2011-02-08

The Social Network 2.0 -- and the REAL reason for the competition between Google and Facebook

A friend of mine is writing an article about The Future of Facebook, and asked me to review his article. I sent him the following response, which covers my view of the needed reinvention of the social network, and the real reason for the major competition between Google and Facebook.

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First, make sure you look closely through “The Real Life Social Network”. Paul Adams, the author, worked at Google and got lured away by Facebook after he became famous for publishing these slides. This presentation reframes everything about social networking, and his talk already resulted in some big changes in how Facebook works.

Google is currently trying to create their own social network, as you have probably heard -- “Google Me” is supposedly the working name. Google figured they could easily duplicate all of Facebook’s functionality -- and improve upon it -- with only about three months of work. Word on the street is that they shut down entire project teams to work on this... but after major overrun of the initial time estimate, there’s still a lot of disagreement even inside Google as to whether or not what they have built so far should even be released. I haven’t seen it but I get the feeling it’s basically Buzz all over again in the social space. It’s interesting to see Google struggling to figure out the social space -- especially since Facebook has not done a stellar job of it themselves (privacy etc.), but they got the critical mass.

Also -- the big big point that most commentators miss in Google-vs.-Facebook commentaries is that Facebook is starting to move into the advertising space in a *major* way -- and advertising is 99% of Google’s revenue. However Facebook has the potential to monetize their ads more effectively than Google, because there is so much information on demographics, friendships and interests in somebody’s profile and social network graph that could provide extremely targeted ads and therefore be incredibly valuable to marketers. *This* is why Google is trying to move into the social space -- because if they don’t, the rug will be pulled out from under their feet and they will start losing major advertising revenue to Facebook once Facebook feels ready to launch a full-on frontal attack to Google’s advertising dominance. (This hasn’t happened yet, but it will, and by then it may be too late if Google doesn’t act now and do things right with building their own social graph infrastructure.)

The great equalizing factor could be that a lot of people are disgruntled with Facebook (due to privacy reasons, annoyances of apps, spam, password stealing, the forced overlap of social circles that would never overlap in RL leading to “oops” moments when their boss friend-requests them and they feel like they can’t say no, then their boss sees their drunken weekend photos etc.) -- and that creates a business opportunity for a competitor to Facebook (be it Google or somebody else) to gain ground on Facebook’s almost complete monopoly in the social space. However ultimately the social network needs to use open protocols and federated servers or decentralization/P2P of some form, allowing users to keep their data on whatever service they want and still tie in with their friends’ social networks on other services. I suspect this will be Google’s approach with Google Me (since that’s what they tried to do with Wave and other products), and employing open protocols and federation is also the approach taken by Diaspora and other direct Facebook competitors (so it’s a growing trend). Once people expect and demand that their data be openly federated, Facebook will lose their grip on their own walled garden if they don’t innovate one level of value above the social graph itself -- for at that point the social graph will have become commoditized. See the “Ubiquity creates infrastructure” figure here: http://www.searls.com/doc/os2/docchapter.html

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