Facebook: Is it the new Google or the new Microsoft?

The latest edition of Wired is carrying an extremely interesting article on Facebook and its plans to dominate the Internet, comparing it with Google. I think that albeit the comparison is fair, it is missing a third –probably more relevant-player: Microsoft.

We all know that the social network is pursuing the aim of putting the users’ social networks at the center of all they do online, and then try to monetize on top of that via highly effective marketing campaigns. We have also seen how that had to push back on both their Beacon initiative –injecting personalized advertising to users-, as well as on their attempt to change of terms of service to a perpetual ownership of user data. And we are probably all very aware that there is more to come. That’s why everybody these days compares Facebook and Google.

Having a huge user base, and sitting on tons of very personalized data is fine only if monetization is possible, and up until now it still remains to be seen how this will happen. Privacy issues seem to be simply too powerful.

But while Facebook’s efforts into highly targeted online advertising have received a lot of attention, their activities in the applications spaces have been less commented. The launch of Connect has allowed them to integrate more than 10.000 independent sites into the Facebook community. And just two months ago, it announced the Open Stream API. Both of the initiatives are a step towards becoming the platform for all personal interaction on the Internet. And this is indeed interesting. If Faacebook becomes the de facto platform for us users to place our data, and for third parties to develop applications that hook us to their sites, then Facebook may well become one of the gatekeepers of the Internet.
And we should not forget that gatekeepers normally have an extremely profitable business model. We’ve seen that for decades with Microsoft. So, will Facebook become the new Microsoft?


About Sandra Sieber

Sandra Sieber is a Professor of the IS Department at IESE Business School in Barcelona. Her studies center around the impact of new technologies on organizations and business models.

One thought on “Facebook: Is it the new Google or the new Microsoft?

  1. Hi Sandra,
    Will Facebook become the new Microsoft? Good question. I think we still lack one thing to see that, one thing Bill Gates and his great possy saw soon back in those days: NEW PARADIGM DEFINITION. In any deep, huge, enormous revolution in business, we have seen a CHANGE in the previous paradigm. The beauty of old Rockefeller’s mind was to see that oil could be the heart of a change that size ONLY IF enough momentum and cohesion was gathered. So he pushed its use to different purposses, from lighting public lamps to greasing, from paints to combustion engines; by doing this, he started the movement and then he increased the momentum. By cohesion I mean he saw the necessity of a lobbying TRUST (I like this story so much I prefer to call it LOVING TRUST): The Standard Oil Corporation. Even today we can see articles and PhD thesis on the topic, and it seems to me it makes sense; then, in some years, the new giant will need to be tammed, broken, so it cannot engulf the system itself (and all of us with it…).
    But in Facebook I haven’t seen neither momentum nor cohesion. It is going that way, but it is NOT there yet. The reason why it is still limping ahead?, It is not due to technology, or market, or competitors, or laws. The answer is inside the nature of a social network. A social network need BOTH structure (management, direction, focus…) and chaos (hyperfreedom). I haven’t seen ANY business model YET able to reconcile both. The big temptation is to let it grow, then control it, then profit from it, then sell it. This destroys the social network because at its very heart it is based on chaos , on non-linearity, on the need of constant horizontal AND vertical growth.
    Bill Gates et al saw this soon, so they went to different directions, and they gave BOTH momentum and cohesion gathering to their business. Also, we have seen the phase of breaking the big lobying TRUST in smaller pieces. Now we will see the fragmentation of the business, the smaller and smaller iterations of the story, and then it will disappear just blent inside our daily life. Exactly what happened with the oil industry, once the new paradigm becomes an old paradigm we have oil corporations as “vulgar” as pharma ones, etc. The new paradigm in energy will be based on renewable ones, but we are far from it since we still have to see the momentum and gathering phases and they won’t come witout a clear technology definition.
    A good thing about Facebook is that the technology definition phase seems to have finished, except for some minor refinements needed. Will they pull it through? I don’t know. We have seen sooooo many times the same behavior…, for example with Skype. A while ago it seemed the revolution of communications, from cell to cable-based phones. The idea is beautiful, simple, the paradigm change is clear and reacheable. But it never happened, it went from the Jurasic Part (with T) to the BLENDING part, but without conquering anything. It’s just another fish in the pond. Why did it never take off the big way? Because they never combined momentum and cohesion. Why not?. Because they decided for the shrot run, the NPV, the fly low but safe strategy. This is not good or bad, it’s simply a way of doing things. But this way never trascends, since FUN is what makes great things great; and as much as I swear against Microsoft when my PC freezes, I must give it to Bill Gates and the others because in the same way tha Steve Jobs, Rockefeller and a few others did it, they seeked their own FUN in the way.
    Well, let’s see what way it goes…
    Antonio Molina

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