Is G+ Putting Facebook On The Defensive?

Editor’s note: This guest post is written by Tom Anderson, the former President, founder and first friend on MySpace. You can now find Tom on FacebookTwitter, and Google+.

If it’s not obvious yet, Google+ is going to be able to “undercut” Facebook when it comes to game developers and platform transactions. Instead of taking a 30% cut of all Farmville seeds (or whatever people are buying), Google will be able to take a smaller percentage for themselves. They may even take nothing. And when it comes to “monetization” on the G+ “website,” Google’s trump card against Facebook is that we may never even see an ad on G+. Google has plenty to gain without ever showing an ad and, put simply, Google doesn’t need the money. Facebook’s got to know this, and it’s got to have them just a little bit concerned.

This week, the WSJ reported that FB is testing out a “real-time” feed (as opposed to Facebook’s current default “Top News” algorithm). Presumably this new feed would become the new norm for users. Though I’d like to think Facebook has been listening to me when I critique their Top News algorithm, what’s really moving Facebook’s hand here (according to the WSJ) are complaints by advertisers and app developers. It seems that the “Top News” stream is killing the virality of advertisers “content” and of apps that are trying to find new users.

If it’s true that FB is considering these changes because of complaining developers and advertisers, that’s a real bad sign for FB. Facebook has made some defensive moves since the launch of G+, which in itself is unusual for them. But this is the first indication they may kowtow to complaining third parties. (Hey, the IPO is coming… competition is heating up, it has to happen, right?) Making decisions informed by the concerns of these third-parties doesn’t automatically spell doom, of course. But Facebook has been so darn good for so long because of their refusal to IPO, their refusal to think about the short term, and their refusal to let one party’s needs overshadow the general health of the service. The tough thing for Facebook is that the larger you get, and the more competing interests you have to consider, the more difficult your choices become.

FB’s trouble may seem like a positive for G+, but it’s not that simple. It’s a virtual certainty that Google will launch a platform (and not just a games platform), but how they do this is critical. We don’t want a repeat of Facebook’s cycle—where FB promised the world to developers, gave them free reign to build the hype, then cut off their marketing channels and destroyed their businesses (an oversimplification yes, but read this harrowing tale from Paul Allen)—so G+ needs to carefully balance the needs of developers with the health of the overall community.

From what I can tell, the heads at G+ are aware of the delicate balance that’s needed here. Though they gaffed in the way they carried it out, Google’s decision to block business accounts indicates that Google understands they need a real plan here. Frankly, I’m surprised that no “regular users” have spoken up to say they don’t want brands on G+.  Maybe that’s just because 80% of the active users on G+ work in the “Internet industry” (at least according to my unscientific poll), and thus have something to gain by letting “businesses” into the service .  Would “regular users” be so happy about this? As Matt Hogan argues, it may not be the best idea to let businesses come in and muck up the place at the very beginning.

That said, what we may be seeing here is a general evolution of brand-user interaction to the point that users trust that it just can “work” (like Twitter, where you can follow brands, but they can’t really bug you).

Because of poor planning on my part, the regular-user / business relationship on MySpace was never quite right. Businesses wanted to be able to go around and add people on MySpace, and it was hard to tell them “no” because of they way MySpace evolved over time. Facebook was smart to make it impossible for “Pages” to add people & comment for the first few years. But they recently reversed that decision. Whether that turns out to be a good thing remains to be seen. (It’s an easier move to make for Facebook now when the “true” user base is already established, and Facebook has years of refining spam prevention algorithms under their belt.)

But whatever the case, both Google and Facebook have some tough decisions ahead of them: how do they balance what’s best for the regular guy (you & me), advertisers (big brands), small local businesses (who can never afford the big spend), platform developers with non-competing services (games & music, which it appears FB won’t get into) and platform developers with potentially competitive services (like business networking and dating, which FB/G+ may want to get into themselves someday).

Over the long haul (5-10 years), the company that makes the right choices in these areas may just end up winning.