The opening of Web 2.0 service platforms

Last week I was in San Francisco bay area talking to several Web 2.0 companies about their APIs.

Last week I was in San Francisco bay area talking to several Web 2.0 companies about their APIs. Much has been written about Facebook’s new move to open up their platform to encourage others to help it evolve new services and I wanted to find out what services from Web 2.0 platforms are available. Using open platforms and APIs like this can be useful for enterprise applications as well as consumer-oriented sites. Talking to some of the sites that have services useful for the enterprise, I was a little surprised to find that many had no APIs or interfaces at all. It wasn’t likely that there were technical reasons for not having interfaces. With the “Data is the Intel Inside” culture of O’Reilly’s Web 2.0 definition, Web 2.0 services face the same dilemma of opening up their most important assets as open source. These assets are even easier to copy and more difficult to legally protect using copyright and attribution controls that open source may have. Closed source companies do not believe that there is an advantage to opening up their most important asset for others to copy and some of the Web 2.0 companies feel the same way. It’s okay to see the information, but only through their site where they can monetize it. After all this is what pays for the service.

One of these Web 2.0 properties that can be useful for the enterprise that I really like is LinkedIn. Although initially nervous of submitting my connections, I have been able to reconnect with colleagues that I haven’t seen in years. It’s also a fantastic recruiting tool. When looking at how to bring people into an enterprise context of collaboration, having access to a team’s collective LinkedIn network would be ideal for reaching out to external experts and resources. It’s just a matter of having access to their APIs.

I met up with LinkedIn product manager responsible for APIs, Lucian Beebe. It turns out there are no APIs to LinkedIn, but they are looking into it. The enterprise collaboration market is small potatoes compared to the much larger consumer market of professionals searching for jobs and introductions. However, there are lots of consumer- and financial -service-oriented web properties with similar requirements to ours and hence LinkedIn’s interest in APIs. Yet LinkedIn’s database of resumes and personal connections is very valuable and sensitive. LinkedIn is not the only property concerned about loss of information, but it is one of the most prominent.

Jeffrey McManus knows a lot about creating platforms on top of valuable data. Jeffrey was developer evangelist at eBay and Yahoo Marketplace helping to get other people to build web sites and applications on the respective market places and product taxonomies. Instead of leaching data away, they were able to build barriers to entry by creating unbeatable ecosystems. Jeffrey posted this quote about Facebook’s move to open its platform:

"Facebook has recognized (and embraced) something that MySpace has not - that there is more value in owning a web platform then a web property."

The other night at dinner, we discussed the risk that these companies take of not opening up their platforms and data. What is at stake is other properties provide will provide much greater value than your property and take market share away. Rather than protecting your assets you are removing the millions in R&D that other are spending creating value-added services on your platform as well as extending reach in to markets, verticals and geographies that a single web site alone cannot reach unless it is Google.

This may be Web 2.0’s open source moment - to open up or remain closed. The decision is not new since companies like eBay, Amazon and Salesforce.com did the same years ago. Despite opening up their platforms, they have continued to make money from their platforms and even grow through greater network effects. However, they are not dependent upon advertising, so the decision that many advertising-dependent sites may take is to stay closed. Yet, the pace that the Web 2.0 market is moving right now, these sites risk new entrants taking market attention and share away by being open and having more compelling features. Recent moves by Digg and Facebook to open up their platforms highlight the opportunity of opening up and the dangers of remaining closed.

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