Can anybody stop Facebook?

New crop of potential Facebook killers emerge, then Facebook starts buying them.


In the fast-paced world of social media, new companies burst onto the scene all the time and once-popular sites fade into oblivion. But amid the constant upheaval, the Big 3 – Facebook, LinkedIn and Twitter -- continue to dominate in their respective niches.

However, Facebook has clearly separated itself from everyone else in the world of social media. Facebook has 1.1 billion monthly active users and just reported quarterly revenue of $2.5 billion and profits of $642 million. LinkedIn, with 300 million users, just reported a $13.4 million quarterly net loss. And Twitter, which has been struggling because of stagnant user growth, has yet to turn a profit.

Three years ago, when Network World published a list of potential Facebook killers, the upstarts that we identified were Empire Avenue, Color (by Color Labs Inc.), foursquare, Hunch, and IMVU.

Today, if you made a similar list (excluding the previously mentioned LinkedIn and Twitter) you would have to include Google+, Pinterest, Tumblr, Snapchat, Instagram and WhatsApp. Of course, Facebook, not a company that sits idly by and watches competitors gain ground, went out and bought both Instagram and WhatsApp.

So, does anybody have a realistic chance of knocking Facebook off its perch?

According to Altimeter Group analyst Charlene Li, Facebook's biggest competition is coming from the companies it recently purchased -- Instagram and WhatsApp, which is why snapping them up was a smart move.

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Li defines competition in two ways: eyeball time and advertising dollars. Clearly, Instagram and WhatsApp are stealing user time away from Facebook, she notes, especially with the key younger demographics.

"But from an advertising perspective," says Li, "Facebook is still doing great because it has the most developed ecosystem for social channels. However, there are cracks showing, even on the advertising front, as established digital adverting favorites such as Google, Yahoo, YouTube continue to show better results (e.g., driving leads and sales) than Facebook. While most people don't look at the 'traditional' digital players as competition to Facebook, they absolutely are when it comes to marketing/advertising budgets."

Gartner analyst Brian Blau sees Google, Amazon, Twitter, and (to some degree) Snapchat as Facebook's biggest competition. He also cites other social networks such as Qzone or WeChat in China, and other consumer platforms that have broad ecosystems of consumer apps and services.

"Facebook relies on the connected nature of their social graph to power their business throughout the consumer market, and that means building on that social graph to connect people and businesses together," Blau says.

"There certainly are other social networks—but the others haven’t achieved the scale and diversity of the Facebook user-base. Their growth has three parts: users and business growth, advertising, and their developer platform; and only the biggest platforms can compete with Facebook on the breadth of their reach in consumer markets."

Yankee Group analyst Raúl Castañón-Martínez concurs that Facebook is the No.1 social network, but it competes with messaging apps that have morphed into 'social messaging' apps. The main competitors for Facebook, based on the number of active users, are WhatsApp (450 million), Line (350 million), and Wechat (270 million).

"However, there are other factors to consider when it comes to defining Facebook's competition," says Castañón-Martínez. "If you look at the regional level, companies such as Wechat, Nimbuzz, and KakaoTalk have a stronger presence than Facebook in China, India, Japan, and S. Korea, respectively."

"Companies such as Snapchat, WhatsApp, and Instagram do just one thing," adds Castañón-Martínez; "Facebook has, until now, aggregated a number of capabilities to compete, but is now looking at streamlining its app and favoring stand-alone apps."

This is evident in Facebook's messenger app, which is now a separate application, he notes. "Technically, this means Whatsapp and Instagram are competitors to Facebook's messenger," Castañón-Martínez says.

Facebook’s top competitors

  1. WhatsApp

First on the list is WhatsApp; located in Mountain View, Calif., and founded in 2009 by Brian Acton and CEO Jan Koum, former Yahoo! employees. However, on Feb. 19, Facebook purchased WhatsApp for $19 billion (in cash, Facebook shares, and restricted stock units). April 2014 numbers show WhatsApp with 450 million active users per month, 700 million photos shared per day, and 10 billion messages sent per day.

WhatsApp is a cross-platform, instant-messaging service for smartphones over the Internet. It also includes the option to send images, video, and audio media in addition to an integrated mapping feature that targets user locations. It's available on most all smartphones including Android, BlackBerry, Apple, Microsoft Windows Phone, and several others. Currently, the app is free to install, then users pay $.99 a year.

2. Pinterest

Second on the list is Pinterest with an estimated 150 million unique visitors monthly. Founded in March 2010 by Ben Silbermann, Evan Sharp, and Paul Sciarra, Pinterest says that it’s 'a tool for collecting and organizing things you love.' Basically, it's like an online scrapbook or bulletin board where users Pin or bookmark all the little things they find on the Internet such as images, news, food, recipes, fashion, and events, etc. that interests them.

Users can Pin or post these tidbits of collectibles to Boards, where they can organize and share them with family, friends, and colleagues. Like Facebook and Twitter, users can Follow other Pinterest members and/or use the service as a Group bulletin board to plan and organize schedules and events. And also like Facebook and Twitter, the site tracks your posts, and then makes suggestions for other, similar items that might interest you.

 3. Tumblr

Tumblr comes in third with an estimated 110 million unique monthly visitors. Headquartered in New York City, Tumblr was founded in February 2007 by David Karp, who is also the CEO. Tumblr defines itself as the site where members can 'effortlessly share anything,' such as 'text, photos, quotes, links, music, and videos' from laptops, desktops, tablets, phones, browsers, email, etc.; essentially any device, from anywhere. And, it can all be customized to each individual's particular preferences.

Tumblr says it has 182.8 million blogs, 83.1 billion posts, and 95.1 million daily posts in 13 languages. In addition to its billboard-style sharing with friends, family, and co-workers, Tumblr offers several marketing and advertising avenues to its members. The Sponsored Mobile Post is a full-screen of your content on other users' cell phones when they scroll through the Dashboard.

The Sponsored Web Post noted by Tumblr is the 'largest in-stream ad unit on the web' displays with members' favorite blog content. Sponsored Radar, considered the hottest spot on the Dashboard, is a static image/ad that appears on every member’s screen, and the Sponsored Spotlight is, basically, top billing in one of Tumblr's many categories (by member's choice, of course).

4. Instagram

Next on the list is Instagram with an estimated 85 million unique visitors per month, 200 million actives per month, and 20 billion shared photos (or, on average, 60 million per day). Founded by Kevin Systrom and Mike Krieger and launched in October 2010, Instagram was purchased by Facebook on in 2012 for approximately $1 billion in cash and stock shares.

Instagram is another photo- and video-sharing social network that allows its members to take pictures and videos, then post them online. The differences between Instagram and the other similar services is (1) the ability to apply digital filters to the photos and videos and (2) the option to share them on other social networks such as Facebook, Twitter, Tumblr, and Flickr. Photos are square (as opposed to traditional rectangular images displayed in either portrait or landscape format), which means users must crop them to fit the format or use the Instagram app service to make adjustments.

For videos, members can download the latest Instagram app; however, video recording is currently limited to the iPhone (3GS phone or newer devices that run iOS 5.0 or higher) and Android (4.0 or higher). Advertising is also an option on the drawing board.

5. Snapchat

Snapchat is a photo messaging app developed by Reggie Brown, Evan Spiegel, and Robert Murphy. It launched in July 2011 as 'Picaboo,' then later re-launched in September 2011 under the Snapchat name. The company has roughly 26 million users who send about 400 million snaps per day.

Basically, users sign up, download the app, then press a button in the center of the screen to record video or take a photo, press another button to add a caption or Story, then press another button to post. One of Snapchat's unique features is the option to set a time limit (1 to 10 seconds) on the deadline for the recipients to view the posts or Snaps; that is, photos, videos, drawings, and/or text. Once expired, the Snaps disappear from recipients' phones and the Snapchat servers.

Like the others, members create a Friends list with whom they share snaps. The app tracks usage and creates a Best Friends list that displays in a separate area above the regular Friends list. Best friends are determined by frequent communication and automatically updates weekly by the app. It's an incredibly simple application that anyone can understand.

2011 Facebook competitors, then & now

So, what happened to the five companies we identified in 2011 as possible competitors to Facebook?

1. Empire Avenue: Now a side street

This site is described as the people stock market, where people are priced and valued based on their interaction with other social networks. Members use virtual currency to buy and sell shares of other people and/or websites. Founded by Duleepa Wijayawardhana (aka Dups), Dr. Michael Mannion, and Niall Brown; in 2009. According to Tom Ohle, vice president of marketing/media relations, Empire Avenue is the first social media network run by members, for members.

Empire Ave is still around and announcing its next phase, which includes buying a $100 Empire Avenue Leaders Upgrade, a benefits package for 2,000 of its current (or new) members. The Leaders get to run the marketing, recruitment, and retention programs. Basically, for a small fee and a new title, members get to market and sell the website to friends and colleagues they hope to recruit.

Membership numbers and other statistics are unavailable and none of the 'Leaders' chose to respond to our requests for this data. In addition, Empire Avenue is not mentioned on any of the top 10, 20, or even 30 social networking statistical charts.

2. Color (by Color Labs Inc.): Paint it black

Color was a free iPhone and Android app that created an instant social network based on users location and proximity to others. The objective was to facilitate better relationships with neighbors and co-workers without the rigors of establishing permanent connections. Users could instantly share images, videos, and text conversations with others in proximity by capturing information as a group instead of an individual. Color was founded by Bill Nguyen and a team of engineers in 2010. The company and its website closed on June 1, 2013.

3. foursquare: Check out the changes

A location-based, mobile service that enabled participants to share their location with friends by checking-in via a smartphone app. It facilitated real-world experiences by allowing users to bookmark information about venues they want to visit, then provides customized recommendations. But the business model has changed. Now instead, the new app tracks the 'go-to' places for users searching for local info. Founded by Dennis Crowley and Naveen Selvadurai in March 2009, foursquare claims it's doing well. Crowley says that its revenues increased 500 percent in the first quarter of 2014 and 600 percent in 2013. Suggested revenues (although not confirmed by Crowley) have been estimated at $14 million for 2013 and $21 million for 2014, so far. So, still in business and still doing OK.

4. Hunch: Out to lunch

An app that maps people to their interests. It called this a 'taste graph,' which tracked everything that users liked and disliked. The site asked users a series of questions about specific topics, then allowed them to rate the answers. In a nutshell, Hunch customized its results by asking questions about who you are and then made recommendations for things that other users like you preferred. Founded by Caterina Fake (also co-founded Flickr) and Chris Dixon (site advisor founder and angel investor) in June 2009. eBay bought the innovative team and the technology of Hunch for $80 million in November 2011, then incorporated it into the eBay site. The Hunch website is no longer available.

5. IMVU: Hanging in there

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