Making Sense of the War Between Facebook and Google: Part 2

In part 1, I defined a way of thinking about the differences between “websites” and “platforms”. A platform, according to this writer is a pervasive utility – an application of real use that extends into many other, if not all, parts of the web. A website on the other hand is a somewhat isolated destination that stands on its own as a place one goes to consume content or perform a task.

I promised I’d talk more about the importance of content to websites and platforms, so that will be my focus in this post.

It probably goes without saying that if you’re a website, you’d better have damn compelling content or functionality, because that’s the only reason people will come back. The New York Times isn’t really a platform because it doesn’t add utility to the functionality of a variety of other websites, but it is a compelling website in its own right because its content is top-notch. Same thing with a website like Pitchfork (for music), or Funny or Die (for comedic video). Regardless of whether content is still king, you can be sure it’s still very important. No one goes to a website to listen to bad music or watch boring videos.

Content is important to platforms as well. They require a critical mass of people or companies within the platform to produce content people want. A platform is useful because it offers people some pervasive utility – like sharing or embedding content (Facebook Like button, Google +1, YouTube player) or easy log-in (Facebook Connect). Content is still critical here, because without it, there is no reason to use a platform’s features. However, if you can attract enough people to the platform, publishers (content producers) will follow, because content needs an audience. This is why most publishers and brands now accept that they must syndicate at least some of their content via platforms like Google and Facebook, so that the masses of people using them will discover it and visit their websites.

Content or functionality always drives the success of websites. The degree to which investment in content drives the success of a platform depends on how pervasive its utility is online. Think about it this way: if a platform is so deeply ingrained in the fabric of the web that you can’t avoid using it, then it’s need to invest in content it controls is decreased. People will be forced to use it, and content producers will be forced to deploy content within it. In Google’s case, the browser (Chrome) and mobile operating system (Android) are incredible examples of this principle at work. Google made their browser good enough that a critical mass of people wanted to use it. They made their mobile operating system good enough, and executed the right deals with manufacturers and carriers, that it surpassed the iPhone’s share of the U.S. smartphone market. So now Google has control over a wealth of advertising inventory, and it doesn’t actually need to produce content because it controls the platforms that enable us to access other companies’ content.

The more pervasive Google and Facebook become, the less they rely on any single publisher to drive traffic within their platforms. To date, Facebook has been winning, as it commands over 40% of all internet traffic (cool infographic here). But 60% of time spent on Facebook is spent playing games, and Facebook does not actually control any of its own gaming content. To me, this second stat could point to the beginning of a decline in Facebook’s pervasiveness. The data from Nielsen is informative:

Top 10 Sectors by Share of U.S. Internet Time
RANK Category Share of Time
June 2010
Share of Time
June 2009
% Change in
Share of Time
1 Social Networks 22.7% 15.8% 43%
2 Online Games 10.2% 9.3% 10%
3 E-mail 8.3% 11.5% -28%
4 Portals 4.4% 5.5% -19%
5 Instant Messaging 4.0% 4.7% -15%
6 Videos/Movies** 3.9% 3.5% 12%
7 Search 3.5% 3.4% 1%
8 Software Manufacturers 3.3% 3.3% 0%
9 Multi-category Entertainment 2.8% 3.0% -7%
10 Classifieds/Auctions 2.7% 2.7% -2%
Other (includes 74 categories) 34.3% 37.3% -8%

Facebook dominates the two largest categories – social networks and online games. Google has a more diversified traffic base – spread across e-mail, videos/movies, search, and others. And ironically (or intentionally), Google is also a major investor in Zynga. Facebook finds itself heavily reliant on gaming, and if Google+ makes real inroads in social network traffic, then this dependency makes Facebook even more vulnerable. 

All this leads me to a spectrum of scenarios for Google and Facebook, both ends of which are driven by the future of content and content consumption:

A) At one extreme, Facebook could become a website, not a platform, because it is a place you go to play games, not a pervasive cross-sector utility. Simply put, Facebook becomes too reliant on a single form of content from a small number of publishers. If Google maintains diversified traffic across all sectors while also grabbing social network market share, it then becomes the ultimate platform, generating ad revenue through embedded utilities which pervade the majority of all our online activities.

B) At the other extreme, social network traffic and game-based traffic could continue to grow and become the majority of all activity and content consumed online. Facebook maintains its lead in both sectors and doesn’t grow much in others, but it becomes the ultimate platform for publishers of the only content categories that really matter.

You could certainly argue that there’s a third scenario in which Facebook grabs more non-social, utilitarian traffic (like e-mail) and diversifies, but I think it’s easier for Google to go social than for Facebook to go serious given Facebook’s history, brand, and most common use cases. I just don’t see people trusting the context of Facebook with the kind of data and sensitive information people generate and share everyday within the context of products like Gmail, Google Analytics and Google Contacts.

In a world with diversified content consumption, the winning platform needs diverse relevance across traffic sectors (scenario A). In a world dominated by social networking and gaming, the winning platform need dominate only these categories (scenario B). Laid out on a spectrum, I find something closer to scenario A to be more likely. The fact that 34% of all web traffic is spread across 74 categories speaks to the diversity of our interests and the unlikely scenario in which a majority of traffic focuses on 2 sectors alone.

That said, obviously many things have to swing completely in Google’s favor for scenario A to play out in full. We love to paint the world in black and white, either-or terms as I have above, but the truth is that reality is usually more complicated, and it ends up somewhere in between. Over the next few years, it’s probably more likely that there will be enough consumer attention for everyone. After all, growth in global internet penetration and usage shows no signs of slowing, so we will likely see absolute growth in most sectors of web usage – including gaming.

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