Many years and jobs ago when I was at BusinessWeek, I wrote about how the early Facebook was more Microsoft than Apple. While MySpace and later Twitter were about self-expression, music, celebrity, and cool, Facebook was built to be a utility. The new operating system of the Web as it used to be called.
Then when Facebook accepted an investment from Microsoft at a $15 billion valuation, Mark Zuckerberg and I had a conversation about how much he’d always admired Bill Gates. Not exactly what you heard from every entrepreneur in his young 20s in a Steve Jobs-obsessed world.
I’ve been thinking about that conversation a lot lately, because several people in the Valley are griping that that’s exactly what Zuckerberg has become — a latter-day Bill Gates for the Internet world.
Microsoft in its most powerful days was one of the most feared companies in the world. Because it had a lock on the operating system, it could wield monopoly-level power over which programs succeeded and which ones failed. It was known as a platform partner you couldn’t quite trust. It might give you massive distribution one day then cherry pick the best ideas and build a competing product to put you out of business the next. Above all, it wasn’t seen as an innovative company. But because of its lockbox control over desktops, it didn’t have to be.
Whenever I think about the popular demonization of Microsoft at its peak, I think of a skit on the Simpsons where Homer created an Internet company and Bill Gates showed up to “buy him out.” A gleeful Homer thought his ship had come in until Gates said, “Let’s buy ’em out boys,” and his goons trashed Homer’s would-be office. Some of Microsoft’s sins have been exaggerated, but that was the company’s reputation after the Netscape anti-trust trial.
There are only a handful of companies that would regularly go up against Microsoft and win — Intuit being an example that won on small business software time and time again. As recent as the early 2000s, Microsoft saying it was about to get into your market was enough to tank the stock. Just ask Intuit or Symantec or myriad of others.
The analogy isn’t quite fair or accurate, though. For one thing, it’s hard to point to a surging company that Facebook has outright tanked. No one controls the user’s computing experience as much as Microsoft did back then. Rather there are a handful of walled gardens we willingly lock ourselves into, including those made by Facebook, Google, and Apple. The gardens are walled, for sure, but they are also semi-permeable walls. While Facebook — and Google — have been called the “OS of the Web,” and Apple and Google control the OS of the mobile Web, there is no one single dominant operating system.
That said, there are reasons people draw the similarity, and it’s not just because Zuckerberg and Gates are both Harvard dropouts. It seems to me there are three pretty fair knocks on Facebook that hearken back to the Gates’ era of Microsoft.
The first is that Facebook hasn’t always been the best steward of an open platform. It has continually changed the rules of how its platform works, and while Facebook Connect is becoming a default way that people sign up for services on the Web, how many third party Facebook apps do you actually use, compared to Apple or Android apps? When Facebook first opened its platform, it hoped to give rise to several billion dollar companies. There’s been one: Zynga. And its stock is in the tank, partially because it relied on Facebook for so long and wasn’t aggressive enough about mobile.
Connected to that is the idea that Zuckerberg & Co. just aren’t leading the market anymore when it comes to features and products. It’s become an “if you can’t beat ’em, buy ’em” mentality, although there are plenty of attempts to beat companies first. This goes back to Facebook’s days as a private company. Remember when it adjusted feeds to be more FriendFeed-like before buying FriendFeed? Facebook also allowed status updates to be customized to be more Twitter-like and launched Places to combat the then-surging Foursquare.
Once going public, the practice became more egregious, or at least attracted more attention. Facebook was roundly panned for its SnapChat rip-off, Poke. It followed that up with adding hashtags and today has launched what many see as “The Instagram of Video,” something that startups had been trying to nail for more than a year, and which Twitter’s Vine has come closest to succeeding at. Sources have also said that during the negotiation with Instagram, Zuckerberg let it be known that Facebook was working on introducing photo filters as well.
The one time Facebook released something truly new was Home, and that’s largely failed to excite consumers. It may not be that Facebook doesn’t want to lead the market. It may have simply lost the mojo to know how.
Is all of this bad? Not really. Unlike Microsoft, Facebook isn’t engaging in anti-trust issues. It’s competing in the market given its reach, which it built fairly. What a sulky Silicon Valley developer may call a copycat could also be called a company living up to its fiduciary duties. Facebook’s edge is its reach to 1 billion people. It should use that strength to continue to dominate the consumer and mobile markets. If it weren’t, we’d be comparing it to Yahoo. While calling someone a current Bill Gates may not be a compliment, comparing a company to Yahoo is a put-up-your-dukes insult.
Indeed, MySpace failed, in part, because it couldn’t see how Facebook’s clean interface and innovations like the newsfeed made it a superior social network. Having benefitted from going up against an arrogant market leader who was blind to a surging up-and-comer, Zuckerberg has always been wise to pay attention to potential threats early and often.
That’s why Zuckerberg once tried to buy Twitter for some $500 million and paid $1 billion for Instagram, the two companies that have come closest to actually competing with Facebook. The former not happening may come back to haunt him. The latter happening has been widely lauded as one of his best moments as Facebook’s CEO, taking out a potential competitor, keeping Instagram out of the hands of Twitter, and solving Facebook’s mobile problem in one master stroke. Zuckerberg would be a fool to ignore these threats and not continue to tweak his product to do what users want social and mobile sites to do.
But what’s interesting is the narrative that the moves have started to take on, gaining steam when the company ripped off SnapChat to build Poke. Part of this is Facebook’s dominance. Nothing makes you a target like 1 billion users.
But part of it is a lack of trust in Facebook that continues to grow the bigger the company gets. At the D11 conference last month, Facebook’s Sheryl Sandberg was asked about the trust problem the company has, and rather than rebutting that it was an issue, she chose her words carefully, saying “I would say trust is one of the most important things we have to get right. When we get it wrong it’s a huge problem, and when we get it right it’s a huge opportunity.”
Increasingly it’s not just privacy-worried consumers who don’t trust Facebook. It’s Silicon Valley developers and entrepreneurs.