DG WORD

Both Google and Facebook are virtually free products that are both worth billions of dollars - and both companies promote and pioneer in online social networking.While Google offers a couple premium services of the myriad of other free services they provide, Facebook remains completely free. This means all Facebook users are equal (almost) in that they all have the same profile, the same features and the same abilities within their accounts, no more and no less. This equality and free-ness is likely part of the appeal to the original college & highschool crowd that made Facebook popular.Microsoft invested heavily into Facebook to the tune of $240mil for just a 1.6% stake. We’ll leave the valuation of Facebook to the analysts, but the bottom line is that Facebook is a company worth billions and is now pitted against Google.How do these two McCarthyian nightmares get to be worth so much? In short, advertising. Facebook doesn’t actually make $15billion/year, but they may make a tidy percentage of that (5-10%) from ad revenues due to the enormous amount of daily visitors on the site. The buyer knows this going in - and if they’re smart, they also know what’s needed to get great return on their investment.Aside from Peter Thiel being an angel investor, Facebook’s explosive growth can be attributed to 2 pivotal moments in their company’s short history:Allowing the general public to access the site (instead of just college kids) and the release of its applications and the developer platform.By releasing applications of their own (namely photos & classified ads) they strategically aligned themselves against a few well-established competitors (flickr, craigslist). Letting the independent developer community integrate their own applications with Facebook not only tapped an extremely useful and bountiful resource, but did so without having to pay for it. There are already over 6,500 applications available on Facebook.An exponential increase in the number of pageviews and length of visit per user resulted. From our experience, page views are still more important to our own clients than length of visit - but for how long?Regardless, the potential and realized advertising revenue is what catapulted Facebook from being worth millions to billions and transformed Facebook from a fairly standard social networking site into one of the most powerful advertising platforms on the internet.So it was only natural that Google, the king of the online ad space, got involved. Google tried to beat Microsoft to the punch by investing in Facebook, but when that didn’t work out they were quick to act by announcing OpenSocial.OpenSocial, the way I see it anyway, is essentially the Facebook developer platform except it’s not locked to any one social network. Any website can use OpenSocial apps and reap the benefits. This puts the power into the hands of the smaller developers, giving them a platform to keep up with the big boys.For this reason I think they’re two different entities and are not really in competition directly (not in this arena, anyway). Facebook will attract developers who are wishing to target that isolated market, but OpenSocial will attract developers who want a broader reach.If Facebook wanted to take on OpenSocial directly, they could do so by allowing outside access to their developer platform - so Facebook applications could be displayed on regular websites (So you can show all your friends on yoursite.com what your name means or where you’ve been in the world, etc.)Whatever happens, we can be certain that the future of the internet is social.