Facebook on Tuesday afternoon introduced an app for mobile phones that acts as a standalone group chat client for mobile operating systems. The app, now live for download, expands the chat features in Facebook's existing mobile app to include features like location-sharing, mobile photo-sharing, and -- most importantly -- instant messaging to friends or groups on Facebook. The app is already available for Android and Blackberry phones along with the iPhone, iPod Touch, and iPad (although the app is not yet optimized for the iPad's larger screen.)

Facebook purchased messaging firm Beluga back in March and it seems that several Beluga team members have had a hand in the app's creation. The timing of the release along with its features seems like a fairly direct response to Google+ and its huddles feature that also lets you instantly chat with friends.

Facebook has repeatedly denied that the flurry of recent announcements from the social networking giant and the company's chat releases, like video calling in partnership with Skype, were a response to Google's new social network, but the parallels are hard to ignore. With Google+ growing to more than 25 million users in just a little over a month, it's hard to imagine that Facebook isn't at least a little threatened.

Google+ released an update to its own app earlier this week that brought increased functionality for the nascent social network's own chat services along with iPad compatibility.

Google+ has suffered a setback after a month of meteoric growth. Traffic to Google+ declined last week, as did the amount of time people spent on the site, according to Experian Hitwise.

Hitwise says traffic to the Google+ website fell by 3 percent to 1.79 million US users during the week ending July 23, following a 283 percent rise the week prior. Average time spent on Google+ fell 10 percent to 5 minutes and 15 seconds, Bloomberg reports.

The estimates from Hitwise require one big asterisk: Hitwise doesn't measure visits through mobile apps or APIs, so any use of the Google+ app for iPhone or Android isn't being counted. Given that the Google+ iPhone app launched last week and quickly rose to the top of the App Store rankings, there's a good chance that mobile users displaced the losses that Hitwise is reporting. Google has also been purging business accounts and fake names, which could contribute to the losses.

Even so, for a service that's only one month old, a drop in website traffic and engagement is troubling. Google+ seems to be suffering similar growing pains as Twitter, in which a lot of people check out the service to see what the hype is about, but quickly lose interest. That's certainly what I've observed with friends and family who joined Google+ but became inactive users soon after.

But Google+ is different from Twitter in that it's designed to hook into other Google services that a lot of people already use on a regular basis. As I mentioned when Google+ hit 20 million users, the service's potential lies in its ability to extend users' social circles to products like Gmail, Google Docs and YouTube. The inevitable addition of Google+ games should also keep people coming back. And of course, Google+ is still invite-only, limiting the total number of people who might join the service.

So don't sound the alarms just yet. Google+ still has a lot of potential, but in its early stages, pulling people away from Facebook and Twitter isn't going to be easy.

Google's Facebook competitor Google+ grew to 10 million users in just two weeks, the company announced Thursday.

That's only a bit more than 1% of Facebook's 750 million global users, but it still represents staggering growth for Google's infant social network, which isn't yet open to the public. The site remains in a "limited" trial phase.

"Growth on Google+ has been great," Google CEO Larry Page said on a conference call with analysts. "Over 10 million have joined. That's a great achievement for the team. There has been a ton of activity."

Page said more than 1 billion items are being shared on the network every day. The "+1" button, which populates search results with friends' recommendations, has been clicked 2.3 billion times a day.

Google+ represents a part of the new CEO's grand vision for the 13-year old company. Despite Google's position as the worldwide leader in search, Page has opted to treat the company as a startup, increasing hiring and starting several new initiatives.

"Today, I see more opportunities for Google than ever before; we're just at the beginning of what we want to do," Page said. "We're only at 1% of what's possible. Google's just getting started."

Accordingly, Google continued its hiring spree in the second quarter, upping its headcount by nearly 9%, or 2,500 employees -- including 450 from the acquisition of flight data company ITA .

The company also has spent freely, putting more than $900 million into its infrastructure during the quarter, including expanding its massive data centers. The company says it expects to continue to make "significant" capital expenditures going forward.

Google says all that spending will keep the company ahead of its rivals.

The past quarter has been a busy one. In addition to Google+, the company started selling its Chromebook line of laptops aimed at current Microsoft (MSFT, Fortune 500) corporate clients and launched its Music application to compete with Apple's (AAPL, Fortune 500) iTunes and Amazon's (AMZN, Fortune 500) Cloud Drive.

The company also unveiled Google Wallet, which will allow customers to pay for items using their smartphones, and it launched Google Offers, a Groupon competitor.

But Google also shut down several products that weren't working, such as Google Health and PowerMeter.

"Our focus is more wood behind fewer arrows," said Page. "I'm very happy with our progress."

Still, the free spending has made some stock analysts cautious. Page lashed back at that criticism, noting that when Google started its search engine, no one believed the company could monetize that besides the occasional banner ad.

"Fast forward to today, it seems like we're playing the same movie all over again," he said. "We're optimizing our products for long-term success. Well-run technology businesses ... make a lot of money over time."

Google also reported its sales and earnings Thursday.

The search giant said its net income in the second quarter rose to $2.5 billion, up 36% from a year earlier.

Results included one-time charges totaling $1.06 per share. Without the charges, Google said it earned $8.74 per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of $7.85 per share.

Profit rose as both the number of clicks on Google's ads and the amount that advertising partners pay per click increased substantially: Paid clicks surged 18% and cost per click grew 12% compared to last year.

Sales for the Mountain View, Calif., company rose 32% to $9 billion. Excluding advertising sales that Google shares with partners, a figure also known as traffic acquisition costs, the company reported revenue of $6.9 billion, which topped analysts' forecasts of $6.6 billion.

Shares of Google (GOOG, Fortune 500) jumped 12% after hours.

Still, not all the news has been positive for Google, which has recently landed in antitrust crosshairs.

The Federal Trade Commission began investigating the company for evidence of abusive practices, and a federal judge rejected Google's planned settlement deal in its attempt to create a universal online book library.

The Department of Justice also heavily scrutinized the company's recent purchase of flight data software company ITA, and Google set aside $500 million for a potential settlement with the DOJ regarding the company's advertising practices. The DOJ is currently studying Google's proposed $400 million purchase of digital advertising toolmaker Admeld.

Late last month, French search company 1plusV said it would seek $423 million in damages from the American search giant over alleged anticompetitive practices

When 750 million people across the world are allowed to make free video calls, it is "something awesome". Especially because these 750 million want to talk to each other - they are friends on Facebook. But when you compare it with a service that allows 10 simultaneous video calls for free, Facebook's big bang seems a desperate catch-up. What makes the blow worse is that they are playing catch-up with a service launched just three weeks ago - Google +.

The new service has been in the works since Microsoft bought Skype in May. What is the connection? Remember in 2007, Microsoft picked up a 1.6% stake in Facebook for $240 million. So now all Microsoft friends are Skype friends. And Microsoft gets another stab at trouncing Google, its current enemy No. 1.



Facebook's latest service is also a challenge to Microsoft's long-time frenemy, Apple , which runs Face Time, the one-tap video calling app on iOS. Alongside, it helps Mark Zuckerberg notch a oneup on Apple's Ping. Sounds confusing? It is, and always has been in techdom.