At Facebook’s yearly “f8” event y, Facebook Founder Mark Zuckerberg announced dramatic platform changes for the world’s largest social network. Zuckerberg’s keynote at the company’s developer conference has brought news of hugely influential updates in the past, and yesterday’s unveiling ranks near the top in terms of significance. These new features promise to markedly transform both the aesthetics and functionality of the site, as well as its relationship with marketers and content partners.
“Timeline”- A new feature that preserves and highlights important events in users’ lives, as captured on Facebook. This “digital scrapbook” will allow users to scroll back chronologically through all the photos, posts, and life events they have shared since joining.
Updated “Open Graph”- Facebook’s move to become the online hub for all of its users’ activities. Zuckerberg declared Facebook’s intention to be the social platform of the web, hosting third-party apps that allow users to consume and discover content without leaving Facebook.com. He announced partnerships with an impressive list of businesses, including Netflix, Hulu, the Washington Post, and the music-streaming service Spotify.
Other recent changes to Facebook include “Friend Lists” to ease privacy and selectivity of sharing (reminiscent of Google+’s “circles”), a “Subscribe button” to allow one-way, asymmetric relationships (reminiscent of Twitter “follows”), and “Ticker,” a real-time stream of all friends’ activities. These past several days have been truly historic for the social network and highlight two interesting themes to consider moving forward.
(1) Facebook’s “Platform Play” and Increased Competition with Apple
A major driver of the success of the iPhone and iPad has been the thriving app marketplace. Each new App created for Apple’s operating system that delights a user makes the experience of owning an iPhone a little bit better—and Apple doesn’t have to pay those developers a dime upfront. Apple effectively outsources much of its software R&D and risk-taking at zero cost, and then it takes 30% of all sales of those apps through its closed-wall app store. It is a beautiful business model.
The cycle then builds on itself. Apple earned a huge lead over its competitors in terms of smartphone (now tablet) market share while fostering a prolific App ecosystem. Consumers see all the wonderful apps their friends can download for $.99 (or free) and decide to buy an iPhone. Future app developers see all the adopters of iOS and choose to develop for that platform because they want the largest potential market for their products. The cycle repeats. The power of positive externalities is clear.
Enter Facebook. Facebook already has a user base of 800 million, dwarfing Apple’s. By positioning itself as a platform for social apps, and not merely a website that directs traffic to other domains, Facebook creates a similar “walled-garden” scenario. Apple monetizes the value of its platform through sales of connected devices and hardware; Facebook monetizes indirectly through advertising. The more of your online time (and data) that goes to Facebook, the more advertising revenue increases for the social giant.
(2) Continued Google Rivalry for Content Discovery Online
While the Facebook-Apple competition is only now emerging, much has been written of Facebook’s challenge to Google’s supremacy as the discovery engine of the web. Google helps people find content through an algorithm-driven search engine that gauges the quality and relevance of websites largely by the number of hyperlinks directed to those pages. Facebook, on the other hand, harnesses peer recommendations and knowledge to answer questions. If hyperlinks were the currency of the web during the reign of Google, social connections may be supplanting them with the ascent of Facebook.
Facebook’s new features revolve partly on the notion of removing the friction involved in sharing content. If a user listens to a song through a Facebook-hosted app, for example, her friends can be notified automatically, without her having to click “like” every few minutes. Every time someone discovers a new song, movies, game, news articles, or website through Facebook instead of a Google search, Google loses the opportunity to generate a related set of ads, the lifeblood of the business. Google is clearly taking this risk seriously, with its investment in Google+ ample and incorporation of social signals into search as ample proof.
The struggle between Facebook, Google, and Apple will be a fascinating drama to follow in the coming months and years.