Well, this sucks for Second Life. Google is launching a new service today called Lively, a browser based virtual world add-on that lets users create and customize avatars and worlds, interact with other users, and generally have a richer social interaction than is offered by GTalk today.

Worlds can be embedded into web pages, although only Windows users on IE or Firefox can view them, after an add-on download and installation. Mac and Linux users will have to wait for now.

Google has created a number of sample rooms that can be copied and altered, or users can start from scratch and build their own world. Furniture and other items can be added and moved around. Avatars can talk to each other, do things like dance and shake hands, and manipulate objects (in a demo, my avatar was able to blow up drums of toxic waste by double clicking on them. Users can also, of course, chat with each other - GTalk is the underlying chat engine.

This isn’t yet a full Second Life competitor. There’s no single world, for example, where users can move around. But it’s easy to see Google evolving this into a single online world. And then, of course, selling advertising into it.