Tech Thoughts (August 22nd, 2011): Facebook Acquiring webOS is a Bad Idea
I’ve seen a few tech commentators offer perspectives about why they believe Facebook should purchase WebOS. I disagree with their assessment and think that a Facebook + webOS deal would lead to significant dilution.
The supporters of a Facebook + webOS deal fail to assess the implications of Facebook’s existing relations with other social networks. In turn, the miss out on how the adversarial relationship Facebook has with other social networks would limit support for Facebook /webOS platform. I’ll talk about the key competing social network first (twitter).
Why Twitter wouldn’t offer strong support to a Facebook mobile OS
Most people who access Facebook on their smart phones also access twitter on their smartphones. They typically use Twitter and Facebook for different purposes.
Twitter is primarily used on smartphones to:
- Update others on what the user is doing or feeling at the moment
- Receive updates regarding what their friends are doing / feeling at the moment
- Read critical news updates related to the users profession
Facebook is primarily used on smartphones to:
- Upload pictures taken with smartphones
- Add a person the user met on facebook if they are too shy to ask for a real phone number (for the singles population)
People typically access twitter more on their smartphones. There are valid reasons for this. Twitter use requires small transfers of data (for text to upload and download), the limited data transfer is perfect for smartphones. The Facebook experience is more image intensive (and hence data intensive). This makes using Facebook more enjoyable on personal computing devices with access to faster and more reliable online connections.
In short, twitter has the edge on smartphones. They also have no incentive to strengthen their key competitor (Facebook) by supporting a facebook mobile OS. They certainly wouldn’t want to share data with a facebook directly or indirectly. Some key things to consider here:
- Data transfer through a facebook mobile OS would improve Facebook’s social graph and increase the value of facebook’s targeted advertising. It would also weaken twitter’s value proposition to potential advertisers relative to Facebook.
- Users would most likely choose an iOS or Android based platform with strong twitter support over a facebook mobile OS with negligible twitter support.
Twitter’s reasons for not supporting a facebook mobile OS would hold true for other social networks. Given the choice between neglecting a facebook mobile OS versus supporting it, competing social networks have every strategic reason to neglect a potential Facebook mobile OS. This makes it difficult for a facebook mobile OS to gain market traction. They already have key app developers (social network apps) gunning against them.
Other reasons why a Facebook/webOS deal has dillutive effects
Facebook is banned in a lot of countries. It seems like a lot of tech analysts are stuck in a U.S. bubble. A Facebook mobile OS wouldn’t see the day of light in many places of the world. People can use VPNs and other methods to access Facebook even though it is banned on personal computers. If a country forbids wireless carriers from selling phones with a mobile OS, those phones are dead in the water.
So without going further, there are already two key impediments to a facebook mobile OS succeeding.
The Value of webOS - A neutral mobile OS (that is developer friendly and has a great UI)
The primary value of webOS stems from its potential source of mobile data on consumers. However, to obtain the full value from webOS, a potential acquirer must be as neutral as possible in order to gain support from other tech firms. Facebook competes on too many fronts with key third parties (any social networking company). Two acquirers that make more sense would be Google or Microsoft.
Google benefits from acquiring webOS on two fronts.
- Google gains intellectual property rights to protect itself from lawsuits
- Google kills off the only platform that could act as a competitor to Android on non-iOS based smartphones. If Google acquires webOS, they would have an effective monopoly on mobile OS systems that aren’t affiliated with Apple. Any aspirations Microsoft has of a prominent mobile OS would die immediately.
Microsoft can obtain the greatest amount of accretion from a potential transaction due to its neutrality:
Microsoft’s Social Network Neutrality
- A Microsoft Windows/webOS platform would be more neutral relative to Google’s Android, giving reason for social networking platforms to support it. Microsoft’s weakness in social networking makes it the strongest reason for other social networks to embrace Windows/webOS platform.
- Google has Google+, which makes Google a potential enemy to key third party social network app providers even though Google+ hasn’t gained substantial traction yet. Google+ isn’t as large a threat as a potential facebook mobile OS would be, but it is still a lingering threat to other social networks (twitter, foursquare, tumblr). Social networking companies would have incentive to see a Microsoft mobile OS succeed (or at the very least split the market with Android) given Google’s entrance into social networking with Google+).
Microsoft’s Smartphone Hardware Neutrality
- Microsoft doesn’t make smartphones for the time being. HTC, Samsung, LG could hedge their bets on a Microsoft/webOS system. It gives them leverage over Google. The possibility of cutting off Android in favor of Microsoft/webOS would keep Google in check.
Facebook would make a poor acquirer of webOS because it is insufficiently neutral. The best potential acquirer is either Google (for defensive purposes) or Microsoft (which has sufficient neutrality to maximize webOS and attack Android). Of course, HP also has the option of keeping webOS and releasing it for free. However, I’m not sure if HP has the relationships and influence necessary to push webOS as an Android alternative. I’m leaning towards webOS dying a slow death if HP doesn’t sell it soon. Now is the perfect time to sell webOS in an auction environment though, since major tech firms have large reserves of cash.