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Social networks vie for members, revenue

Tuesday, June 3, 2008 | 4:55 p.m. CDT; updated 11:00 p.m. CDT, Monday, July 21, 2008

Google’s announcement of a service to “make the Web more social” was decidedly casual, or staged to seem that way.

Standing beside a campfire, lawn chairs and toasted marshmallows, engineering director David Glazer explained how, through an agreement with Facebook and similar sites, Google’s effort would serve a primal human need.

“We all like huddling around fires and huddling around food and talking to each other — people are social,” Glazer told about 100 attendees gathered outside the company’s headquarters last month. “With ‘Friend Connect,’ we are trying to make that happen everywhere on the Web.”

Yet within three days of the campfire, a dispute erupted between Google and Facebook, its largest partner in the new service, that reflected the fact that for Web companies, there is nothing casual about the business of Internet socializing: There’s too much money, maybe billions, at stake.

Facebook, the burgeoning social network, abruptly withdrew its support for Google’s Friend Connect, meaning that none of Facebook’s members could sign in to Web sites using Google’s new service.

It was an embarrassing rift for both sides. Many view the ongoing standoff as a contest with far-reaching implications for Web socializing.

In the common social networks, people communicate, organize and socialize largely within sites — such as Facebook, MySpace or LinkedIn — but not outside of them. This model, referred to in geek parlance as the “walled garden,” ensures that social networking sites get immense traffic from members, and the revenue that comes with that.

Many in the industry are proposing a new model, however, in which every Web site will have a social aspect. In this scenario, there will be no need for a person to confine socializing to MySpace or Facebook. People could tap into their information — contacts and pictures — as they roam the Web. The social networking sites would function more like a utility, storing a person’s contacts, photographs and other tidbits.

“Social networking sites are at a major fork in the road,” said Bernard Lunn, a tech and media entrepreneur who writes for ReadWriteWeb, a blog that focuses on tech issues.

Although it’s uncertain what shape social networks will take, there is little doubt that they have become wildly popular and that their value has been the subject of high-stakes financial speculation.

In 2005, Rupert Murdoch’s News Corp. bought the company that owned MySpace for $580 million. Last year, Microsoft bought a 1.6 percent stake in Facebook for $240 million, a purchase that valued the three-and-half-year-old company at $15 billion.

But while there are millions willing to spend time updating their pictures and profile information on social network sites, there may be just as many wondering: What good are they?

Facebook founder Mark Zuckerberg has argued that his Web site makes human relationships more “efficient.”

He said in a speech last year that friends could communicate offline only if they paid attention to each other at the same time.

“There’s a better way to do this; and on Facebook, it’s simple. These people can read each other’s profiles any time they want to see new information about each other. They can look at each other’s media, and they can send each other messages. On Facebook, these real connections become more efficient. People get more value out of all their relationships.”

Even so, exactly how people will share their information across the Web, and which companies will benefit from it, remains uncertain.

Google’s Friend Connect would have allowed Facebook members to visit other Web sites using the service and, while there, tap into their Facebook friends list and other social information.

But shortly after the launch, Facebook officials asserted that Google hadn’t briefed them on Friend Connect. And having seen the service, they said, they discovered that it violated user privacy by passing user information to third parties.

“We had not had a chance to review how it worked before it launched,” Facebook’s chief privacy officer, Chris Kelly, said in an interview last week. But he declined to detail the company’s privacy concerns.

Google quickly offered an alternate version of the Facebook deadlock.

Glazer said that Facebook had been fully briefed on Friend Connect, before and after the announcement. Moreover, he noted, the only Facebook information that Friend Connect gives to a third-party site is the person’s public Facebook photograph, and that is done only after a user has logged in with his or her Facebook credentials.

Some observers suspect that Facebook cited “privacy concerns” as an excuse for pulling out of an agreement they had come to view as a competitive threat. They were concerned about their users leaving the walled garden.

“What Facebook is after really is control over their users,” said Chris Saad, co-founder of DataPortability.org, which advocates standards for sharing information.


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