And a big, complicated clash will determine whether Google or Facebook dominates it
In the beginning was the personal computer.
Not long after, people started connecting them together on networks, culminating in the World Wide Web and the Web browser, which launched the first great era of the Web. Then came the search engine, which launched the second great era of the Web, the era of Google.
Now comes the third: the era of social networks. Facebook has jumped out to a commanding lead, but Google hasn’t really started fighting yet. So the stage is set for a battle of, well, biblical proportions. The wizards at the Googleplex in Mountain View, Calif., are working furiously on a social network to rival Facebook’s. Just a few miles away, in Palo Alto, Facebook is preparing for an initial public offering to give it the money it needs to take on Google’s Goliath. And last month, the clash got a bit ugly when it was revealed that Facebook had hired a public relations agency to slime Google’s social networking tactics.
We are about to witness the next great conflict of the information age, a rich and complicated match on the scale of mainframes vs. micros, RISC vs. CISC, Windows vs. Unix. Like those battles, Google-Facebook will shape the industry’s landscape for years to come.
The Web has had a social dimension almost from the start. It just took a while for the right software to come along and make it compelling. "We’re now seeing a Web built around people, where their profiles and content are moving with them as they visit different websites," notes Paul Adams, who made his mark as a user-experience researcher at Google before jumping recently to Facebook. Socializing is something that people used to do on the Web; gradually it is becoming the Web.
During the first quarter of 2011, the set of 12 social media companies tracked by the Rye Brook, N.Y.–based private equity advisor NYPPEX rose in value by 51 percent. One of those companies, the Facebook game maker Zynga, increased by 81 percent. Ken Rutkowski, the founder of the Media, Entertainment and Technology Alliance, predicts that credits purchased and exchanged in its online games will make Facebook the world’s biggest "bank" by 2015.
None of that has been lost on Google. Yes, it flopped with Buzz, Orkut, and Wave. But Google finds itself in a position like that of IBM in the early 1980s, when IBM’s core mainframe business was threatened by what were then called microcomputers. Like IBM 30 years ago, Google has seemingly inexhaustible resources and an implacable determination to stay on top. And so it will try again in the social sphere, and keep trying until it succeeds.
How serious is Google about social media? In April, its new CEO Larry Page announced that a quarter of all bonuses would be tied to Google’s social media success.
Yet Google’s opening salvo, on 31 March, was so small that it slipped by with little fanfare. Still chastened by the Buzz fiasco, apparently, Google is calling its modest new initiative an "experiment" for now. Officially known as "+1," it’s a button that pops up next to search results and ads. You click on the button to recommend pages or ads to your friends and contacts. Yes, it’s basically the Facebook "like" button but without all the other stuff you need to call yourself a social network. But Google’s not done. Think of +1 as an acorn. The oak tree will come later, when Google thinks we’re ready for it.
In the meantime, Google says that it will use the button to help determine a page’s relevance and ranking in its search results—the more +1 clicks a page gets, the more significant and interesting Google’s servers will deem the page to be. There’s a kind of insidious brilliance about +1, because every time you hit that button Google learns a little bit more about you, letting the company target you a bit more effectively with search results. And with ads, too.
That’s important, because ads are what makes this cockeyed caravan go. Google and Facebook have the same basic model: Offer the services free and charge for advertising. And, as any adman will tell you, the more popular your service, the more money you can get for ad space. That’s why Google and Facebook are vying to be the de facto home for Web users.
Nearly all of Google’s and Facebook’s revenues come from advertising. Google posted US $29.3 billion in revenue in 2010. A recent report said that privately held Facebook generated about $2 billion in revenue last year, which places its size on a par with that of Google when Google was also just six years old.
What Google and Facebook have that old media don’t is information about you—data that they collect and process with a barrage of advanced technologies, software, and math to wring money out of you with far greater efficiency. They do that by using the information to target you with ads that can be so specific and relentless that they seem a little creepy at times. Use Google’s Chrome browser to search for a fruit-flavored green tea and you will probably find yourself hounded for days or weeks by ads from tea sellers that pop up to the side of other pages that Google points you to. Writing the code that does that is how some of the greatest mathematical minds of the current generation make their living these days.
That’s Google’s edge: It is in the enviable position of benefiting from having users online in almost every way (but it greatly prefers to keep them at sites available to its scrutiny through the Chrome browser and Android apps). Facebook, on the other hand, can learn about people and profit from them only when they’re on the site (a fact that helps explain Mark Zuckerberg’s fervent desire that we all just get over our archaic notions about privacy). So now Facebook’s triumph is emboldening the network to take on more and more services in the interest of keeping users within its walls.
Here, Facebook has two potent weapons: crowdsourcing and games. Google’s success at collecting information and driving commerce has created incentives for sites to manipulate the system with search-engine optimization tricks that artificially elevate their ranks in search results. Distorted search results are in turn prompting frustrated Web surfers to crowdsource their questions to trusted branches of their social networks. The idea is that your friends and relations can steer you toward a good answer much more reliably than Google’s immensely powerful but compromised data centers.
Quora, a question-answering social site, has sprung into being for precisely that purpose. Here, too, Google isn’t sitting still, but you already knew that. Improved search is part of the rationale for the +1 feature, which allows users to elevate their favorite search results in queries from their friends.
Facebook has also made extremely successful use of online games to keep people within its domain. Some 250 million people play social-network games every month, according to the analysis firm Parks Associates. The ascendance of these games has been so swift that media analysts are blaming it for the death of the TV soap opera in the United States, after a reign that lasted for decades. There are scores of Facebook games, but just two—Zynga’s CityVille and FarmVille—account for 140 million of the 250 million people who play social games every month. Google’s plans for online games aren’t known, but nobody doubts that some of the fiercest battles for online revenues will occur in the arena of gaming. And as our contributor David Kushner notes, these new social diversions may be as different from action-heavy console games as bucolic FarmVille is from the bloody Call of Duty first-person shooters [see "Betting the Farm on Games"].
As improbable as it might seem now, Google and Facebook could yet lose their grip on the new social Web. They will thrive only as long as online ad revenue flows, and that flow can be maddeningly fickle and elusive [see " The Revolution Will Not Be Monetized"]. Their snooping may even backfire. Some users have already decided that they would rather not blindly trust their social networking and Web-search history to anyone. More customized service, too, is always a lure. So four young techies in San Francisco have found a niche and are trying to fill it with a different kind of social network, called Diaspora. We’ve got the inside story on the ups and downs of life at the tech start-up of the moment [see "The Anti-Facebook"].
Google and Facebook, meanwhile, are grappling with a rather different sort of engineering problem: how to build data centers that push the boundaries of what’s possible now, to keep up with epic demands for processing power, data storage, and more [see " Under the Hood at Google and Facebook"]. Even here, the two giants embrace fascinating philosophical differences, and this is just one tier of a fast-evolving technology ecosystem to which the two must be constantly adapting. Smartphones, tablets, and netbooks are now so popular that accessing the Web to settle a bet, tweet a short movie review, check in with work, or post a Facebook status update has become an almost inescapable adjunct to any other activity. No one with a smartphone is ever out of touch with his or her online social circle, for better or worse. Even shooting, editing, and posting video—something that professionals could do only in the studio a few years ago—can now be done on the fly.
We’re just starting to see other technologies that let people interact with their machines more intuitively and effortlessly. These and other technologies will further lower the barriers to natural interactions and updates across the Web [see " 5 Technologies That Will Shape the Web"]. The inevitable culmination of these developments, say a couple of prominent social-media tech researchers, will be digital avatars that do your bidding online—and are thinner and funnier and better looking than you, too. Avatars are a staple of current sci-fi, and they’ll soon be a part of your online social world, according to Jeremy N. Bailenson and Jim Blascovich [see "This is Your Mind Online"].
Technology will also give us a whole new concept of mobility. Just as GPS units in phones make it possible for people to spontaneously advertise their coordinates at all times, new kinds of sensors linked to the Web and embedded in clothes, buildings, vehicles, and other common objects will be able to convey ongoing updates about your every action. People will need to do less and less in the future to loose a torrent of data about themselves and their ongoing activities onto the Web. Whether anyone will really want to be the recipient of these data deluges is a moot point. Much of this information might seem meaningless, but the availability of robust computing capabilities for processing constellations of such data drawn from many parts of our lives—and the lives of other demographically relevant people—could certainly make it vivid and might very well make it compelling.
There’s a downside, and it’s a doozy. A system for tracking everyone’s actions more closely than 1984’s telescreens sounds uncomfortably like the greatest threat to personal privacy that the world has ever seen. But in capitalist democracies, at least, the more immediate worries are that corporate marketing could gain major advantages from knowing so much about us, and that minor lapses or, as they say, youthful indiscretions could wind up wrecking some people’s lives and careers [see "Welcome to the Surveillance Society" and "Me, Myself, or I"].
Regaining traditional privacy may be impossible, but that doesn’t mean we should be entirely at the mercy of corporate whims in their stewardship of our data. And so in this issue Web pundit Jeff Jarvis proposes a framework for a "bill of rights" that might help to curb abuses by Google, Facebook, and the other giants weaving this new social web and struggling for advantage in it [see " Privacy, Publicness, and the Web: A Manifesto"].
Of course, privacy means different things in different places. The 457 million Chinese who use the Internet have seized avidly on social media, making Sina Weibo, China’s homegrown microblogging service, one of the fastest-growing utilities in Web history. Sina Weibo’s success has protected it so far from Chinese officials who fear its reach and influence. If services like Sina Weibo can survive long enough, they may provoke significant cultural if not political changes. [see " China’s Social Networking Problem"].
Google and Facebook are both counting on human creativity to drive their future success. So they are fostering lavish workplace cultures—with beautiful campuses, gourmet food, and at Google, conveniently located dog-poop disposal stations. (Really.) You may be surprised (we sure were) by what it takes to lure, pamper, and retain a top techie these days [see " Campus Life" and "Food Fight"].
The social networks that will come out of these brainy hothouses will undoubtedly have surprising cultural consequences. Life support excepted, the most fundamental human need is companionship. And so humankind has turned its newest technologies—computers, networks, mobile gizmos, and software—to one of its oldest and most basic requirements. A new and interesting chapter has begun. You’ll like it, although there are bound to be a few scary parts. We can’t tell you how the chapter will turn out. But when you’ve read our report, at least you’ll know what to fear and what to hope for.
With additional reporting by Julie Pitta