From KurzeilAI.net:
Rumors of Google‘s plans to create a virtual world that rivals that of Second Life have popped up once again.
It would be a 3D social network tied into Google‘s current applications of Google Earth and Google Maps.
A virtual world is a natural progression of Google Earth. Users could create avatars. The "street view" feature of Google Maps could be incorporated, as well as Google SketchUp, with avatars able to walk around on actual streets and enter real buildings to check out what’s inside and socialize with other avatars.