Is Google suffering from Microsoft Syndrome?

August 4, 2011, 3:19 PM UTC

By Ben Elowitz, contributor

FORTUNE — From early on, Google seemed determined to be more than a search company. And one of the most admirable traits of Google’s structure has been its decentralization: The company’s deliberate decision to forego synergies to give product groups the freedom of independent thought and action has created tremendous product variation and innovation. Distinct product groups and a culture that prized fresh original thinking created great products like Gmail, Google Apps, and Google Maps; and all of these products delighted users even as they initially passed up the value of synergies that big companies often tout.

And yet, it seems that those at the Googleplex are increasingly giving in to the temptation to integrate new product development into a “synergistic,” if monstrous, whole. Integrating new products into existing ones, the story goes, should give a new product a boost with a built-in user base and in-product feature merchandising, not to mention enhanced “strategic” and “platform” value, which basically translates to customer lock-in.

I understand the attraction of this. And it makes sense in principle. But the trend is concerning, because it sacrifices the essence of Google’s (GOOG) greatness: its focus on the simplest possible product to meet user needs. Instead, products are increasingly being morphed into tack-on feature sets of bigger products.

But the downside here is that the influence of the core product consistently invades – even where it shouldn’t – and this overwhelms what could be a terrific new stand-alone product. As a result, great now too often becomes good at Google. And, if this new-product dilution and diminution continues, it will be increasingly difficult for the company to successfully innovate and take advantage of the burgeoning social Web.

One classic example: instead of solving a real need for all the Web’s users, Google Buzz was, as MG Siegler noted at TechCrunch, “shoved in everyone’s face by way of its somewhat unnatural home in Gmail.” My mother has taught me to put people with advanced degrees on pedestals, so I can’t help but be stunned that legions of Googly Ph.D.’s missed this by integrating Buzz into Gmail. It’s pathetic, but true: Google forgot that most connected people aren’t even on Gmail. And, obviously, the value of the network is far lower when most people aren’t on it. So, instead of being a great social product with a clear use case, Google Buzz became a controversial feature with ambiguous purpose that was added on as an appendage to Gmail.

With the launch of the Google+ Project, these questions of product integration, synergy, and installed-base leverage are more crucial than ever.

Google+ will not succeed on the back of Google’s search product alone. No matter how many users it may garner, it will turn out like the other stillborn features in Google’s search, e.g. Buzz and SearchWikis. Already, it would be easy to consider Google’s first new social product launch a success, based on the 20 million or more reported users who have signed up for it. But nearly all of those users have joined on the basis of their existing relationship with Google, rather than for the sake of any life-altering content from their friend networks.

And, while leveraging its existing business and user base in search may sound like a smart corporate strategy, the results of such migration will be limited. The battle for the social Web is being waged for a prize of exploding consumer attention online. Adding line extensions to users’ search experience will neither defend Google from Facebook’s coming attack, nor offensively capture new and emerging opportunities for Google. So, the “leverage-and-enhance-the-core-product” strategy is an easy reach to execute, and offers appealing initial momentum, but it is short-sighted.

We’ve all seen this pattern before; and I’ve lived it as part of the Microsoft (MSFT) world here in my home of Seattle for the last decade. No matter what part of the company they work in, my friends at Microsoft know their paycheck comes every week, thanks to product sales of Windows and Office. And no matter what product they work in, whether it’s set-top boxes or mobile phones, their objectives are overwhelmed by the need to sell more copies of Windows and Office. Meetings at Microsoft have become famous for having a dozen-plus attendees – all in order to maximize integration with, you guessed it, Windows and Office. Rather than being marketed independently, great products like Office Web Apps and Windows Live SkyDrive seem destined to become mere shadows of their moneymaking core brands, victims of what Matt Rosoff recently referred to as the “strategy tax.”

As Google matures, is it becoming more and more like its original nemesis? Ironically, it’s Microsoft’s focus on synergy that has left such huge room for entrants like Google and Apple to come in and dominate sectors including apps, music and devices. Microsoft’s failure syndrome was especially perplexing because it clearly had the talent and experience to build these categories better and faster – if it had been willing to obsolete itself.

If Google doesn’t give itself back the freedom to compete with the reality of the outside world, it will quickly find itself a self-imposed victim of the Microsoft Syndrome. It may ride its own large, but strategically dead-ending, business for a long time; but it could also find itself missing out on the huge next wave of the Internet — social.

The required response from Google is not just a set of adjunct products that build on search. Instead, this is exactly the time that Google needs broad, far-reaching, and decentralized creativity to solve real people’s still-latent needs via the emerging social Web. Google needs to make sure its Google+ Project is a complete stand-alone product that – like Google Apps, Google Search, Gmail, and Google Maps before it – can compete on the open Web and break new ground. Facebook has outsize traction in the social sphere, but it’s not too late for Google, as long as the company quickly takes action to avoid falling into the trap that has caught its first major rival.

— Elowitz is co-founder and CEO of media company Wetpaint.