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http://www.businessweek.com/technology/has-facebook-become-a-social-utility-11292011.html
Gigaom

Has Facebook Become a Social Utility?


There has been a lot of sound and fury lately about Facebook’s initial public offering, with the Wall Street Journal saying the social network is expected to launch its IPO as soon as next spring. The issue could give Facebook a market value of $100 billion. Not only would this be the largest technology IPO in U.S. history, but if the Journal‘s numbers are correct, it would give the company a market value comparable to that of General Electric (GE). That would reinforce something that has already started to become clear: Facebook—for better or worse—has become a social utility, the social Web’s equivalent of a power company.

A Facebook IPO isn’t a done deal yet. As reports make clear, the current state of the stock market and the pummeling some other technology issues such as Groupon (GRPN) have received (the e-mail-marketing service is currently down 42 percent from its issue price) could cause the social network to postpone its offering. Although the company must soon begin filing its financial results with securities regulators because it has crossed the magic 500-shareholder mark, that doesn’t necessarily mean it will go public. Some have argued that Facebook may never do an IPO because it seems to have no problem raising billions in the private markets.

Whether or not Facebook goes public is beside the point. Whatever the company’s market value—from $60 billion to $100 billion—it has become a central part of people’s lives in a way that would have seemed almost unimaginable a few years ago, when Facebook was still seen as a plaything for university students, or a place to put photos.

That was before Zynga showed that Facebook could be a massive cash generator for social games. (Zynga is also heading toward a public offering soon.) It was before websites of all kinds saw how much traffic and engagement they could generate by implementing the network’s “Facebook Connect” and open-graph plug-ins to add “like” buttons and other features. More than 7 million apps and websites use those plug-ins now.

Annual Ad Revenue Nearing $4 Billion

The numbers behind Facebook are still mind-boggling when you step back to look: If it keeps up its current rate of growth (there’s no obvious reason why it shouldn’t), the social network could have a billion active users within months. According to some estimates, it will soon have more than 16 percent of the display advertising market—a number that’s also growing rapidly—and will likely generate ad revenue close to $4 billion this year alone. That’s just one of the reasons why Google (GOOG) is so determined to develop its Google+ network as a competitor.

Although the growth of Zynga and social games is interesting, that’s really just the precursor to a much bigger story: the integration between Facebook and a host of other services that potentially carry much broader implications. Already there are some apps—such as the music-sharing app Spotify—that will not work without a Facebook account. If you are determined not to belong to the social network, you can’t use these services at all. This may not be a big deal yet, but imagine when other, more important services are also tightly integrated with a Facebook account

Media companies such as the Washington Post and the Guardian, among others, have also integrated themselves into the social network in a fairly aggressive way: Instead of just using Facebook’s open-graph plug-ins to show users’ social relationships when they are at the newspapers’ websites, they have created “frictionless sharing” apps that allow Facebook users to read and share their articles without ever leaving the network. That has benefits for the Post and Guardian in terms of engagement, but it also cements Facebook’s status as the default social destination and default social platform.

Expecting More From a Utility

So what might happen when Facebook becomes a social utility? Governments will start trying to regulate the network in the same way they would a telecom company or electricity provider—as the European Union and other jurisdictions are doing, particularly when it comes to privacy rules. The policies of that utility will become a lot more important than when it was just a simple service used by a few million university students.

That’s one reason why Facebook’s “real name” policy has caused so much controversy (which spilled over onto Google when that company took the same approach with Google+). Requiring real names is fine when you are just one of many social services and you want to cut down on trolling and other bad behavior. What happens when your policy makes it impossible—or at the very least, dangerous—for dissidents in Egypt, China, or other totalitarian states to use your platform for social good? The implications are profound. It’s not clear that Facebook has thought them through as much as it should have done.

Facebook Chief Operating Officer Sheryl Sandberg wrote recently in the Economist that we are approaching a future in which your online identity will merge with what she called your “authentic identity,” something co-founder and Chief Executive Officer Mark Zuckerberg has also argued is a natural evolution. It’s obvious that Facebook sees this as a good thing. Is it? Those are the kinds of questions we will have to face now that the company has become the GE of our social age. The answers are far from obvious.

Also from GigaOM:

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