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Taking A Step Back From OpenSocial

November 3rd, 2007

After a few days of pondering the implications of Google’s OpenSocial announcement, I think it’s worth taking a step back and separate the potential from the reality – a brilliant business move around a business model that hasn’t really paid off yet.

First – OpenSocial is definitely a move by Google and others to “check” Facebook and keep them from become the de facto social networking leader. There is speculation that Facebook will become the “next Google” and start printing money.

But truth be told – it’s still speculation. It’s worth remembering that Facebook – as awesomely popular and useful as it has become – still has yet to really monetize their platform, and I feel there is way too much faith being placed on the apps (widgets, whatever you want to call them) and the behavior of users in relation to them. Even as information about Facebook’s ad strategy emerges – it’s just a strategy and nothing more. People go to Facebook to socialize, and the performance of advertising on the platform has left a lot to be desired, namely laughably low click-through rates.

I’m skeptical targeted advertising will make much difference. I took one look at the concept for sharing third-party information on FaceBook. The idea is that a user would receive highly targeted ads based on stuff they bought on another site – basically retailers communicating and sharing data with Facebook. If I were presented with that check list as it reads – I would check everything as “never”.

But back to OpenSocial – there is much that looks cool about it. Open makes things easier for developers. But ultimately, what about the user? Will “containers” (the various social websites) be willing share information – meaning will we be able to easily move our data? Will MySpace really be willing to share everything with Ning, or Orkut? Or vice versa? I sure hope so.

But right now, this strategy probably benefits Google more than all the Web 2.0 sites that decide to jump on this bandwagon. If Google said, “we have a new open widget platform for iGoogle and Orkut,” the buzz would not be as great. But by getting a bunch of partners together, calling it OpenSocial and suggesting the openness of the standards, Google looks more alturistic than it may really be. They convince developers that they’re coding for many social networks – but at the end of the day, they may be developing for Google’s. Not a bad thing, but Google wouldn’t be calling for open standards if they didn’t stand to benefit – either for their as yet unrevealed social networking plans (Orkut) or further spread of all the Google properties and the data contained within.

So ultimately, the OpenSocial announcement is quite brilliant – in terms of positioning between Google, Facebook and Microsoft, I see several results:

  • Microsoft may now be in over their heads by investing in Facebook (I wonder if Google bid up that investment price, knowing all along they had OpenSocial right around the corner).
  • Google has managed to highlight one weakness of the Facebook “walled garden”.
  • Facebook may now feel it has to answer this OpenSocial thing with some time-consuming changes to “open” their platform, which could be a costly distraction from developing a successful ad strategy.
  • Say Facebook is able to monetize their platform. Their valuation would soar into the stratosphere, where only company that could conceivably afford an acquisition would be: Google.

(Google, $1000 a share in 2008).

Additonal Reading: WinExtra, Mashable, ReadWriteWeb

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  • Yeah I honestly don't get it. Do people really not see that everything is temporary? HotBot dominated search for a while, then Yahoo, now it's Google. In a few years - maybe as many as 5 or 6, it'll be someone else. LiveJournal grew at a huge rate, then MySpace, now Facebook. In a few years, it'll be something else. Blogs used to be called "homepages". In a few years, they'll be called something else (my guess: "digital homes" or something equally stupid). Pirating was BBS's, then usenet, then FTP and IRC, then Napster/gnutella, now it's bittorrent. WinPlay3, Winamp, iTunes. In a few years it'll be something else. Lynx, Netscape, IE, Firefox - in a few years.. They're all just fads - some last longer than others. If anyone wants to make a long term bet, I'd be happy to put down money on this one - 10 years from now, Facebook won't have as many users as it does now - if it even exists at all.
  • I do think it's funny how cyclical it is - just last year it was all podcasts and Digg - now I dare say Digg has plateaued. I wonder what it will be next year.

    As far as a bet - thinking back to what was in vogue back in 1997 - I think you have some evidence behind you there.

    Still, there is still a ton of money to be made from these temporary rises and falls, and some of these bigger companies trying to figure out if purchasing smaller Web 2.0 ones is a smart move, if only for defensive purposes. Part of the Facebook frenzy is driven by how MySpace seems to be making some good money for News Corp. And so the speculation expands...
  • Great point that this is still speculation. I don't understand how much control this, as a consumer, will really give me over my data from one social networking type site to the next.
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