Full quote because there's no specific answer permalinking on Quora:Brandon Smietana answered:
If Google launches a service off its Gmail and Google accounts and uses its installed base as a launch platform, the interesting question becomes "Why doesnt Microsoft launch a social network?". Microsoft has a larger installed base on Live compared to Google.
* 173 million Global Gmail users.
* 284 million Global Yahoo! Mail users.
* 360 million Global Windows Live Hotmail users.
* 299 million Active Windows Live Messenger Accounts worldwide.
In fact, Yahoo could create a larger social networking than Google on the basis of its installed base and number of Yahoo users.
Another question that needs to be asked is "Why would anyone create a social network?". Look at Facebook's eCPM rates and cost per click and compare them to Google. Social networks are crap, they do not make any money.
Here is a screen shot of the rates for advertising space on Facebook. http://twitpic.com/1u9xls
Facebook is the cheapest advertising space on the internet. I have seen porn sites that have higher eCPMs and click through rates on their ads than Facebook gets!
So you are thinking "Is this guy insane!? But what about all the users and money Facebook is making!?". Facebook's biggest advertiser is Zynga and the largest portion of Facebook's revenue's comes from social game advertisements. The largest source of revenue for Facebook will soon be the 30% cut Facebook takes from social game developers through the Facebook credits platform.
Facebook is not a social network. Facebook is a social gaming platform.
By users Facebook is a "social network", but by current and future revenues Facebook is a social gaming platform. Why is Google building another social networking instead of building the best social gaming platform on earth? What is wrong with them?
Even if Google builds a 300 million user social network, it wont matter. The revenues from it will be irrelevant.
Consumer internet is a zero sum game. I do not really think it matters much if traffic sloshes around between one platform and another. Diaspora or Google Me will only succeed if it provides a better service for its users than the alternative. Even if users use the service, its not clear if it can be monetized effectively.
Google does not need to dominate the social network space. It would be enough if Google commoditized Facebook and merely created a viable alternative. That is all Google has to do to accomplish its strategic objectives for its social network.
Also, the reason that Google is entering the social networking space have nothing to do with Google feeling threatened by Facebook. Facebook has a +600 million user installed based and has a large installed base on the Facebook mobile application.
Facebook is uniquely positioned to threaten Google in the geographically targeted advertising space. The social networking Google is building is likely more closely related to Google's strategic objectives in the mobile advertising space than out of concern of being marginalized on the desktop by Facebook.
I've suspected as much but I haven't heard anyone put it quite like this. It's a blatant statement almost worthy of a blog post by itself just because it's very Emperor's New Clothes-like.