THE SOCIAL WEB

A Special Report

The Social Era of the Web Starts Now

AND A BIG, COMPLICATED CLASH WILL DETERMINE WHETHER GOOGLE OR

FACEBOOK DOMINATES IT

Not long after, people started connecting them together on networks, culminating in the World Wide Web and the Web browser, which launched the first great era of the Web. Then came the search engine, which launched the second great era of the Web, the era of Google. Now comes the third: the era of social networks. Facebook has jumped out to a commanding lead, but Google hasnt really started fighting yet. So the stage is set for a battle of, well, bibliby JOH N R EN N I E cal proportions. The wizards & GLEN N ZOR PETT E at the Googleplex in Mountain View, Calif., are working furiously on a social network to rival Facebooks. Just a few miles away, in Palo Alto, Facebook is preparing for an initial public offering to give it the money it needs to take on Googles Goliath. And last month, the clash got a bit ugly when it was revealed that Facebook had hired a public relations agency to slime Googles social networking tactics.
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$175 billion
Google

$65 billion
Facebook

$8 billion
Zynga

M A R K ET VA LUAT IONS Q1 2011, US $

We are about to witness the next great conflict of the information age, a rich and complicated match on the scale of mainframes vs. micros, RISC vs. CISC, Windows vs. Unix. Like those battles, Google-Facebook will shape the industrys landscape for years to come. The Web has had a social dimension almost from the start. It just took a while for the right software to come along and make it compelling. Were now seeing a Web built around people, where their profiles and content are moving with them as they visit different websites, notes Paul Adams, who made his mark as a user-experience researcher at Google before jumping recently to Facebook. Socializing is something that people used to do on the Web; gradually it is becoming the Web. During the first quarter of 2011, the set of 12 social media companies tracked by the Rye Brook, N.Y.based private equity advisor NYPPEX rose in value by 51 percent. One of those companies, the Facebook game maker Zynga,
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THE SOCIAL WEB

A Special Report

increased by 81 percent. Ken Rutkowski, the founder of the Media, Entertainment and Technology Alliance, predicts that credits purchased and exchanged in its online games will make Facebook the worlds biggest bank by 2015. None of that has been lost on Google. Yes, it flopped with Buzz, Orkut, and Wave. But Google finds itself in a position like that of IBM in the early 1980s, when IBMs core mainframe business was threatened by what were then called microcomputers. Like IBM 30 years ago, Google has seemingly inexhaustible resources and an implacable determination to stay on top. And so it will try again in the social sphere, and keep trying until it succeeds. Yet Googles opening salvo, on 31 March, was so small that it slipped by with little fanfare. Still chastened by the Buzz fiasco, apparently, Google is calling its modest new initiative an experiment for now. Officially known as +1, its a button that pops up next to search results and ads. You click on the button to recommend pages or ads to your friends and contacts. Yes, its basically the Facebook like button but without all the other stuff you need to call yourself a social network. But Googles not done. Think of +1 as an acorn. The oak tree will come later, when Google thinks were ready for it. In the meantime, Google says that it will use the button to help determine a pages relevance and ranking in its search resultsthe more +1 clicks a page gets, the more significant and interesting Googles servers will deem the page to be. Theres a kind of insidious brilliance about +1, because every time you hit that button Google learns a little bit more about you, letting the company target you a bit more effectively with search results. And with ads, too. Thats important, because ads are what makes this cockeyed caravan go. Google and Facebook have the same basic model: Offer the services free and charge for advertising. And, as any adman will tell you, the more popular your service, the more money you can get for ad space. Thats why Google and Facebook are vying to be the de facto home for Web users. Nearly all of Googles and Facebooks revenues come from advertising. Google posted US $29.3 billion in revenue in 2010. A recent report said that privately held Facebook generated about
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$2 billion in revenue last year, which places its size on a par with that of Google when Google was also just six years old. What Google and Facebook have that old media dont is information about youdata that they collect and process with a barrage of advanced technologies, software, and math to wring money out of you with far greater efficiency. They do that by using the information to target you with ads that can be so specific and relentless that they seem a little creepy at times. Use Googles Chrome browser to search for a fruit-flavored green tea and you will probably find yourself hounded for days or weeks by ads from tea sellers that pop up to the side of other pages that Google points you to. Writing the code that does that is how some of the greatest mathematical minds of the current generation make their living these days.
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THIS PAGE AND FIRST PAGE: PHOTO: DAN SAELINGER; STYLING: LAURIE RAAB/HALLEY RESOURCES; HAIR & MAKEUP: JENNIFER BRENT/BEAUTYWING NY

Thats Googles edge: It is in the enviable position of benefiting from having users online in almost every way (but it greatly prefers to keep them at sites available to its scrutiny through the Chrome browser and Android apps). Facebook, on the other hand, can learn about people and profit from them only when theyre on the site (a fact that helps explain Mark Zuckerbergs fervent desire that we all just get over our archaic notions about privacy). So now Facebooks triumph is emboldening the network to take on more and more services in the interest of keeping users within its walls. Here, Facebook has two potent weapons: crowdsourcing and games. Googles success at collecting information and driving commerce has created incentives for sites to manipulate the system with search-engine optimization tricks that artificially elevate their ranks in search results. Distorted search results are in turn prompting frustrated Web surfers to crowdsource their questions to trusted branches of their social networks. The idea is that your friends and relations can steer you toward a good answer much more reliably than Googles immensely powerful but compromised data centers. Here, too, Google isnt sitting still, but you already knew that. Improved search is part of the rationale for the +1 feature, which allows users to elevate their favorite search results in queries from their friends. Facebook has also made extremely successful use of online games to keep people within its domain. There are scores of Facebook games, but just twoZyngas CityVille and FarmVilleaccount for 140 million of the 250 million people who play social games every month. Nobody doubts that some of the fiercest battles for online revenues will occur in the arena of gaming. And as our contributor David Kushner notes, these new social diversions are nothing like the action-heavy console games that have been the industrys mainstay [see Betting the Farm on Games]. As improbable as it might seem now, Google and Facebook could yet lose their grip on the new social Web. They will thrive only as long as online ad revenue flows, and that flow can be maddeningly fickle and elusive [see The Revolution Will Not Be Monetized]. Their snooping may even backfire. Some users have already decided that they would rather not blindly trust their social networking and Web-search history to anyone. So four young techies in San Francisco have found a niche and are trying to fill it with a different kind of social network, called Diaspora. Weve got the inside story on the ups and downs of life at the tech start-up of the moment [see The Anti-Facebook]. Google and Facebook, meanwhile, are grappling with a rather different sort of engineering problem: how to build data centers that push the boundaries of whats possible now, to keep up with epic demands for processing power, data storage, and more [see Under the Hood at Google and Facebook]. Were just starting to see other technologies that let people interact with their machines more intuitively and effortlessly.
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Theyll help lower the barriers to natural interactions and updates across the Web [see 5 Technologies That Will Shape the Web]. The inevitable culmination of these developments, say a couple of prominent social-media tech researchers, will be digital avatars that do your bidding onlineand are thinner and funnier and better looking than you, too. Avatars are a staple of current sci-fi, and theyll soon be a part of your online social world, according to Jeremy N. Bailenson and Jim Blascovich [see This is Your Mind Online]. Technology will also give us a whole new concept of mobility. Just as GPS units in phones make it possible for people to spontaneously advertise their coordinates at all times, new kinds of sensors linked to the Web and embedded in clothes, buildings, vehicles, and other common objects will be able to convey ongoing updates about your every action. People will need to do less and less in the future to loose a torrent of data about themselves and their ongoing activities onto the Web. Theres a downside, and its a doozy. A system for tracking everyones actions sounds even more intrusive than the telescreens of George Orwells 1984. But in capitalist democracies, at least, the more immediate worries are that corporate marketing could gain major advantages from knowing so much about us, and that minor lapses or, as they say, youthful indiscretions could wind up wrecking some peoples lives and careers [see Welcome to the Surveillance Society and Me, Myself, or I]. Of course, privacy means different things in different places. The 457 million Chinese who use the Internet have seized avidly on social media, making Sina Weibo, Chinas homegrown microblogging service, one of the fastest-growing utilities in Web history. Sina Weibos success has protected it so far from Chinese officials who fear its reach and influence. If services like Sina Weibo can survive long enough, they may provoke significant cultural if not political changes [see Chinas Social Networking Problem]. Google and Facebook are both counting on human creativity to drive their future success. So they are fostering lavish workplace cultureswith beautiful campuses, gourmet food, and at Google, conveniently located dog-poop disposal stations. (Really.) You may be surprised (we sure were) by what it takes to lure, pamper, and retain a top techie these days [see Campus Life and Food Fight]. The social networks that will come out of these brainy hothouses will undoubtedly have surprising cultural consequences. Life support excepted, the most fundamental human need is companionship. And so humankind has turned its newest technologiescomputers, networks, mobile gizmos, and softwareto one of its oldest and most basic requirements. A new and interesting chapter has begun. Youll like it, although there are bound to be a few scary parts. We cant tell you how the chapter will turn out. But when youve read our report, at least youll know what to fear and what to hope for. o With additional reporting by Julie Pitta
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