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Facebook's Weapon In the Fight With Google

Ankit Tyagi |
July 12, 2011 | 2:11 p.m. PDT

Associate Tech Editor

Facebook and Windows logos, photo courtesy of Creative Commons.
Facebook and Windows logos, photo courtesy of Creative Commons.

Facebook's recent partnership with Skype brought video calling to the popular social network. And though this may not be particularly spectacular in it of itself, the approach Facebook chose in partnering with Skype did differentiate Facebook from Google. While Google utilized an in-house approach to power its video chat service seen through Google+ hangouts, Facebook is expanding beyond its own ecosystem to introduce new features. Does Facebook have a secret weapon to take on Google?

With more than 170 million users, Skype is considered to be the leader in Internet telephony and VoIP technology. By bringing their powerful services to Facebook, the duo presents a serious threat to Google. And, according to Skype's vice president Neil Stevens, the partnership with Facebook was a "strategic long-term deal.

So, why did Facebook partner with Skype? Why didn't Facebook just do what Google did and develop an in-house service to do the work? 

In 2007, Microsoft spent $240 million for a 1.6 percent stake in Facebook after winning a bidding war with Google. Although small in percentage, Microsoft now has a stronger tie with Facebook than Google does. And, according to Skype CEO Tony Bates, that partnership eventually sparked a "strategic relationship" with all three tech companies Microsoft, Facebook and Skype.  

Even before the addition of Skype, Microsoft and Facebook partnered in collaboration efforts. With the integration of Microsoft's search engine, Bing, users were able to combine web browsing with Facebook's social network using friend recommendations and "likes" all the while growing Bing's search user base. Microsoft, despite this partnership, may still have seen Google's growing empire as a major threat.

Kathryn Harrigan, professor at Columbia Business School, says "Microsoft is justifiably frightened of Google's capabilities." As for Facebook and Google, the two companies have been in constant competition with each other for years trying to stay relevant in the ever-evolving tech field. But, despite the neck-and-neck race, Harrigan says, "Facebook will not be around long-term without help from a Microsoft-class firm."

Harrigan also says the partnership with Skype, Microsoft and Facebook may have been an issue of confidence--confidence to implement the technology quicker. The likelihood of Facebook successfully creating an in-house video chat system to compete against Google+ was difficult and risky. But, by partnering with Skype, the risk was eliminated and the service rolled out faster, without much friction.

Interestingly enough, before Microsoft's purchase of Skype, however, Facebook and Google were both vying for the potential acquisition of Skype themselves. Google's acquisition of Skype may have assisted in the development of "hangouts," but for Facebook, the absence of Skype may have meant playing catch up at its own game. After all, Google already had video chat with Google Chat. 


Reach Ankit Tyagi here.

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