Facebook, Still Dominant, Strives to Keep Cachet
Facebook, Still Dominant, Strives to Keep Cachet
By JENNA WORTHAM, VINDU GOEL and NICOLE PERLROTH
Published: November 17, 2013
When Evan Spiegel peered into a crystal ball to divine a
future for his company, Snapchat, he did not see Facebook.
He saw something else, something much bigger — a social
network that could exist on its own, outside Facebook.
Facebook is still the dominant social media service, and
has been an attractive suitor for many start-ups. And Snapchat most likely
spurned Facebook partly because it thought it could fetch much more than the
billions Facebook was willing to pay.
But the snub also foreshadows a possible future where
Facebook is no longer the default place on the web where people go to network.
The swift rise of upstarts like Snapchat in a shifting social media landscape
suggests a change in how and where people like to spend their time.
The rebuff also reveals a changing perception of Facebook
in the tech industry. As the once scrappy start-up evolves into a sprawling
corporation, younger companies who view themselves as disruptive do not find
Facebook’s size and cushy campus as appealing. Not to mention that a lot of
them are trying to provide alternatives to Facebook, which means selling to
Facebook would defeat their entire purpose.
Despite the site’s primacy in the social media market,
some numbers suggest that Facebook addiction has given way to Facebook fatigue,
at least among some users. A study by the Pew Internet and American Life
Project found that the majority of users have at one point or another taken a
multiweek break from the service, citing the tedium and irrelevancy of its
content. Among the crucial younger demographic — users ages 18 to 29 — that
first propelled Facebook into prominence, 38 percent said they expected to
spend less time using the site this year.
The survey confirmed what some at the company already
knew. In its latest quarterly call with investors, it said its youngest users
were spending less time on the service, although overall teenage engagement was
stable.
That fatigue may also have started to trickle down to the
developers who build apps on top of Facebook’s platform.
The company’s business depends on the working
relationships with those developers. In its early years, Facebook carefully
courted app developers like game makers, including Zynga. But it later changed
its rules to make it harder for apps to go viral. More recently, though, it has
been trying to lure developers back with more favorable terms.
At an invitation-only mobile developers conference at
Facebook on Thursday, the day after reports emerged that Snapchat had rejected
its offer, Facebook product managers pushed mobile developers to incorporate
the company’s new social features into their products, which would help it
spread its tendrils.
Facebook also pushed them to incorporate tools from
Parse, a start-up it acquired for a reported $85 million this year, which
provides back-end resources like analytics for mobile apps.
But some developers, who declined to be named because
they work with Facebook, said the pitch was unusually aggressive, especially
compared with a similar event for mobile developers at Google earlier in the
week, and made them less inclined to want to collaborate with Facebook.
Jonathan Thaw, a Facebook spokesman, said that the
company has mobile developer events regularly and that it had received very
positive feedback from people who attended this particular event.
For any company as large as Facebook, finding new sources
of growth is a challenge. Executives there have used acquisitions large and
small to help promote that growth. Being able to identify potential targets —
and acquire them quickly and affordably — is important for its continued
success.
Facebook has had a sharp eye for emerging companies that
have succeeded in areas it is eager to enter, like Instagram, the photo-sharing
app it bought in 2012 for about $1 billion after intense negotiations. The
service, which had 30 million users at the time, now has more than 150 million,
and this month, the first ads began appearing in users’ photo streams. In
addition, the two companies were a good fit.
Instagram is largely autonomous, but uses Facebook’s
resources and advertising expertise while helping its parent company understand
how photos and video are changing social networks.
“Facebook and Instagram are spiritual brothers,” said Sam
Altman, a tech entrepreneur. “They are motivated by the same things, and that
is why it worked out so well.”
Facebook’s recent $120 million purchase of the Israeli
mobile software company Onavo also fits squarely into its plans for the future.
Onavo gave Facebook important technology as well as vital information on how
competing apps are being used on iPhones and Android devices.
Other deals have not worked out so well, whether because
of a lack of simpatico or something else.
“The gap between the billion-dollar valuation companies
and the people who are trying to do something fresh and new is growing,” said
Frédéric della Faille, the founder of Frontback, an up-and-coming social
sharing application. “Money is not the only goal. Do you need an enormous
amount of money to be happy, or are you content to go along with the ride?”
Recently, Facebook failed to acquire Waze, a crowdsourced
mapping service for drivers that provides real-time traffic and route updates.
Discussions dragged on for weeks with little progress, according
to two people with knowledge of the talks who declined to be named because they
were not authorized to speak publicly about the matter. When an agreement that
gave Facebook exclusive negotiating rights expired, Google snatched up Waze for
about $1 billion.
As for Snapchat, its compatibility with Facebook is
unclear. Snapchat is centered on impermanence and offers privacy and anonymity.
Facebook constantly pushes users to share more and is rooted in real-world
identities and creating a permanent, largely public record of people’s daily
lives and interactions.
Given these differences, the Snapchat bid looks like an
attempt to corral back some of the cool factor in the form of young eyeballs.
Three years ago, Snapchat did not even exist, and Facebook, with a valuation of
$100 billion before its public offering, was the hot company. Now with younger
users preferring Snapchat — which says it processes nearly as many photos as
Facebook each day — Snapchat may well have the upper hand.
“It’s head-scratching,” said Christopher Poole, 25, the
founder of 4chan, the message board. “From a business perspective, I understand
it. But from a cultural perspective, it’s like, ‘Wait, what?’ ”
Mr. Poole said Facebook’s aggressive pursuit of Snapchat
may point to an identity crisis of sorts.
“Does that mean that they’re willing to embrace an
alternative to Facebook identity, or does it mean that they feel that
threatened by it that they’d leave their own wheelhouse?”
A version of this article appears in print on November
18, 2013, on page B2 of the New York edition with the headline: Facebook, Still
Dominant, Strives to Keep Cachet.
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