Now worth around $100 billion, what is Facebook?
Calling Facebook a social network offers about as much clarity concerning the future of the business as calling Apple a mobile phone company. Both companies work because they offer closed platforms, spaces within which others can provide services to customers in an isolated and protected environment.
But what value exists in the protections offered by Facebook? What does the site offer as a business? Never mind the recent stock struggle, Facebook’s real battles are much further down the road.
A few possibilities exist, and Facebook no doubt would like us to believe each and every one of them offer viable future returns for the company. Conversation platform, gaming platform, and content sharing platform may all describe Facebook, but they may also hint at the marginal edges of what once seemed Facebook’s unlimited appeal.
Facebook allows you to share status updates, photos, and all kinds of minutiae with friends; as a chit-chat space, Facebook has plenty to offer. It doesn’t hurt that the site oozes unthreatening as a foundational part of its design; you can only like, not dislike. Spam filters exist to keep conversations “positive” and “on topic.” You control who you see, even if who sees you is a bit more opaque. In essence, Facebook conversations exist to make the user feel comfortable and nested.
This represents both Facebook’s social appeal and its intellectual limitations. Far from a place for serious discussion or critical engagement, Facebook is where you go to dogpile what you like and passively engage the rest. That Orwellian positivity leaves a lot of room for sites like Reddit, Ruck.us, and Change.org to compete for the serious and civic conversations of the world. After all, intellectual growth and idea exchange rely upon criticism, not gang agreement.
Well, in the case of Reddit, the growth relies upon the serious, the vulgar, the puerile, and the sublime. Can anyone say that about Facebook?
The success of Zynga on Facebook caught the business world’s attention a couple of years ago. And while social gaming also exists outside of Zuckerberg’s cultivated garden, few platforms have integrated social gaming so seamlessly into the core product.
Facebook’s diverse game ecology remains the quiet dragon of the platform’s success. BioWare and Atari both use Facebook-lite versions of their RPG to games to promote the console versions, while more serious gamers can also play plenty of native social games that offer real flavor and game mechanics, like the products of Blue Frog Gaming or 5th Planet Games.
The fast evolution of social gaming into competitive games that draw in power gamers and story gamers alike speaks well for Facebook’s ability to compete as a gaming platform. Or it would, rather, if Facebook could find a mobile solution.
For now many Facebook games remain Flash-based, not HTML5-based, so they have issues running on the popular iOS operating system. This means that people retreat to iPhone apps rather than Facebook when on the go. Also, many of these companies use Facebook to launch the game and then slowly attempt to push users to their external sites to increase profits. The success of such attempts remains to be seen, but they are unlikely to ever offer the same threat as the lack of mobile access.
The real question is whether HTML5 or some other solution can truly integrate Facebook’s web-gaming superiority with its need for mobile expansion.
Last but not least, Facebook loves news. Sharing tools have made Facebook the rising star of news aggregation; in fact, early studies suggest that Facebook has even begun to solve the problem of biased news surfing online.
How? Well, a small percentage of your friends likely read different sources than you, so if you like their cat pictures, you also get to see some of those news stories. Just don’t try to comment too critically on those stories or you might get marked as spam.
Facebook has the most success in this news sphere, offering better identity to news sites than Google News and more potential eyeballs than the actual branded news sites. More than 4 million people have installed the Guardian news app for Facebook, with 2.2 million of those accounts active on a monthly basis. But how much ad money is there for Facebook and news sites to share these days? Plus, nothing Facebook offers matches the innovative apps produced for the iPad when it comes to news. Will this relative lack of innovation eventually doom Facebook as a news aggregation source?
News has struggled since making the move online and nothing about the Facebook platform has innovated a new or better way to produce news, especially compared to the citizen journalism prowess of Twitter or Storify.
The past and future content king?
For now Facebook remains king of content. The combination of social chit-chat, gaming, and news aggregation makes the platform a multi-dimensional success story. Despite this, however, other sites seem better positioned to make those small improvements that drive innovative markets. The challenge of going mobile, a need for critical conversational space as opposed to safe conversational space, and the limits of app innovation on Facebook present stiff obstacles to the company’s long-term success.
Facebook might be worth $100 billion dollars today, but the company’s limitations are more obvious than ever, which makes the path to a $200 billion valuation a lot more complicated than buyers remorse following the IPO.