A simple followup on Facebook’s complex plan

About a year ago, Facebook announced its plan to expand its platform availability and allow users to link disparate online activities into a single social graph.

It’s a year later and the competition has yet to respond. Google’s +1 still hasn’t fully launched. Beyond that, Yahoo! was the only other company able to compete on a broad network perspective, while Twitter, FourSquare, and others maintain more isolated social networks.

Some of my quick thoughts from then and now:

  • Network effects aren’t unlimited. Facebook operates the universe’s largest social network. We all know about the benefits of network effects – but unlike a theoretical hockey-stick graph, past a certain point network effects diminish. You don’t have to search too hard for people who’ve gone through a “friend/follower purge” to reduce network noise. Bigger networks aren’t always better from a user perspective. Although Facebook’s active user count continues to grow, the numbers are mostly outside the U.S. and early users are essentially feeling the network plateau.
  • Natural monopolies have huge barriers to entry. Scoble uses a railroad analogy; earlier this week, Shawn Morton told me a story about a speaker who equated social media with the nuclear power industry. While Facebook’s investment in technical and human resources is substantial, it’s not exactly a natural monopoly on the scale of a railroad, electric utility, or airline. And the nature of social technologies tend to disrupt institutions; don’t be surprised if a new entrant – comprised of staff who’ve departed Facebook – undercuts Ubiquitous Liking. The Like has continued to proliferate but Facebook isn’t yet indispensable. Look to the launch of Facebook-specific mobile devices as a harbinger of networked success. 
  • This isn’t free. Keep in mind that participating in this effort isn’t free for anyone. Individuals gain recommendations from friends, so far on things like hockey players and jorts. The cost is a bit of privacy. Brands stand to gain referral traffic. The costs include sharing customer data. Whether individuals and brands decide to “pay” those latent costs, vis-a-vis personal experience or online business goals, will determine Facebook’s success or not. Time and time again, many users are willing to trade privacy for the latest and greatest – witness the success of spammy “see who clicked your profile” apps.

The momentum continues and will only continue to build through Facebook’s 2012 IPO

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