Google's Groupon groping reveals the shifting power in the web world

    So why would Groupon choose to align with Google's search-oriented ethos instead of the social one that helped it become a power?

    A war is brewing between the open and closed webs, and the poles around which companies are aligning seem to be Google on one side, and Facebook on the other. What few analysts predicted, especially during Facebook's near-disastrous privacy spats over the last year, is how comfortable the web-surfing public would be in the closed web, as long as that web provides everything the average person needs or wants from it. Increasingly, Facebook and its partners are doing just that.

    And besides Facebook's guarded principles of data access which Google is happy to complain about, the trick Facebook has pulled is that it doesn't feel like a walled-off world on the web. It just feels like the web: a place where users go to see what their friends are up to, take note of any games they're playing, Groupons they're buying, restaurants they're reviewing on Yelp or checking into on Foursquare. Users are dipping their toes in and out of the stream, and they understand and are tolerant of the fact that the stream is generated only because they've shared so much data with Facebook to begin with. It feels like a huge added value.

    Google is increasingly feeling like less of a value add. In its quest to be open, it's stopped feeling like a smart filter that brings the most relevant parts of the web to users of its search, and more like the actual wild, woolly, untameable raw web itself. Most twentysomethings and all teenagers today don't remember the days of trying to bend HotBot, Yahoo (NASDAQ:YHOO) or AltaVista to your whims, and what a massive improvement Google was on that. Instead, Google is their AltaVista, their baseline Internet from which things can (and must) only get better.

    It's nothing more than the relentless pace of technology that's made that the case; Google hasn't done much wrong in its decade long run at the top of the tech heap. And their business isn't going away; it has added far too much value to the ecosystem of the Internet for that to happen. But until it proves to the current generation of Andrew Masons that it understand social and the closed web -- not just as a nice bag on the side of their search engine, but as core to the future of the Internet -- it's going to have a hard time getting superstar startups to take their money, at any price.

    Though only 30, Mason can surely still remember the bad old days of useless search engines and therefore witnessed how quickly dominant players can be left behind. Why -- given his company's profitability and his personal wealth -- would he subject Groupon to the company that killed Dodgeball, bungled Yelp, and screwed up almost all of its own social efforts, from Buzz to Wave?

    Schmidt has been hinting to the press that he knows Google is facing its first serious re-orienting as a company, and like all transformations, it's probably very painful for insiders to consider. Core search will have to be marginalized to make social and local the heart of the operation. (Its mobile and OS efforts essentially amount to parallel operations in the company; neither one is likely to become Google's new core, but more to layer on what that core is.) The entire tech world, from Mark Zuckerberg to Andrew Mason, seems to be watching and waiting to see if Google can figure it out.