In short, the conditions are not quite present for a VHS-like or a Wintel-like domination of social networking by one company. There are still opportunities for competitors to differentiate themselves and room for users and application developers to spread themselves around. The powerful network effects do suggest that large numbers of people will continue to sign up and use Facebook. But advertising is not so effective and nowhere near as profitable as packaged software (Microsoft) or fully automated digital services (Google), at least not yet. Nonetheless, Facebook and several other social networking sites have staying power and will continue to fight among themselves and with Google as well as Microsoft, Yahoo, and others for user eyeballs and their fair share of Internet advertising. My guess is that Facebook will end up like Google-with 65% or so of the global market, a winner-take-most scenario. But Facebook as a company needs to explore better ways to make money as well as develop the capabilities to quickly add features and services that mimic Twitter, LinkedIn, MySpace, Foursquare, and Groupon. It may want to enter directly into commercial activities and try drawing user attention and advertising revenue from the two other most popular Internet sites, Amazon and eBay, or from the online classified ad specialist, Craigslist. The possibilities are nearly endless for a platform with 600 million users, and counting. But nothing is guaranteed. Facebook will still have to fight off competition from the social networking innovations that no one has thought of yet. © 2011 ACM.
