Google and Facebook Wednesday, 31. October 2012

I'd like to dissect the Digital Backyards question of "What are European Alternatives to Google & Facebook?" a bit, to make sure we know what we are talking about.

I'm writing this because I attended the conference two weeks ago, presenting lflux, and there is now an open mailing list for people interested in this issue. It's a braindump-turned-essay and by no means exhaustive. Its purpose is to serve as a potential frame for the discussion.

I'll be talking about

  1. what we mean when we talk about "european"
  2. what people actually mean when they talk about Google and Facebook
  3. infrastructure and monopolies
  4. more worthwhile goals than "european"

1 European Alternatives

For the sake of the argument, I'll constrain "European" to EU countries only.

1.1 What does it mean to be European in this case?

The knee-jerk answer to this is one based on territory: a service hosted in Europe, created by a company founded and incorporated in an european country, which is bound by european laws.

Other interpretations are possible, but thinking about their implications allows us to quickly rule them out:

Let's stick with our knee-jerk answer for the sake of the discussion.

1.2 What are the upsides of being European?

The most-cited upside in the public discourse is the fact that the company is bound by european laws, especially those concerned with the protection of privacy. Being able to assume basic familiarity and compliance with local "customs" (business norms like proper invoicing, imprints, but also cultural norms) can be a significant factor for user adoption, especially with people who have not grown up on the internet and have a healthy scepticism of services.

1.3 What are the downsides of being European?

1.4 Examples of "local alternative" services

In the early days of the internet, search engines for many niche markets popped up. Search engines restricted to small countries lived next to those indexing the whole web.

Nowadays, there is still market for niche products, but apparently less prominently.

The popular US-based services have a worldwide following, but local "clones" which are sometimes better-adapted to or entrenched in the local culture can still hold their own or even dominate certain markets. China, Japan, Russia and many other countries are dominated by this kind of service.

For social networks there apparently exists a certain fragmentation even inside a country along age groups.

2 Google and Facebook: the phrase

"Google and Facebook" has become a phrase often uttered in discussions about online life. What do people mean when using it?

2.1 Similarities

Google and Facebook are both online startup companies which became succesful after the first (and, so far, only) dotcom bust. They have multiple thousands of employees. They are based in the US, in the Silicon Valley, but have subsidiaries and offices all around the globe, including Europe.

They are largely engineering-driven and generate a large revenue from advertising. They reached the critical audience enabling an advertising-driven business model via the typical Silicon Valley route of using Venture Capital.

Their users regard their services as free, since they're mostly cross-financed by advertising.

2.2 Dissimilarities: Products

The big difference between the companies is that Facebook is Facebook, while Google is a lot of things.

Google has a huge diversity of Products, some better known than others.

In this discussion, many assume we're only talking about Google Search and the associated advertising business, since this is where Google has the largest monopoly. It's often passed over that Google also owns YouTube, the internets' biggest video sharing site; Google Analytics, the most-used website analysis tool; or that a significant percentage of all e-mail worldwide is routed via Googles' mail servers, either visibly via their own domains (gmail.com) or via Google's "Apps for your Domain" product.

2.3 Forgotten Competitors

While "Google and Facebook" both has a certain ring to it and mentions two of the largest internet companies out there, people often refer to the ecosystem the companies represent when using that phrase.

The search market is split between Google, Yahoo, Baidu, Bing and some other engines, with Google possessing a market share around 85%.

The free email market, while being based on an open system, is also split between Google, Yahoo, Microsoft (Hotmail) and AOL (in no particular order).

The market for social networks is inhabited by a huge ecosystem of products with a huge variety of interaction models, restrictions and centered on different types of content. Twitter is also an example for a wide-spread social network for which multiple generations of supposed alternatives have been launched and forgotten by the lion's share of the internet.

This of course is just the global perspective and there are many examples from all around the world where "small" services might dominate a complete market, e.g. Orkut in Brazil or Yandex in Russia.

3 Infrastructure and Monopolies

Google and Facebook now control infrastructure used for communicating both publicly and privately by many. When many people rely on a system in their daily lives (and anecdotal evidence suggests at least some do. Hello hungarian students who prefer Facebook over Email!), systems can be considered, to borrow a banking term, too big to fail. Too big to fail systems are often natural monopolies and should be regulated as such.

This has been done before: Microsoft was forced to open up internal documentation to ensure interoperable alternatives to their products could be built.

4 More Worthwhile Goals

I think, rather than asking for European Alternatives, we should ask for "better" alternatives and not care where they are developed. And there are many areas where we can innovate.

As mentioned earlier, better handling of privacy issues can be one useful feature to compete with established players. Related options could be encrypting communication by default. This makes a product more complicated and less interesting to advertisers, since the hoster cannot access data and target adverts to users. One issue on which the new social network app.net is competing on is the fact that everything is cross-financed by advertising. They ask their users to pay an annual fee in exchange for not placing advertising and tracking on their site.

There are also obvious downsides to one company having control over everything, many stemming from the fact that this introduces a single point of failure. These can be reduced, but not eliminated, by introducing and supporting competition that uses the same basic structures.

They can also be circumvented by using a distributed system design and open standards.

However, this introduces more issues: * usability: distributed systems are harder to design, both from a software and an user interface standpoint * sustainability: distributed, open systems are notoriously hard to to make money from. * critical mass: any social service, to be useful for enough people, has to already include many people. this creates a chicken/egg problem.

Additionally, even if a system is distributed and open - like email - there's still a tendency for most users to use major players' services.

As always, it's important that we don't want to force people to use a platform. Thus, the principle of "Make something people want" (Y Combinator) should always be the priority.

Thanks to Michael Renner for criticism and additional input.