"They made this very ballsy decision to transform themselves from a place where everyone came to—a destination—into a service that lets me take my information everywhere," says Sam Altman, chief executive of Loopt, a location services company that works with Facebook.
Facebook colors this as a win-win for the sites with which it works. By giving sites such as The Times of India and TVGuide.com access to Facebook's graph of friends, it allows them to draw in new traffic and easily acquire new users. When movie review site Rotten Tomatoes integrated with Facebook, the number of reviews on the site doubled. Facebook, of course, benefits too. By implanting its links and cornflower-blue F logo on millions of pages, the company is enmeshing itself deeper into the fabric of the Web, one site at a time.
B.J. Fogg is a researcher at Stanford University who studies how machines influence human behavior. In 2007 he began teaching classes about Facebook at Stanford, a matter of miles from the company's offices. "It was pretty apparent to me, even before they had half a billion people onboard, that they were in a position to win the game," he told me. "Now that they have their tentacles in many millions of Websites, it will be really hard for them to ever go away."
It can be tempting to write off Zuckerberg as an overzealous youth too excited with his own ideas. In the six years since its founding, however, Facebook has already reshaped at least two industries online. The first was photos. By 2004, when Facebook arrived, online photos were nothing new. The digital photography revolution was in full swing. Film was on its way out, and sites like Snapfish and Shutterfly were processing millions of snapshots. Flickr, founded the same year as Facebook, quickly became a popular venue to share photos, and was soon acquired by Yahoo. But as Facebook expanded it surpassed Flickr as the largest photo-sharing site on the Web. By February this year, more than 3 billion photos were being uploaded to the site each month. Though the company has made little effort to make any money from its photos service, it has invested heavily in it, designing new software and building data centers to cope with this torrent of data.
What made Facebook the largest photo site on the Web was not simply its enormous user base—it was the ability to "tag" people in a photo, or link that photo back to their profile. In this way, you don't have to look through all of your Aunt Gertrude's holiday pictures; you can just quickly see the ones she appears in. "The takeaway from that is that the social features are really the killer part of this," Zuckerberg told me. "Having good social integration is more important than high-res photos."
More recently, Facebook has upended the video-game industry. In 2007, it began allowing outside companies to build simple applications and games that run on Facebook.com. Games proved the most popular, and lucrative, too. The largest of the social-gaming companies, Zynga, will reportedly take in revenues in excess of $600 million this year. Playfish, one of the largest social-gaming companies, was bought by Electronic Arts, the second-largest video-games company, for up to $400 million in 2009. And earlier this year, Playdom, another social-games company, was acquired by Disney for up to $735 million. Today, upward of 200 million people play games on Facebook, more than on the Xbox 360, PlayStation 3, and Wii combined.
This change in behavior points to the key reasons for Facebook's success, according to Sam Altman. Whether it be in photos, games or location, users tend to be more engaged if their friends are involved. "In the past three months there's been this massive change in terms of acceptance of Log In with Facebook," Altman said. "We've gone from something most of my friends didn't use, to something most of them use several times a day on the Web. That is what has made people realize how much value there is with Facebook."
This more personalized world is already appearing online. Among the bevy of features Facebook introduced in April was Instant Personalization. It's a wonky term for an intuitive, if somewhat creepy, feature: if a user is logged in to Facebook and then goes to a handful of other sites, such as Internet radio Pandora or the local reviews site Yelp, the user is automatically logged in to those sites as well, which are customized to promote content relevant to a user and his or her friends.
Even Instant Personalization, however, is a "light" integration. "This is really just the early stage," Zuckerberg told me, after the Deals launch. It's a big change for the Web. For the past 15 years we've all had the same experience when we went to a Web site. That is over now. If Zuckerberg is to be believed, we are rapidly moving from a world where the Web doesn't know who you are, to a world where the Web knows exactly who you are.
"What we're imagining is very different," says Chris Cox, who dropped out of Stanford to join the company in 2005 and is now one of Zuckerberg's closest lieutenants. "If you imagine a television designed around social, you turn it on and it says, 'Thirteen of your friends like Entourage. Press play. Your dad recorded 60 Minutes. Press play.'" In other words, the world will be experienced through the filter of one's Facebook friends.
Zuckerberg points to companies such as Zynga (built on Facebook's Platform) and Quora (a question and answer service founded by former Facebook employees, which relies almost exclusively on Facebook for users) as examples of companies building around social "from the ground up." "The real disruption is going to come from people who are rethinking these spaces," he said.
This is a sly piece of semantics. Zuckerberg and other Facebook executives talk about the importance of building new companies and services around "friends" and of being "social." But seeing as Facebook alone is the keeper of the most comprehensive social graph on earth, what they really mean is building new companies and services around Facebook. And while this may sound hubristic, it reflects Zuckerberg's belief that Facebook's map of human relationships is among the most important developments in business history. "That, I think, is the strongest product element we have," he said. "And [most] likely one of the strongest product elements that ever has existed."
Not everyone is onboard with Zuckerberg's mission. Users have revolted against many of the changes Facebook has made this year, calling for more control over their own information. Privacy advocates and regulators, too, are demanding that the company proceed cautiously as it grows.
There are also concerns that by encouraging users to share more information about themselves online, Facebook is changing the very nature of privacy. Zuckerberg acknowledged these shifting mores in an interview earlier this year. "People have really gotten comfortable not only sharing more information, and different kinds, but more openly and with more people," he said. "That social norm is just something that has evolved over time."
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