May 9th, 2007
Social networking giants--the new lock in
During a Software 2007 panel on community and the Internet, PayPal co-founder and now CEO of Slide Max Levchin laid out a scenario in a social networking giant that locks in consumers will arise, with great similarities to how Microsoft was able to create a lock in on the desktop.
According to Levchin, 20 years ago Microsoft was able to lock in consumers and lock up data and the desktop with complex file formats. Today, the same thing is going on in the community and social networking space, but it's no longer on the desktop, he said. Content ranging from contact lists and comments to spreadsheets and video is moving to the cloud. "Once they have it they are going to keep it that way," Levchin said. "It not easily portable or removable."
He identified MySpace as a kind of new Microsoft in the making. "The funny thing about it is that people talk about 'Will Google take on Microsoft?' but it doesn't have that much consumer data. MySpace has the consumer data. The PC doesn't matter–the Webtop matters." Just having the friends/contact list and the relationships is a powerful incentive to keep people from migrating away from a service.
Microsoft could potentially its data grip in the business world, if communities sites like MySpace or Facebook could make their brands more respectable, Levchin surmised. "Most likely someone will come up and own the whole thing," Levchin said. "MySpace has 82 percent of the [community] market."
MySpace is more of a nuisance in corporations today, with the younger employees updating their pages during work time. LinkedIn and Xing are becoming influential a business context, and Facebook is moving in that direction.
"Social networks–address books, instant messaging, email clients–are becoming part of the Internet operating system," Levchin said. "One way [social networking] might happen [in corporations] is a Fortune 500 exec see his kids using Facebook–calendar, events, friends, status–and says 'oh my god, it's the ultimate productivity app. Why am I paying Microsoft all this money for stuff that barely functions.' I would be most surprise if that [scenario] does not happen."
A social networking giant sucking in all kinds of data doesn't make Microsoft irrelevant. The company makes it money selling applications and tools, and has an extensive community of developers. But more applications and data are going to the cloud, cross-platform technologies, including Adobe Flash, Microsoft own Silverlight and Sun's new rich Internet application platform, make Windows less important and the browser more prominent than in past eras.
As certain social networking/community sites become more powerful, they will follow the Microsoft method of opening up parts of the platform to consumers and developers to build out the ecosystem, extending the lock in. However, lock in doesn't necessarily mean imprisonment. The walls will be semi-permeable, keeping the natives from revolting, and preserving some leverage that keeps members from moving too easily between competitive community or portal sites.
Despite acknowledgment from companies like Google and Yahoo that users should own their 'attention' data, the desire for 'ownership' and good quarterly result gets in the way of doing what is best ultimately for users.
"We are rapidly decentralizing but a few databases are gathering our information in the sky. There is decentralization of human effort and power, but Google controls your search habits and can sell it if it wants to."
Dan Farber, editor-in-chief of CNET News.com, has more than 20 years of experience as an editor and journalist covering technology. See his full profile and disclosure of his industry affiliations.
