Slate: Is Facebook really a good business? →
Farhad Manjoo:
I have a more general skepticism about the utility of the “social layer” that Facebook wants to build under the entire economy. In a letter to potential investors, Zuckerberg argues that most products and services can be improved by making them “social.” This has become received wisdom in the Silicon Valley; nowadays every site, app, game, and store plugs into some kind of social network, often Facebook.
The clearest example is social gaming. The S-1 notes that Zynga, the company behind Facebook games like FarmVille, accounts for 12 percent of Facebook’s revenues. Most of the money comes from Facebook’s cut on the sale of virtual in-game items like “zebra unicorns.” The S-1 notes that there’s something dangerous in Facebook’s reliance on a single company for such a significant source of its revenue, but the real problem here isn’t Zynga. It’s the zebra unicorn.
Manjoo thinks it’s “crazy talk” that we’ll all abandon Facebook for some other social platform, and he’s right in that it’s unlikely something will come along that can do to Facebook what Facebook did to MySpace. But over the long term—and in the tech world, “the long term” is in the range of 15 years—I’m not sure that Facebook won’t suffer the same fate that AOL did: not being toppled by a single competitor, but a decline into irrelevance brought about by the advance of technology.
Facebook offers nothing that you can’t get elsewhere on the internet in terms of building an online presence, sharing with friends and family, and keeping up with people in an extended circle—it’s simply that right now, many people find them the most convenient way to do that. A long-term bet on Facebook is a bet that this will still be the case 15 years from now—or a bet that, 15 years from now, Facebook will have pivoted in a way that still keeps them just as relevant. That’s a very tall order.
