Facebook Platform: Is There a Local Angle?

In case you’re not aware of it, Facebook made a significant announcement yesterday that it would open up its “platform” to third parties. I’ve done a fairly straightforward write-up of the news at SEL. Facebook claims to have 24 million users.

For purposes of this post the question is, is there a local angle to the Facebook Platform announcement? Indeed, there is.

In filling out your profile you’re asked to identify a “regional network” or location. Facebook already has a classifieds marketplace and a deal with Oodle tied to location. So there’s geographic awareness of where users are. Also, Facebook’s legacy is firmly local because it started as a closed social network for college students at specific universities.

On to the platform . . .

As mentioned, Oodle is one of Facebook’s partners, but is also part of the platform initiative. I ran into Oodle’s Craig Donato and Faith Sedlin, among others, at the event. Dogster/Catster was also there. Travel search engine SideStep is also a partner. As far as I could tell those were the only “local” partners, but there will be more. (SimplyHired and Platial were there in the crowd.)

Let’s say I was Citysearch or Yelp (I know that sounds redundant) or Outside.in or HotPads (real estate) or even SuperPages or YellowPages.com, I would build a Facebook application for potential exposure to its community. But it has to be done thoughtfully. This is very much a case of if you build it they won’t necessarily come.

The prize for doing it well is potentially rapid dissemination through the “social graph” (the Facebook community) via the viral features on the site.

There’s basically no reason for local sites not to try and build on top of Facebook, even though in many cases locally targeted applications cannot spread as rapidly as others through the network because they appeal to selected groups of users by definition.

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Now a few words about Facebook more generally and its potential “end game.”

Facebook reportedly turned down nearly a $1 billion offer from Yahoo!. Facebook says it wants to remain independent and many people believe it’s angling for an IPO. I don’t believe that the company will generate sufficient revenues in the near term to make it an attractive public offering. But I could be very wrong about that.

More likely in my mind is a bidding war in which Facebook is acquired by Google or Microsoft or potentially TimeWarner, though that’s much less likely. (IAC is also a potential bidder.) Presumably Yahoo! has bid as much as it’s going to bid for the site I imagine. However, among the big three search engines Yahoo! is probably the best fit.

Neither Google nor Microsoft really have social networks, despite claims to the contrary. Google was somewhat blindsided by the rise of MySpace, Orkut doesn’t count (unless something changes) and Microsoft’s Spaces isn’t convincing to me.

Microsoft’s VP for emerging business got on stage yesterday during the partner portion of the program. The minute that happened, I thought: “Here’s Microsoft’s next big acquisition.” I could be wrong of course but that was what came immediately into my brain.

From what might be described as a “meta” perspective, Facebook has made a brilliant strategic move in its new platform. Whether any individual third party benefits is another question, but Facebook will reap the benefits of related PR/buzz and increased valuation. There was the question of how Facebook would grow and it opened up the site to everyone. Then there was the question of how it would get larger and compete with MySpace. This is the answer.

I had never heard Facebook CEO Mark Zuckerberg speak before yesterday. The whole “F8” event was intended to emulate Apple or Microsoft and was designed for maximum PR value. It achieved its desired effect in that regard.

Zuckerberg struck me as very heavily identified with Facebook. And he clearly has an ego at this point. But he’s not the only one running the company. The board and investors would certainly take an offer if it were the right price: $2 billion is the number that has been floated.

Let’s check in again six months from now.