Pulling Out the Old Playbook

There are a couple of basic business strategies:

1. Obtain more marketshare than anyone else.  This should be considered the preferred approach.
2. Failing that, gather up the rest of the also-rans and band together against the dominant player.  This approach is usually accompanied by frequent use of the word “open”.
3. If/when that fails, hire some lobbyists because it is inconceivable that you lost, the competition must have cheated.

The OpenSocial API announcement is being portrayed as an savage attack on Facebook, with MySpace’s endorsement being described as possibly “checkmate“.  We’ve seen this playbook run many times before and it is a mistake to confuse the sound and fury of an announce with the likely impact. It actually underscores the weakness of the hand held by Google and their fellow travelers.  While nominally about making it easier for developers to write widget applications that can be hosted across multiple sites, it really shows how few options Google has to try to deflate the twin nightmares that Facebook poses to Google.

First, Facebook is a huge and rapidly growing walled garden that Google can’t index, provide search results about or sell ads against.  Facebook’s privacy controls that keep out the crawlers have proven to be very compelling and the cornerstone of Facebook’s success.  That of course flies in the face of Google’s willingness to sacrifice any semblance of privacy on the altar of their business model. 

Second, the profile data of Facebook allows more targeted and therefore more lucrative advertising.  This has been borne out by some of the ad-supported applications developed for Facebook.  Lacking an asset of similar scale (insert obligatory comment here about how Orkut is big in Brazil…) or access to Facebook’s profile information, this puts Google’s ad business at a disadvantage to ad systems that can take advantage of this information.

Google hopes to either 1.) see Facebook eclipsed in popularity by any and all other social networks they can actually crawl (not necessarily their own – this strategy is driven by the search business, not Orkut) and thereby make the problem go away or 2.) somehow shame Facebook into opening up their crown jewels for the greater convenience of Google’s business model.  Neither outcome seems likely.  These kind of industry efforts have a very poor track record because they are primarily about competitive positioning as opposed to significant customer benefit.  Nevertheless, they remain an almost reflexive impulse if you have UNIX genetic material.

While Facebook’s platform play has significantly helped the service’s popularity, both in breakthrough buzz and actual usage, an ecosystem of applications that can be hosted by multiple social networks is not likely to make a dent in Facebook.  The OpenSocial announce has shifted the spotlight away from Facebook, at least for this week.  But it is a move that even if successful, only helps the also-rans catch up to where Facebook is today.  Parity isn’t usually enough to displace the leader.  Moreover, the availability of applications is still a secondary factor in what makes a social network successful in the first place.  Facebook’s phenomenal growth curve predates its platform strategy.  And then there are the problems specific to these kind of “lets gang up on the leader” efforts. 

The fundamental problems are all the participants compete with one another and they’re uniting around an admittedly least common denominator specification (we’ll assume for the moment the spec is coherent and can be implemented consistently – a generous assumption).  In the days of yore when UNIX roamed the earth, vendors would gather together on stage on Monday to praise their commonality, sing Kumbaya and then have to go out and compete with each other for the rest of the week.  One of the ways they competed with one another, not surprisingly, was to differentiate their products, which tended to undermine the commonality claim.  The OpenSocial announce is deja vu all over again, right down to the bickering over whether the target of the announce was or was not in fact invited to participate.

Now, if you’re one of the small social networks participating, there is probably nothing but upside for you.  You likely get more applications for your service than you would otherwise.  But the bigger players are where it falls apart.  When I first drafted this post, I had a line about there undoubtedly being many messengers from the OpenSocial camp prostrated before MySpace representatives.  That begging obviously was successful and MySpace endorsed the spec today.  For MySpace,  it was an cheap opportunity to steal some of the spotlight back from Facebook.  Beset by slowing growth and the loss of cool kid status to Facebook over the last year, it was an easy PR gesture to make.  What’s not to like about being anointed kingmaker and people writing that your major competitor may be on the ropes because of a press release?

The real test is what happens when MySpace rolls out their platform.  Will they really limit themselves to the least common denominator spec?  Might they not expose some of their unique functionality to developers?  Could they have their own, richer widget model as well as supporting OpenSocial?  Given their historic resentment towards services built on the back of their user base, might they not want to have some control points for which applications are accessible?  Will they leave the monetization to the application developer like Facebook does?  Are they really more committed to “openness” than using their scale for competitive advantage?

From a developer perspective, many of the Facebook apps were developed in just days or weeks and if MySpace offers additional functionality that lets developers differentiate or offer MySpace users better integration, they’re likely to quickly take advantage of those MySpace-specific functions.  Even if that model is (horror of horrors!!!) “proprietary”.  Because OpenSocial does not facilitate viral adoption of applications across networks, developers are likely to focus their efforts on the network with the largest user base and that is MySpace by a mile.  I suspect most of the developers who play around with OpenSocial in the meantime will decamp and focus on MySpace when their platform arrives.  But enjoy the frenzy in the meantime.  Like many announcements before it, you can bask in the “openness” for a while, at least until business considerations kick in.