Facebook is not only a Web service with more than 500 million users, and it’s not only going to make money by selling advertisements against those users.Facebook is a platform on which hundreds, if not thousands, of other businesses will be built. Eventually, Facebook could earn money from every single one of those businesses.
Facebook hasn’t hidden its platform ambitions. Mark Zuckerberg and other Facebookers have been talking about Facebook as a platform for a couple of years now, and the release of the OpenGraph API — which lets any Web site become like a colony of Facebook — was a big step in that direction. Monday’s announcement that Facebook would begin requiring Credits for all in-game purchases of virtual goods, with Facebook taking a 30% cut of each sale, was another indication of where the company wants to go.
But the emerging power of Facebook was really clear yesterday at the second Inside Social Apps conference in San Francisco.
The conference was supposedly devoted to all social platforms, but the audience clearly thought Facebook is the only social platform that matters — when Facebook commerce manager Deb Liu tried to claim that social app developers have a choice of platforms, she was basically laughed off the stage.
More to the point, the conference was sold out and standing room only, with more than 800 attendees. A lot of companies in attendance — Zynga, Sega, THQ — develop social games, but there were plenty of other businesses built on Facebook as well. Conference cosponsor AdParlor helps advertisers use Facebook more effectively. Companies on Facebook’s preferred developer consultants list were there. There was even a small guerrilla company that helps Facebook app developers collect email addresses from users.
Amazon had a team there — a product manager told me that they like to get out of Seattle see what the buzz is in the Valley. Goldman Sachs had a person there. Trip Chowdry from Global Equities Research was there.
The entire scene was like the early SEO conferences a few years ago. At the time, it was stunning that an entire thriving industry had grown up around a single company, Google. Now, it seems obvious. Or going back a few more years, it was like the first Web conferences in the mid-1990s. Or Comdex in the 1980s.
This is what the beginning of a platform shift looks like. The last two companies to build dominant new platforms were Google and Microsoft. Facebook is next in line.