Google spent approximately $600 million for the development and launch of Google+ social network, this Â can be equivalent to the price of News Corp.’s MySpace.
There are about 500 Google+ employees and the average annual salary of these employees is $ 250,000. Google+ took advantage of the technology and talent from Google’s 3 acquisitions;
1. $ 123 million acquisition of On2
2. $ 158 million acquisition of Â Widevine, and
3. $ 179 million acquisition of Slide
The estimated calculations were put down by Phil Terry, the co-founder of Creative Good, a user experience business. They are as follows:
- 500 employees working on Google+
- $250K in average all-in comp for each of them including stock-based compensation.
- $125 million in annual labor-related costs and stock-based compensation for the Google+ team
- Google+ also relies on or uses in part technology and people from three acquisitions
- $123 million for On2
- $158 million for Widevine
- $179 million for Slide
- Add up the $125 million in comp plus the $460M in acquisitions and you get $585 million.
MySpace was sold again for a paltry $35 million. Like Â MySpace and eventually Â Facebook, Â Terry believes Â Google‘s $585 million investment may be a losing one. He proposes Phil’s law, which states, that there’s an inverse correlation between the speed of scale of a social network and its durability. Â Of its inevitable failure, he says:
While I like what I see with Google+ and think they understand some of the problem with online social networks, Google is underestimating the durability of even a reformed Â online social network like theirs. Elements of Google+ will live, Â especially Hangout (the very compelling video chat service) but Google+ as a social network will either not scale or, if it does, it will eventually fall for the same reason that MySpace did or Facebook will.
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