Implications for Publishers

On the surface, this Facebook offering is a no-brainer for publishers. Who does not want more social activity on their site? However, in reality this is far from a slam dunk. To understand why, consider two types of sites: sites that are either social networks or have social networking integrated, and the sites that have their own commenting and ratings systems. In the first camp you will find Last.fm, Flixster, Goodreads, etc. None of these sites were a launch partner, understandably so. Social connections around music, movies and books are their bread and butter as are the ratings, reviews and recommendations. If they switch to Facebook for all of this, what do they have left?

So any site that already has social networking built in has to decide to abandon that before jumping into the Facebook Open Graph. The even worse problem is the ownership of ratings and comments. Are publishers really ready to give that up? Nobody seriously thinks that users are going to be rating through Facebook and then through the site again. So how is this going to work? It is unclear at this point, but it's likely publishers will ask for ways to replicate or export comments and likes that users sent to Facebook via their site. Perhaps an open API that allows publishers to manipulate the data is the answer, but it is easy to see how some publishers would be very concerned.

However, if you run a website like eCommerce or a blog or a service like Pandora that currently does not have a lot of social built-in, this offering is a no-brainer as it will instantly start recycling your pages through the massive Facebook power of passed links.

Implications for Competitors

This is aggressive and brilliant move by Facebook - and Twitter, Google, Yahoo, MySpace, AOL, eBay, Amazon and others, except for Microsoft, should be really worried. It appears that Microsoft is content with just partnering with Facebook, perhaps rightly so. Possibly a Bing deal is in the works, which would make a lot of sense.

For all other players on the Web, the worry is that Facebook is trying to close the loop in exclusively owning user eyeballs. Apparently Facebook is not content with just connecting people; it wants to connect people and things. And not only that, it wants to do it around the Web. And not just any people - friends. You don't need to look too closely to see that Facebook is creating a feedback loop, which includes it, users and the rest of the Web and excludes its competitors.

There are several things that other big players might try to do, the worst of which is to try to mimic Facebook. The "me too" that we've seen way too many times recently has not worked, and will not work now. The second best choice is to try to block it. As strange as it sounds it might just work. Between publisher and user issues there are a lot of concerns, and a carefully orchestrated and coordinated campaign may seriously hurt this initiative. Remember, Beacon was brought down fairly quickly by a combination of user backlash and derogatory press.

The third option - to embrace and extend this platform, to innovate on top of it - is likely to be the best move. Innovation has always trumped stagnation on the Web. The problem is that it might not be that easy to embrace this initiative. After all, it does not look like Facebook asked everyone to gather around the table and cooperate on this. It might not be open to cooperation, but if it is then this is the way forward.

Technically speaking, what Facebook has done is elegant and correct. From markup, to plugins, to API, all of it is modern and awesome. The missing bit is that Facebook appears to be the only repository of data in this equation - and that makes the whole offering seriously closed. Publishers and users don't have a choice as to where to store the data. It is going to Facebook and Facebook alone. Perhaps there is a way to rework the system in a way that fixes that. We will look forward to see how this unfolds.

Implications for Facebook

Clearly this announcement is yet another turning point for Facebook. Before the conference Facebook was the biggest social network on the planet. If its vision actually happens, Facebook will be the biggest network of people and things on the planet- or to put it differently, it will be the taste graph of the planet.

Obviously there is a different technology that Facebook will need to be building. It already perfected the social networking part, but semantic analysis, recommendation systems, vertical categories like movies and books, as well as having completely open read/write storage of tastes is completely new to the team. The biggest challenge that Facebook will face is to inject, re-deliver and most importantly make use of the data that is flowing into it.

Facebook will be doing some serious number crunching and UI revamps to prepare for this next phase of its life. But perhaps the biggest experiment and test will be delivering relevancy. Google succeed with this in search; Facebook will now have the challenge to bring relevancy to the recommendations and taste-based advertising arena.