Google+ Vs. Facebook: War Breaks Out!
Google's social network going large with self-promotion, including a showy homepage change and a performance.

Even though Google’s (NASDAQ:GOOG) search business continues to crank out huge amounts of cash flows, the company definitely is concerned. Companies like Apple (NASDAQ:AAPL) continue to pose problems with the mobile market. Even Microsoft (NASDAQ:MSFT) remains a strong competitor, especially with its dominant Office franchise.

Yet it looks like the biggest threat is Facebook. With more than 750 million active users, the company continues to grab online marketing dollars. For example, according to a report from Reuters, the company doubled its revenues to $1.6 billion during the first half of this year.

Of course, Google’s answer is Google+. And as an indication of how serious the company is about this service, it has pimped out its spartan home page with a big, blue arrow pointing to a tab for Google+.

Yes, it’s inevitable that there will be an explosion of sign-ups. Even as an invitation-only service, Google+ got roughly 25 million users.

But the big question is: Will the users stay?

The concept of “engagement” is absolutely critical for social networks. And history has shown that this can fizzle out pretty quickly. Just look at operators like Friendster, Bebo, Ringo, Tribe and MySpace. They are either dead or near dead. Only a few social networking services, such as LinkedIn (NYSE:LNKD), have actually survived.

Despite all this, Google+ continues to look promising. Launched just 90 days ago, the service has seen frequent innovation. The Hangouts service — which allows for multi-user video chat — is turning into a great product. It also has new iPhone/iPad apps and integration with the main search engine. All in all, it looks like Google’s engineers are working as if they were at a lean, mean startup.

But having a strong product is not enough. Facebook has been able to add some new capabilities to deal with Google+. In fact, on Thursday, the company will conduct its much-anticipated F8 conference, where even more features and offerings — such as a music service — will be announced.

Basically, Google needs to get creative. So what to do? Well, perhaps the most impactful thing is to get celebrities involved. And Google already has that covered. Grammy Award-winning musician will do a performance on Google+’s Hangouts at 9 p.m. That should attract plenty of buzz.

But Google should continue to push aggressively. The company has a huge cash hoard and could sign social-networking exclusives with top acts like Lady Gaga and Justin Bieber. By doing this, Google should be able to scale its service substantially, as well as create more engagement.

True, even with all this, Facebook still is likely to remain the dominant player — at least for a couple years. The company still has many entrenched advantages. But Google+ is looking more like a worthy adversary and not showing signs of letting up the pressure.

Tom Taulli is the author of “All About Short Selling” and “All About Commodities.” You can also find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.

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