n Brazil, Google paves Facebook’s path to the top

Facebook’s popularity in Brazil has exploded over the past year, and the company may have its biggest competitor to thank for it. In its recent initial public offering filing, Facebook said its number of active users in Brazil had nearly tripled in 2011, finally placing it ahead of Google Inc’s Orkut service as the No. 1 social network in the country. “I can’t think of an example where Facebook has grown so quickly,” said Andrew Lipsman, vice president of industry analysis at research firm comScore. “It really just skyrocketed.” In Brazil, the birthplace of co-founder Eduardo Saverin, Facebook found a market primed for growth, with rapidly expanding Internet access, increasing rates of computer ownership, and rabid demand for social media. Much of the credit for that may belong to Google, analysts say. While a growing economy and easier credit gave Brazilians the ability to purchase computers and broadband connections, Google’s Orkut gave them a reason to do so in the first place. “Until Orkut came along in 2004, Internet use in Brazil was stagnant,” said analyst JosÈ Calazans of market research firm IBOPEnielsen in S„o Paulo. “When people here started buying computers and going to Internet cafes, it was specifically to access Orkut. Now many of those people are moving to Facebook.” Orkut offered Brazilians their first taste of social media, with a simple interface and Portuguese language option making it easier to use than competing sites such as Friendster and MySpace. In a highly social culture such as Brazil’s, where even business meetings end in hugs, the site became a national phenomenon. “Everyone was getting on Orkut,” recalls Raquel Recuero, a professor who specializes in social media at the Catholic University of Pelotas in Brazil. “You would add people you didn’t even know, and people would compete to see who had the most friends.” Orkut’s rise coincided with an economic boom that lifted millions out of poverty, with many Brazilians gaining access to computers and the Internet for the first time. That turned into a double-edged sword, both expanding Orkut’s user base while alienating more-affluent early adopters. “After the lower classes started to come on, there was a culture clash that happened within Orkut, which was amplified by the media,” said Recuero. “For instance, we would see reports on the news of criminals stalking their victims on Orkut. People started to rethink how they used the site and started becoming aware of concepts like online privacy.” Orkut’s failure to innovate in line with users’ expectations created an opportunity for Facebook to step in, offering new applications and games, as well as the ability to connect with people beyond Brazil. Over time, Brazilians came to see Facebook as a way for them to start their online lives over from scratch, helping lead to its widespread adoption. Orkut still holds a very large share of the social networking space in Brazil, with more than 34 million users compared with Facebook’s 36 million, according to comScore. Yet, its days may be numbered. “If you think back to the US, Facebook and MySpace were very competitive for a while going back to about 2009,” said comScore’s Lipsman. “You can co-exist for a while, but what tends to happen is that people tend to consolidate around one or the other.”