Facebook's next trick: Become a platform without becoming a utility

Credit: Source: REUTERS/Norbert von der Groeben

To the surprise of absolutely nobody, Facebook's "awesome" announcement turned out to be a pretty cool, if not world-shattering, video chat app, powered by Skype. But what jumped out at me is this tidbit from Mark Zuckerberg as part of the Q&A. (The quote below from TechCruch's liveblog of the event; I'm assuming it's a paraphrase rather than a precise transcription).

The last five years have been about building the social infrastructure and connecting people, the next five about building these apps. It's going to be a hybrid in all these places trying to build on social infrastructure that already exists. Every app is going to be social.

The "social infrastructure that already exists" is, of course, Facebook. In the previous five years, in Zuckerberg's view, Facebook won the social war: it's now how people connect to other people they know on the Internet. And over the next five years, Facebook will be the platform on which other people will build apps that take advantage of these existing social connections. Facebook will presumably then lie back and let the cash roll in, either from direct payments or revenue sharing from the app builders, or just from ad revenue boosted by the already ridiculous amount of time Facebook users spend on the site.

But there are potentially pitfalls to this strategy of becoming, in essence, a utility service on which other people build their money-making strategies. It's been tried again and again on the Internet. Sometimes this succeeds wildly -- Google is a utility that helps you find other people's Websites, which makes those Websites more valuable in the process. But consider the case of Sun, which bet big on supplying the servers and development languages that make it possible to build complex Websites, only to find out a few years later that nobody cared about Sun per se and the tools were easy to replace.

Facebook knows that even as a utility it needs to keep reminding people that they're using Facebook, and not just "the social network" in some generic way (which may be why they're trying so hard to keep people from seeing which of their friends are on other networks.) One interesting thing about the deal with Skype is that users will not apparently migrate their Skype profile and data to Facebook: they'll use their Facebook contacts instead. Skype's CEO may have been brought out to Palo Alto to make this announcement but my guess is that the millions of people who've never heard of Skype will think of themselves as Facebook-chatting when they use this feature, not Skyping. Facebook could make a deal with some other video chat service in a few years and most people would never know the difference.

Facebook needs to maintain that kind of leverage if it's not going to vanish into bland utility status, but that makes for some awkward tensions with app builders and partners. If the last five years were the year of making friends, for Facebook the next five years might be the years of making frenemies.

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