The Great Microsoft-Google Social Web Battle

By Clint Boulton

Developers get behind the OpenSocial Foundation and build applications that prove incredibly viral among Yahoo’s 500 million-plus users. OpenSocial becomes the most powerful social Web platform to date, fueled by applications for work and play.

Fed up by walled gardens and privacy issues, a quarter of Facebook’s users cancel their membership and join MySpace, Bebo (soon to be owned by AOL) or one of a dozen other social networks supporting OpenSocial, thanks to a flood of viral apps.

Microsoft buys Yahoo and joins OpenSocial in mid-2008, sparking celebration (and no shortage of nervous acceptance) as the vendors promise to unify the social Web. Microsoft works with the group to develop a plug-in that will let OpenSocial apps work on its Live platform.

Accustomed to controlling its own destiny, Microsoft pushes out Yahoo’s members in OpenSocial in favor of its own officials from the Live platform in early 2009. Google’s and Microsoft’s OpenSocial members clash.

Citing irreconcilable differences and emboldened by strong adoption of its Live platform and the rationalization of Yahoo’s assets, Microsoft exits OpenSocial and begins negotiations with Facebook in spring 2009.

With Yahoo’s assets fully integrated, and del.icio.us and Flickr humming along nicely, Microsoft goes for the killer blow–acquiring Facebook for $13 to $15 billion during the summer of ’09. Microsoft abandons the OpenSocial plug-in and entices users to join Facebook.

Desperate not to be lapped in the social Web arena, Google buys MySpace from News Corp. for a hefty premium toward the end of 2009. The stage is set for a platform war between OpenSocial and Facebook.

Microsoft uses the targeting and ad-serving capabilities in aQuantive to supercharge social ad monetization on Facebook. Facebook sports $500 million in revenues in the first full year under Microsoft.

By leveraging DoubleClick assets and strong video ad sales from YouTube, Google and MySpace together fight valiantly against Microsoft-Facebook, figuring out their own unique approach to targeted ads.

Concerned by protests over what consumers claim is an invasion of privacy, the U.S. government steps in in 2010 to regulate how Internet companies mine consumer data to target ads. Social ad revenue levels off under the revised rules, becoming just another vanilla revenue stream for both Google and Microsoft. The companies then step up competition in the cloud computing market.