Facebook will soon have 600 million users and already consumes 25% of all US Internet traffic; Facebook is becoming more powerful everyday.
“With Great power comes great responsibility" - Uncle Ben, Spiderman
As Facebook becomes the corner stone of all things social on the Internet, what will that mean for the rest of us?
The title of this blog post could very well be the future of the web where Facebook abuses its control over the Internet and the world we surf in becomes a scary place. I am a big believer in Facebook and I think in general they are changing the Internet for the better. Facebook Connect or Facebook for Websites as it is now called is probably the most Interesting and powerful aspect of Facebook. With 1-click (or zero in the case of Instant Personalization) a website can go from knowing nothing about a user to providing a fully social experience.
Every new experience created on the Internet is highly socially connected and even the Google is trying to build in social into all its services. However if 50%+ of the Internet relies on Facebook this could cause some major problems
Single Points of Failure
By using IP routing and DNS the Internet ensures that there is no single point of failure. All Internet traffic does not go through one source and if any node goes down there are many others ready to take over.
If Facebook Connect becomes prolific it would make Facebook a single point of failure. If Facebook goes down or its security is compromised it would pose a serious problem to the whole Internet
Censorship and Control
Facebook will have unprecedented powers to censor and control people. This could be used to suppress certain views or destroy competitors.
Recently Facebook showed its power by killing Lamebook.com. Facebook said that this was unintentional and a mistake, but this is evidence of the power it can yield. Facebook will be in a position to kill websites by 1) not directing users to them and 2) killing most of their social functionality.
Extract Monopolistic Profit
Such control will give Facebook a lot of power to extract value and margins from the Internet. This is what the headline refers to with Facebook Credits becoming mandatory across the Internet. Facebook Credits are slowly becoming mandatory across Facebook apps so it is not such a far-fetched suggestion.
Facebook Credits is just one way that Facebook can extract Monopolistic profits. Additionally it could use its millions of users and data it has on these users to create a socially targeted Ad network. This would have no serious competitor.
Such use of power would have several dangers:
1. As the Internet becomes less profitable the incentive to innovate would decrease. This would also make previously profitable markets non-profitable.
2. Facebook could easily copy competitors as it has done with Twitter and Foursquare. This behaviour would also lead to decreased innovation.
I think there are 4 possible conclusions:
1. Facebook becomes a benevolent dictator and doesn’t abuse its power over the web.
2. Facebook does not become that powerful: Other websites make parallel Social Graphs. The proliferation of Facebook Connect does not go much further than it already has.
3. Facebook abuses its power as a monopoly over the social graph and no one controls it.
4. Government intervention: Facebook abuses its power as a monopoly, but the US and EU governments step in and force it into position 1.
All of these are interesting futures to think about. In fact this is a repeat of the situation with Microsoft Windows. In the case of Windows the solution turned out to be government intervention. They crossed the line with Netscape, killed a big company but were held accountable and now on the whole they don’t make such moves. Similar thing just happened with Apple when it suddenly eased its hold on the App Store under pressure.
Overall I am pretty optimistic about the Internets and Facebook's future. It should be interesting to see how the next few years unfold.