Facebook: Friend or Foe

February 16, 2011 § 1 Comment

Mashup or Shutup! (dot com)

Image by dullhunk via Flickr

Facebook’s dominance is apparent. Facebook has an estimated 600 million users worldwide and an estimated $50 billion valuation. If this is not enough then consider how they have been infiltrating the digital ad space by gobbling up revenue from the likes of Yahoo and MySpace. Consider also Facebook’s intent to develop a payment system that will rival eBay’s PayPal service. If that’s still not enough, then consider their efforts to develop a smartphone to compete with Apple and Google. Not to mention, the war they have waged by snatching the best engineers from Google and Microsoft.

Is Facebook a friend or foe?  Facebook’s shear reach and user data can equate to significant opportunities for those that embrace the beast.  Facebook has also created unprecedented opportunity for internet/digital savvy entrepreneurs.

However, ‘Facebook is not shy about their aspirations. “We think every industry is going to be rebuilt around social engagement”, Chief Operating Officer Sheryl Sandberg said. Facebook already helped spur a new crop of videogame companies around the interacting with friends. Ms. Sandberg said, adding, “News, health, finance shopping and commerce – we think similarly, all of these things will be rebuilt by companies that work with us to put social at the core.”[1]

Facebook continues to grow. Online display advertising surged to 13.6% from a paltry 2.9% and reached almost $9 billion in revenue for 2010.  This obvious growth comes as an expense to other companies jockeying for ad dollars to sustain their businesses; and this is not exclusively affecting digital properties but is having an impact on traditional media (TV, radio and print) as well – it is still being argued to what degree it’s having.

So, what is a competitor to do? Instinctively it would be to fight the good fight – to protect and defend what they have rightfully gained through innovation and shear hard work.  However, is this the best approach considering Facebook’s continued march to dominance?

Consider the position Yahoo has taken over the years. Facebook is a mere 7 years old, Yahoo saw the potential wave of destruction coming early on and began very aggressively to fend off the tide.  In 2005, Yahoo launched Yahoo 360 a social network in response to Facebook and bought Flickr the photo-sharing site.  In 2006, Yahoo tries to buy Facebook but the deal fell apart before it could even get off the ground.  In 2007, Yahoo ceases development on Yahoo 360 seeing that they are falling short and begin a new effort to launch Yahoo Mash another attempt at a social network, however, shortly after it’s launched they abandon this effort as well and launch Yahoo Updates which is still in use.  Seeing that their efforts have fallen short time and time again, Yahoo decided to enter into a partnership with Facebook following the old mantra: If you can’t beat ‘em, join ‘em.  It’s not long after this partnership that Yahoo begins to see further opportunities to develop partnerships with Google and Twitter that ultimately lead to stabilizing site traffic while enhancing the user experience.  Ultimately it’s about maintaining user interest within the Yahoo space.

No matter how you look at the current landscape, Facebook is clearly looking for total domination.  Facebook will continue to tread over other internet pioneers such as Groupon and Yelp by simply reinventing and repurposing an old idea. It’s rumored that they are well into developing similar capabilities in an effort to enhance the user experience while limiting migration from their site to other sites that theoretically compliment Facebook’s current product offering. Facebook may well become the Amazon in the social space – as Amazon redefined e-Commerce; Facebook will continue to redefine the social space.


[1] Fowler, G. (2011, February 15). Facebook’s Web of Fremenies. The Wallstreet Journal, p. B1, B7

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