The real power of Facebook lies in controlling connected identity

Today, there is a lot of talk about Facebook signing up a billion users – a staggeringly large number. However, the real value of Facebook comes from how it allows us to use our Facebook identity to sign-up for apps, e-commerce website and even gadgets.

In 2008, when Facebook introduced Facebook Connect, a way for folks to use their Facebook credentials to other websites and services, it was pretty obvious what Mark Zuckerberg’s long term goal was: controlling the identity infrastructure of the web. Once you do that, then you get access to all sorts of data and you are always relevant.

The mobile app revolution has only accelerated the adoption as more and more apps are using Facebook’s connected identity. And if there were any doubts, Mark lays them to rest in this interview with Businessweek (emphasis ours):

That way we can start to build interesting products like News Feed, or show who’s online for chat, or rank your friends so they’re in the right order for a search. But even when we were at half a billion people, you got these large-scale services like Skype or Netflix (NFLX) that also had big user bases. And we weren’t yet at the point where the majority of their users were Facebook users, so they couldn’t really rely on us as a piece of critical infrastructure for registration. A lot of startups did, but the bigger companies couldn’t. Now really everyone can start to rely on us as infrastructure. That’s a pretty big shift.
So for the next five or 10 years the question isn’t going to be, does Facebook get to 2 billion or 3 billion? I mean, that’s obviously one question. But the bigger question is, what services can get built now that every company can assume they can get access to knowing who everyone’s friends are? I think that’s going to be really transformative. We’ve already seen some of that in games and media, music, TV, video, that type of stuff. But I think there’s about to be a big push in commerce.

So what he is saying is that just like search is a core infrastructure service of the web, so is Facebook’s connected identity technology. And because they have more data, they’re going to be more valuable and will help new kinds of transactions – whether they are purely social or purely economical. That was essentially what I thought it would be back in 2008. Now let’s see if the future works out according to plan.