A standards war is brewing in the social networking space with Google’s introduction of OpenSocial. On one side of course is Google, and on the other, Facebook. Google’s new OpenSocial platform allows third party developers to write widgets once and use them on any participating network (Orkut, Linked in, Friendster, Plaxo, etc). The platform makes sense for Facebook competitors like Plaxo who compete for eyeballs and developers with Facebook; in fact Plaxo’s activity jumped upon announcing OpenSocial support. It makes sense for small developers who are working on a bootstrap budget and want maximum exposure. It makes perfect sense for Google most of all, since they derive their capitalization value from “platformizing” the web.
Contrast this with Facebook, whose capitalization value stems largely from keeping eyeballs and developers focused on its own application. Their revenue model is tied to Microsoft‘s high octane advertising sales team, which is now part of the equation thanks to Microsoft taking a 5% equity stake in Facebook. It makes sense – Microsoft‘ has excess sales capacity, and Facebook needs to rope in the ad dollars. Facebook creates barriers to entry by having developers code for it and skipping the smaller social networks. That’s why they’ve taken a completing approach of releasing developer tools which only work within their own proprietary network.
This latest move is classic Google. They benefit from the trifecta:
1. They immediately raise the value of Orkut, their own social network.
2. They tank the value of Microsoft’s new purchase, possibly buying a stake if the equity becomes a bargain.
3. They create a favorable framework for indexing social networks, used by Google search.
Tonight Google hosted an event for the bay area Facebook developer community, hoping to siphon off the developers with the promise that the smaller guys collectively are a more enticing market than the market leader. It was pretty interesting to see who showed up – attendees included folks from Ning, Plaxo, and Spock (CEO Jay Bhatti was in attendance) . Even more interesting, more established players Etrade and Ernst & Young LLP also sent people, indicating the Fortune 500 are at least keeping an eye on developments here.
Patrick Chanezon of Google and Dave McClure, the angel investor behind 500 hats led the presentation. Chanezon started off by defining terms – he referred to data providers as objects and social networks as containers. He immediately drew a distinction between personal social networks and enterprise containers. The implication was obvious: develop for a closed network and end up with sunk costs or develop with OpenSocial and obtain an express route to cash-rich salesforce.com customers.
Some elements of the new platform still need to be worked out. Chanezon was quick to admit that the API governance and the security models have yet to be resolved. In addition, a demo from BuyFast highlighted an issue: each container may elect policies specific to the social network, which may result in developers trying to “match” users based on having email available in one container and only name in another. In other words, the connectors work but sometimes developers have to play connect the dots based on whatever info they can grab.