More thoughts on Facebook's new platform

Earlier this week I reported on Facebook's plans to further open up and to turn the social network into a platform. Third parties would be able to partner with Facebook, who in return would provide the necessary hooks for those companies to port their applications, and set-up-shop inside of the site. However, the Wall Street Journal article which broke the story was sketchy to say the least -- leaving lots of questions unanswered.

Last night, Facebook's officially launched its new platform, and along with more details, some good analysis from around the blogosphere is filtering in.

But first, a reminder of what I wrote before the official announcement:

If Facebook can find the right balance and truly embrace outside services in a way that profits all parties, then this could add significant value for its users through the addition of new and innovative services — and further position the social network as a very different proposition to MySpace.

And this morning I woke up to the TechCrunch headline: Facebook Launches Facebook Platform; They are the Anti-MySpace

Of course, what Mike Arrington is referring to is the fact that third parties building applications inside of Facebook, will be able to monetize their presence.

Arrington writes:

Applications can serve their own ads and/or conduct transactions with users. Ads can basically be shown anywhere that Microsoft ads are not currently shown.

Whilst the bit about "anywhere that Microsft ads are not shown" is a little fuzzy, I think what it means is that companies can conduct commercial activity once the user is operating within their mini-app on Facebook. What's clearer is that they'll be able to process transactions without users leaving the site. This is a departure from other social networks (including MySpace) where direct commercial activity is not permitted, and usually involves getting users to click away from the site first.

So, third parties get to build innovative services within Facebook -- in what has the potential to become an open market place where companies compete freely within the Facebook platform -- and Facebook gets to keep it users from ever needing to leave the site. At this point there is a similarity with MySpace, in that they also keep adding new features such as video sharing, MySpace news etc, so that users stay within the site; the difference here is that News Corp. is doing it by building there own or through acquisition, rather than letting third parties in.

So in many ways it's the same end game, just with opposite strategies.

Facebook the Operating System

Looking at the range of apps (see Marshall Kirkpatrick's announcement FAQs and accompanying slideshow), what's equally impressive is the way Facebook now operates like an Internet operating system -- not only offering third parties access to its established user base, but also acting like a unified GUI, from which they can build applications on top off.

Here's how it works:

• There is a special area on Facebook where users can browse and 'install' third party apps. So as Arrington notes: "The API would allow, for example, a third party to recreate Facebook Photos, the most used photo application on the web. Users could then remove the default Facebook Photos and install the third party version instead."
• Once a user adds a new app, it shows up as an option in their profile page, and in Facebook fashion is announced in their news stream, so that any of their 'friends' are alerted that they've installed the app.

Richard MacManus (over at Read/WriteWeb) has some additional thoughts on Facebook's overall growth and strategy, and their chances of reaching an IPO:

Could we eventually see the biggest IPO since Google, when Facebook puts its hand out to the public for cash? It's looking like a good bet now. And as Facebook's current stats show, they are growing at a remarkable pace. They have the vision, the user base, and 3rd party developer support. It seems the monetization isn't quite worked out yet, which could still end up spoiling the party. But one thing is for sure, Facebook has gone well beyond what MySpace has to offer - and is looking distinctly threatening to not only MySpace, but the other big Internet companies. Facebook has grown up!

Right now, Facebook has 'let in' over 70 companies, but it's not clear on what criteria they were chosen or how easy it will be for others to join. So whilst I'm very impressed with the new and bold strategy, my one caveat is that it's not totally open -- in the sense that you have to get permission first.

One other thought: where does this leave the 'small pieces, loosely joined' philosophy of the net? If everybody sets up shop in Facebook, keeping all the action inside the social network site, where does that leave the rest of the web?

Related post: Facebook wants to become a platform