will tell me “160 ounces” as the primary search result. Previously, I might have simply received a Wikipedia article on pounds and ounces. While Google may be first here, there is clearly a long way to go. For example, asking a more complex question such as “what are the top 10 VCs in Boston” results a suite of news articles related to the topic without actually delivering answers themselves. Perhaps therein lies an opportunity for a challenger with development resources and significant motivation, though overcoming Google will not be an easy task.

In summary, Google clearly still has a stranglehold on search. Nonetheless, there are cracks in the armor appearing as OS becomes more important, content can be used to drive adoption, and consumers are looking for a different kind of search result. Google has a defensive position in all of these areas – with Android, Google Play, and Hummingbird. But will it be enough to stave off a hungry competitor that is rapidly seeing its core cash cow (PC OS) being supplanted by new mobile OS? The incentives are there, but can Microsoft (or anyone else) deliver.

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Social Networks: Winner Takes All?

As an early stage technology investor, I steered clear of any one pitching another ‘social network.’ Anyone who wanted to go up against Facebook just sounded crazy. A question that’s thrown around too often in startup feedback sessions is “Well what if Google tries to build it?” This is a meaningless question because you can use it with just about any startup idea, but in the case of social networks, Google did try to build it… And yet even Google+ is trailing behind, so clearly this is a winner takes all market, right?

This summer I worked at Google[x], Google’s innovation lab known for its self-driving cars, Google Glass, and most recently announced moonshot, Project Loon. While interning here, I was surprised to learn that of all the dozens of campuses, hundreds of buildings, thousands of new initiatives, CEO Larry Page, sat on the same floor with the Google Plus team. He put 1000+ employees behind this project, and he situated himself amongst them. Google has not accepted that Google+ may be a failed social experiment. And if you’re like me, you have never logged into Google+ since you (maybe) created an account…

But then I read this VentureBeat article over the summer titled “Google+ continues to dominate LinkedIn & Twitter, could catch up with Facebook (http://venturebeat.com/2013/07/08/google-plus-one-number-two/#UzAM53kAU4TDC6lh.99) that stated, “of people who use social networks to log in to other websites, almost 46% use Facebook, but Google+ is a strong second place with 34% of social logins… At this rate Google will surpass Facebook by May 2016 at which time its users will generate over 1,096 billion +1s per month, while Facebook users will generate just 849 billion shares per month.” Whether you’re tracking registered users, active users, social logins, or shares, Google+ seems to be a surprisingly serious second. So is there an opportunity for another social network?

There is much written about the features of Google+ versus Facebook so I won’t spend time describing that here, but what I found interesting was the framework I recently learned in class on how to evaluate whether a space is in fact “winner takes all.” The three criteria for a Winner Takes All market are: 1) strong network effects, 2) high homing costs, and 3) low demand for differentiated product. This framework offered a new lens in which to think about Google vs. Facebook vs. New Startup. We know there are definitely strong network effects at play (the addition of each new user adds value to all the users on the platform). Are there high homing costs? I think most people would find it burdensome to go to Google+ to post something, and track comments on that platform, and then log into Facebook to post the same thing, and follow the discussion that is happening within that walled garden. So yes in the case of Google vs. Facebook, the high homing costs are working against Google+. Is there a low demand for differentiated product? Arguably, no, customers could value different features in a social network. The most common difference referenced is the desire for choosing groups to share particular content with so that not every one sees the same posts. There’s a desire for privacy or more selective information sharing across different types of connections. I’m sure if I asked you to name something annoying that you wish you could change about Facebook, you could easily think of three or more things such as “remove advertisements, only show updates in news feed from people I actually care about, or how can I easily remove all those ‘friends’ I added a long time ago without thinking twice about how many loose connections I now have on Facebook?” So this last criterion is in Google’s favor, but 1/3 on your side is still an uphill battle. However, based on these criteria, if Google+ nails the product differentiation then they could still in theory dominate Facebook.

But what is interesting here is that social networks may be one of the few spaces where a new startup has a better shot of taking Facebook than Google does. And here’s why. Looking at the same three criteria, a new startup has the potential to win on both the 2nd and 3rd criteria.  Unlike Google, which will probably never add the ability to “also post to Facebook,” a startup can be agnostic and say, “Do you want to also post to Facebook and Google?” And thus now this user has low homing costs to using this startup social network because anything shared here can be easily posted across Google, Twitter, Facebook, you name it, allowing it to gain user traction.  Then if the startup can nail product differentiation, then hey, I guess it could win and take it all.

Note: In a way, Instagram could be an example of a startup that succeeded at this. It was a brilliant acquisition by Facebook, but Twitter should have bought them. Twitter would be trending very differently if it owned Instagram. Now that’s another blog post.







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