Google's Sweet Revenge

Getting a buyout offer from Google (Nasdaq: GOOG  ) can be a perilous proposition. Say yes, and your company's engulfed by Big Goo. Say no -- as rumor suggests Yelp, Twitter, and Digg have -- and the world's largest search engine could simply roll out its own take on your signature tech. Twitter might now be poised to learn that the hard way.

The Wall Street Journal is now reporting that Google "is taking a swipe at Facebook and Twitter with a new feature that makes it easier for users of Gmail to view media and status updates shared online by their friends."

In short, Google is trying to kill two rising dot-com stars with a single blow. But while it's easy to get excited about Gmail opening up its free email platform to status updates and closer connections to contacts, Google won't be the first to try such a strategy.

Yahoo! (Nasdaq: YHOO  ) turned heads this summer when it tried to cash in on what it has called its "dormant social network" by incorporating status update features into Yahoo! Mail. Most savvy dot-com watchers would chuckle at comparing Yahoo! to Google, but email is one area where Yahoo! has the lead. Gmail is a spunky platform, but it's competing against Yahoo!, AOL (NYSE: AOL  ) , and Microsoft's (Nasdaq: MSFT  ) Hotmail -- freemail services that have had head starts since the 1990s.

In that light, it's probably not a coincidence that reports are beginning to circulate that Facebook is readying its launch its own email service. Gmail's creator even works for Facebook these days!

However, we'll have to wait for that service to materialize. It's been nearly a year since News Corp.'s (NYSE: NWS  ) MySpace changed its corporate email addresses -- prompting many to speculate that it was reserving @myspace.com for a user email platform. That hasn't happened yet.

However, it's inevitable that Google will butt heads with Facebook and Twitter. As traffic hubs, social-media sites present a real threat to Big G if folks begin launching their search queries from within the stickier sites.

I don't think Facebook or Twitter will lose any sleep if Gmail gets social. Both upstart services -- Facebook in particular -- do more than just send out updates to friends. Google's new initiative can't afford to merely make Gmail a poor man's Twitter. There's too much at stake to take this battle lightly.

Does Facebook have a better chance of succeeding in free email than Google does in social media? Share your thoughts in the comments box below.

Microsoft is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has been twittering from his @market account since the early Twitter days, but he's still not entirely convinced of its lasting power. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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