Facebook – a leading portal to the web but not the only one

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Everyone is talking about Facebook at the moment from Ben Holmes and I chatting over lunch last week about whether it might become a $10bn company to Fred Wilson’s Open Facebook post on Sunday – naturally that has got me thinking, and nine times out of ten when that happens my two cents worth end up on this blog. So here we go.

To set the scene: Facebook has been taking London by storm recently and I’ve gotten caught up in that wave. It has become the social network I have got the most out of and I haven’t really scratched the surface yet – although that says as much about me as about anything else. It is hard to put my finger on exactly what it is that has made the difference with Facebook, but a large part of it is that more of my friends and colleagues have congregated here than anywhere else.

So I like Facebook a lot, enough to think seriously about whether Mark Zuckerberg, founder of Facebook can realise his dream and make Facebook the “OS of the internet”.

The fact that for many people Facebook is the first place they go when they turn on their computer gives him half a chance. That is a bit like Windows after all. Time will tell, but I suspect it also has a stickiness that is a bit OS like. Status updates and the mini-feeds make it impossible to move unless you take your whole network with you, and given that Facebook has an older crowd the networks are likely to be diverse enough to make that difficult. The way they have opened themselves up to third party apps via an API is also a bit OS like – those apps have to be written to Facebook for people to be able to add them to their profiles. This contrasts with Myspace and most other social nets where users customise their profiles by adding HTML to their page – so in theory the same code should run on any social net.

All of this goes some way to explaining why everyone is so excited about Facebook and why they turned down rumoured $1bn+ offers for the company last year – but I don’t see the natural monopoly and lock out of other systems that being an OS implies.

For starters there are still a lot of things that you can’t do through Facebook – writing this blog and reading other people’s blogs are my two leading activities on the web and up to now you can’t do either of those through Facebook. That could change quite easily I suppose – I quite often use a Firefox plugin called Scribefire to write posts which they could incorporate and I’m sure they could do something similar for the more popular RSS readers (either via the Facebook API or by doing something similar themselves).

More problematic is search – it is difficult to see Facebook owning that – for sure they could do a deal with Google (like Myspace did), but it is hard to see them being anything other than the junior partner in that.

Similarly, there is the vast bulk of other things people do on the web. Almost by definition I don’t think Facebook can aspire to be an OS to the internet when the bulk of internet activity happens without even acknowledging it exists. Nothing happens on my PC without going through Windows – plenty will always happen for me on the web without going through Facebook.

Finally social networks are not natural monopolies in the way that operating systems are. All of us are on multiple social networks, choosing which we use depending on our purpose. The first generation of social networks are all horizontal plays, but I have been saying for some time now that the next generation are going to be focused around interest areas – for example our portfolio company WAYN is a social net for people interested in travel – so you can see how people will use WAYN or Facebook at different times depending on what they are trying to achieve. In the long run you can see the market consolidating and this situation changing, but I can’t see that happening too quickly.

So, as I say in the title to this post, Facebook can be a leading portal to the web, but it is hard to see them becoming the only one.