On the future of social networks

Facebook’s valuation seems to be built upon a winner takes all model for social networking. I do not think this is the way things will pan out. Everyone seems to be looking at a repeat of Microsoft and Google’s dominance as the models for the future but this is wrong.

Through brilliant strategy Microsoft was the only tech company to bet that software not hardware was the key to pre-eminence and nobody ever caught them. Other eighties PC makers like Commodore, Apple, Atari, Acorn insisted on control over both hardware and software leaving MS with a virtually open field. Google produced a search algorithm that was qualitatively better than anything else around at the time and nobody has ever caught up. There is a myth that all that Google has these days is brand but I occasionally try other search engines and they are still actually worse.

So Microsoft had a strategic advantage and Google had a technical advantage. Facebook has neither. It’s appeal over MySpace is primarily design. It was this which prompted them to tidy away the applications onto a separate page to get back to that clean, uncluttered look.

Now if they implement friend connect so someone can have an account on MySpace which shows their facebook friends they will make the barriers to entry for a new network much lower. The two things keeping people with facebook are: good design and their friends. Now if full data portability were implemented allowing people to access their friends on other networks one huge barrier to competition has gone.

In other words facebook would have done to social networks what Microsoft did to PC manufacturers: commoditise them. Unfortunately by opening up this far facebook will be commoditising itself. Then the only differentiator would be its clean design. It would be interesting to see what happened if someone launched a stripped down social network with the following features: news feed, photo sharing, personal info, wall, integration with email. No apps, no vampires, no SuperFunFunnyWalls.

Of course facebook could just turn off friend connect if they decided a worthy competitor had emerged. The risk is that the competitor has turned up some Google-style special sauce that would make them stick with them and not with facebook.

Pic: Brian Solis