Google – Silver lining

G+ failure saves Google from major problem.

  • Google is finally shutting down its attempt at competing with Facebook in Social Networking following a security lapse which, due to the inactivity on the service, has had very little impact.
  • Google+ or G+ was Google’s fourth attempt at social networking which was launched in June 2011 and in which large amounts of money was invested.
  • Despite being seen as a major threat by Facebook and a large number of users, G+ was never able to gain significant traction.
  • Most of G+ users were simply there as a consequence of signing up for other Google services which became clear in the usage figures from both ComScore and Nielsen.
  • For example, in 2012 ComScore estimated that engagement was just 3.3 minutes per month compared to 7.5 hours for Facebook.
  • This did not improve and in 2015, the site was adjusted to focus more on media sharing prompting RFM to reclassify G+ from Social Networking to Media Consumption.
  • That redesign has also had little effect and following the discovery of a potential security breach in March 2018, the decision was taken to close the service down.
  • Given the attention that has been placed on Facebook for its breaches, it would appear surprising that Google has got a free pass for this one.
  • However, when one looks a bit deeper, the reason becomes clear.
  • In March, Google discovered that one of the G+ APIs was making some users’ private data visible to any developer who wrote an application to that API.
  • This had the potential to affect about 500,000 users but because G+ has been a ghost town pretty much since it was launched, only 432 people even applied for access to that API.
  • Furthermore, it also appears that no one bothered to access the API in a way to access private data, and so very little, if any, damage has been done.
  • My position on Google has been that it is not going to suffer the kind of backlash that Facebook is facing.
  • This is because its product development cycle is much longer, and it tests its products far more thoroughly before bringing them to market.
  • Even with the best testing, the odd bug is going to slip through here and there and I think this incident is one of these.
  • However, if G+ had been a resounding success, this bug would most likely have been a major problem.
  • Then again, if it had been widely used, Google may have noticed the vulnerability long before March 2018.
  • Either way, there is a silver lining to G+ ignominious failure which Google will now reap as this breach will most likely be quickly forgotten.
  • I don’t see this as a weakness of Google’s development process and so I think that it is still in good shape to avoid most of the negative attention that is being focused on data and security.
  • Hence, I still think Google is likely to escape the most unscathed from the current privacy-related backlash and hence should outperform its peers.
  • That being said, privacy advocate Apple is likely to fare the best of all while the current storm rages.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.