Mobile is the Future of Social Networking

The biggest threat to Facebook isn’t another web-based social network but one built on smartphones. Phones contain all the relevant data for a social network, but that data has been locked in the device. As smartphones gain wider adoption and apps begin to mature, we’ll increasingly be able to surface this data. More powerful messaging apps, like WhatsApp, are already leading the way.

I see Facebook as having a core competitive advantage but being unable to directly charge for it. They have the most accurate real life social graph, and they leverage it for complementary services. Want to throw a party? Invite them with Facebook because they have the most accurate contact list and everyone is just a click away. In other words, an invitation site benefits immensely from being able to reference the identity of a user’s friends. Facebook has a huge advantage for any communication that benefits from accurate identity. They can’t charge for access because another social network will step in to offer the same services for free. Instead, Facebook has to make money indirectly through advertising and credits. Part of that strategy is getting users to share as much as possible including sharing almost all the actions for a user. Some users will leave Facebook as a result. A small number of users leaving isn’t necessarily a problem, but the best social graph is one that’s ubiquitous. If another solution exists that has the potential to not alienate even a small base, I believe that solution will eventually win.

Smartphones are currently at a disadvantage. There isn’t a centralized database of accurate identities, adding contacts to every new phone is a pain, and status updates don’t exist because the communication medium can only push out data. All of these issues are solvable as long as users are willing to use new solutions, and the apps will be created to implement these solutions. Users are already using group messaging services because SMS communication is both expensive and a worse user experience. They have also shown a willingness to pay for these services. Once these apps get wider adoption, the app creators will realize they basically have the user’s social graph.

Facebook will still exist. The only question is if they will be a ubiquitous social platform or one of many outlets. I am also referring to Facebook as they exist today since they do have the potential to become the described mobile platform. Their acquisition of Beluga and launch of Facebook Messenger could be a precursor.