Is Google's Earnings Miss A Disaster for Facebook?

Google's revenue was up 51% but still missed Wall Street's forecasts. It reported revenue of $3.39 billion, which was slightly short of an expected $3.45 billion. Being Google, the stock tanked after-hours as the market has come to expect stellar earnings every quarter. What was interesting was that Google's CFO blamed the weak numbers on difficulty monetizing social networking traffic such as with its major partner, MySpace. This had led many analysts to question whether monetizing social networking sites is really much hard than we expect.

Microsoft was quick to counter that ad networks on Facebook were doing better than expected. But what exactly does Microsoft expect? Take at MSN Live Search and you'll see Microsoft standards for search are not very high indeed. Meanwhile Zuckerberg, the CEO of Facebook, has been going around selling slices of Facebook priced at $15 billion with nothing but a story as how he plans to make billions. It seems even when Google does badly, it can pull down its competitors. Was there a jedi mind-trick behind Google's earning's explaination? Facebook took a beating after Zuckerberg's failed Beacon initiative and even the once adoring media has now decided Facebook Apps are 'a waste of time'. Are fundamental questions about the viability of advertising on social networks going to undermine Facebook's bubble-like valuation of $15 billion. If Facebook was a publicly traded company, I think traders would be dumping the stock right about now.

Facebook Beacon too much like Big Brother

In 1984, Winston Smith hides from the Thought Police, who use an un-named technology to read the thoughts of the oppressed citizenry. Although not in the same league as Big Brother, Facebook announced today that they were backing down from having an opt-out e-commerce spying system, that reports your purchases to Facebook.

Aside from protestors and the occasional facebooker who found his holiday gifts out-ed to friends and families, Beacon failed for 2 reasons.

1) Lack of transparency

Beacons works by tracking users behavior across multiple site with cookies. Same trick used by many Ad networks, to do behavioral targetting of ads. But many too users were blissfully unaware of this, and with the high degree of media scrutiny on Facebook, it was bound to be seen by some as violation of user's privacy.

2) Lack of participation by major E-tailers

If Ebay and Amazon had been partners in this Beacon initiative, this would never have happened. Who were Facebook's primary web partners in this conspiracy to track user's behavior: also-ran e-commerce websites. As one facebooker commented, what if she bought a used table because it was dirt cheap and her friends found out.

Any opt-out system would have to be introduced with first-rate partners, who would have to be willing to go to bat for Facebook: essentially sell the idea to their users and address privacy concerns. Imagine, if Amazon had been a partner in Beacon, and had introducted additional controls in Amazon to protect their user's privacy. The message would have been, yes it is opt-out but our trusted partners care about creating the best possible experience. Instead Facebook Beacon became the proverbial industrial fishing net, bringing up plenty of trash and catching the occasional dolphin. Hopefully, facebook learned from this expensive lesson in how to introduce big and controversial ideas to the world.

Verizon to open up its network

Perhaps feeling Apple and Google breathing down its back, Verizon has announced plans to open up its network to devices and software "not offered by the company". These foreign devices and apps will have to pass tests in a new testing lab to prove that they meet certain "minimum technical standards"

Not sure if this is a real breakthrough because wireless operators regularly partner with 3rd party device and software companies to make products for their network. It seems that Verizon is saying the network will be more open to technology innovators because inter-operability will be determined by technical tests rather than business relationships, and because Verizon plans to publish technical specs for their wireless network in 2008.

NyTimes is reporting Verizon will offer 2 types of service 1) Standard 2) A new bring your own device service.

Open Social night at the Googleplex

Googlers working on OpenSocial, along with speakers from Plaxo and Hi5, got social with the web community on Wednesday night. In a panel discussion moderated by Silicon Valley Web Guild, they went over the OpenSocial platform, and tried to answer questions about the platform's maturity, commercial potential and openess. The words a "work in progress" was used countless times by Googlers and their Social network partners, as they tried to deflect criticism that OpenSocial was not ready for primetime. The Hi5 and Plaxo networks currently only allow OpenSocial apps to run inside a sandbox, and expect it will remain this way until 2008.

Chris Schalk from Google, expressed satisfaction that overall OpenSocial was very well received and suggested that Google was surprised by the overwhelming interest in OpenSocial from other social networks. Reflecting a pragmatic approach to building out the platform, he identified feedback from developers and partner companies as the primary force in shaping the design of the OpenSocial platform. Ultimately, Google plans to release OpenSocial as open source.

While OpenSocial doesn't currently address many issues of developing apps (Preferably called 'gadgets' by Google) such as policies on fair use of the social graph and how to style apps to fit in with the look and feel of each host platform; there is a definite sense that OpenSocial is an ambitious undertaking. Ultimately, it aims to "free" social networking users data and usher in a golden age of app portability. But it remains to be seen whether OpenSocial can hang together as each social network moves beyond the low-hanging fruit of common data definitions and creates extensions of OpenSocial to realize their unique values.

Food Faves: Looking for testers

I recently put up the beta version of my facebook app, Food Faves. It lets you share reviews of restaurants and uses AI to compare your tastes with your friends. If you are interested in testing the application, please contact me via email.

Rails Meetup Vancouver: Facebook on Rails

I gave a talk at Rails Meetup Vancouver on developing a FBML Facebook app using rails, and the advantages/disadvantages of facebook markup vs web standards. In particular, the talk covered the rfacebook gem/plugin and discussed some limitations of that library. Unlike the PHP library which is provided by Facebook, other facebook client libraries are always playing catchup to changes to the development platform. Generally its a good idea to test out the interaction between facebook - rfacebook - backend before jumping into building your app. Here are the slides from the presentation:

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