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R.I.P. Facebook?

Posted on 10.16.2013

Facebook is the world’s largest social network, with 1.15 billion monthly active users as of June 2013. Despite its popularity, the company continues to face challenges that have the potential to derail its success in the future.

Among these challenges is the fact that many consider Facebook a “walled garden”. In fact, Ian Lurie, founding CEO of Portent, compares Facebook’s walled garden business model to AOL’s. This is because most of the features that people really like about Facebook can only be used when members are actually logged into Facebook, much like the AOL platform during its peak – when users could access everything from weather to news upon logging into their accounts.

“If you look at AOL and what eventually killed it, it’s that people just wanted to get on the Internet and they didn’t want to do it inside of America Online,” said Lurie. “They wanted to use their own email client to send email, they wanted to chat on whatever site they wanted to chat on, they wanted to share photos using Flickr, or whatever other service they wanted to use, and they wanted to search using Google.”

Moreover, Lurie notes the Facebook API is too restrictive, stating that it is difficult to integrate the kind of communications functionality that Facebook offers into websites and applications.

“If they really wanted to open things up, they would provide a way for developers to take all of the different features of Facebook, like photosharing and everything else, and easily integrate it with their own websites,” said Lurie. “There are tools within the Facebook API that allow you do some of this, but it’s not easy and there are certain things where it just grinds to a halt and you can’t do it.”

Opening up the API would also allow developers to more tightly integrate Facebook into mobile apps. That said, Facebook’s business model and API aren’t the only places where the company has dropped the virtual ball. Lurie suggests the company should have (and still should) looked into turning the Facebook platform into an operating system. This would allow the platform to be embedded on a variety of devices, and in turn, would likely provide the kind of features and tools that consumers would enjoy using on a piece of hardware.

In addition to a restrictive business model, Facebook faces a variety of other challenges that threaten the company’s success in the long run. Perhaps a less expected challenge is the social network’s aging user base. For example, a 2012 report from Pingdom revealed that 65 percent of Facebook users are 35 or older, which is much different that the site’s initial user base of only college students. A user base full of adults, which includes moms and dads, has resulted in younger generations turning to other social networks, like Tumblr or Instagram, to connect with their friends. In order to succeed in the future, Facebook will have to regain its “cool” and find a way to bring young users back to its service.

Moreover, members of the social network may eventually get turned off by the company’s ever-changing privacy settings. In fact, earlier this month Facebook announced that it will no longer give members the option to not have their names appear in the search results. This, along with the fact that Facebook collects personal information from its members that it then allows advertisers leverage, could ultimately push people to other platforms. However, only time will tell where Facebook ends up in the grand scheme of things.

It is important to note, though, that just like AOL, a decline in popularity doesn’t mean that Facebook will cease to exist altogether – especially since the platform has such a vast audience. Instead, if the company continues to maintain a “closed garden”, many members will likely keep their accounts and simply disperse more of their time to other services around the Web.

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