Google is increasingly requiring users to sign up for Google+, its social network competitor to Facebook, in order to access Google's other free services, according to The Wall Street Journal. The paper argues that Google is engaged in a vast information-gathering effort to counter the competitive threat from Facebook.

My colleague Nicholas Carlson believes this controversy is "silly" because all it does is make Google's various products -- Gmail, YouTube -- easier to use.

In fact it is controversial, and it's not about convenience. It's about cash, tracking, and the end of privacy.

First, here's what's at stake, per the WSJ:

Because using Google+ requires people to sign in to their Google accounts, Google will be able to blend mounds of data about individual users' search habits and the websites they visit with their activities on Google+. That is a potential boon to Google's ad business, from which the company derives about 95% of its more than $40 billion in annual revenue, excluding its new Motorola phone-making unit.

Google's search ad business was just fine before Facebook came along, and it's still doing well. So why does Google suddenly need everyone on board with Google+?

The biggest recent change in the competitive landscape is Amazon. In December, Amazon launched its own ad exchange -- a hugely powerful ad network that, ultimately, could promise to use Amazon's vast trove of consumer purchase data to target ads.

It's also a direct competitor to Google's ad networks.

Here's how the Google v. Facebook v. Amazon advertising landscape now looks:

  • Amazon: Owns the best database of actual shopping history and purchases. This type of data is like gold for advertisers.
  • Facebook: Owns the best database of personal information about consumers. 1 billion users strong, with all their interests and friends, it's terrifically useful stuff for marketers.
  • Google: Has traditionally dominated the "purchase intent" sector of the category. When people search for "Star Wars DVD" online, that's a pretty good indicator they want to buy said movie.

Until recently, Google's data on shoppers and their purchase histories and demographics has never been as good as Amazon's or Facebook's.

Google+ promises to change all that, by linking your personal profile data to anything you do elsewhere in Google. It's like a combo of Facebook's data with Google search data. By contrast, Facebook and Amazon have only their own data -- leaving Google (in theory) the more interesting ad partner.

Why is this controversial? Because users have handed Google (and Facebook and Amazon) all this data free of charge. Data is an asset that has value, and that asset has largely been transferred en masse to Google et al. without direct compensation. Certainly, Google has given users free use of its products. But it hasn't given cash to its users the way its users have generated cash for Google. And along with that data went users' anonymity.

With Amazon now on the scene -- right in the heart of Google's ad business -- shoring up that cash machine is Google's top priority.

So yes, you're going to get a Google+ profile whether you like it or not.

Disclosure: The authors owns Facebook and Google stock.
