Could Facebook eat Yahoo’s lunch?

by Mathew on May 24, 2007 · 3 comments

As promised, Facebook has launched an ambitious effort to transform itself from being just a social network into a platform with all kinds of services from other companies running inside its network. In a sense, Facebook will be the frame of the car and the engine, and other companies will provide the radio and even the seats. This is more ambitious than I was expecting, although PaidContent tries to play down the hype.

snipshot_e4ia5vhurcg.jpgFacebook has announced partnerships with more than 65 companies to build features and widgets based on the Facebook API, and those companies — as detailed by Allen Stern at Centernetworks — include everyone from Microsoft, Amazon and Warner Brothers to Photobucket, Slide and Twitter. Interestingly enough, those last three partners are all competitors to some extent, since Facebook’s photo app competes with Photobucket and Slide, and its status updates are very Twitter-like. Reaching out to those companies and giving them access to Facebook’s user base is an interesting move for the company to make. Investor and PayPal co-founder Peter Thiel says it is the most important development since Facebook was created.

Mark Zuckerberg, the 23-year-old Harvard dropout who started the company with a few of his friends — and has been criticized by some for not selling to Yahoo for a rumoured $1.6-billion last fall — told Fortune magazine that he sees the social network becoming something like “an operating system” for the Web, and made an analogy to Windows. At least you can’t accuse the flip-flop-wearing Zuckerberg of thinking small :-)

Whatever Facebook’s chances of success might be — and that is still a very big question mark — this move does one thing for sure: it reduces the odds that the social network will take after Friendster and suddenly flame out. And as Alex Iskold pointed out in an analysis at Read/Write Web, if it can successfully leverage the social ties within its network, it could turn out to have the magic ingredient that Yahoo has been missing.

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