The second quarter of 2010 saw social networking companies wrestle with the next phase of their development as well as the fallout from the success they’ve had thus far. Facebook, Twitter and Apple all embarked on ambitious new drives to both expand their influence into new areas of web use and increase their monetization of it all. Those ambitions, in the context of their already rapidly increasing power, are fueling trepidation among users and industry members alike about the level of power they now wield.
The growth of the Internet’s most popular services at the hands of a relatively small circle of companies is provoking concerns about how open the Internet is and will remain, and how closed it is to proprietary systems and companies. Facebook and Twitter, meanwhile, are launching new innovations that will tie their services more deeply into the social fabric of the entire web.
As Internet users continued to embrace online social networks, they struggled increasingly with shifting norms of personal privacy and identity, reacting suspiciously when those shifts coincide with the business imperatives of social network providers. Federal regulators and legislators, in turn, are beginning to act on those concerns. Twitter hit an inflection point in the second quarter that signaled the next phase of its life: Its adoption of a bona fide business model began when it embraced advertising. And its shift toward adding more in-house functions prepared it to sever the umbilical cord to the independent developer community that helped Twitter get where it is today.
Meanwhile, the advance of location-based services, one of the hottest topics in the sector, seemed to pause tenuously in the quarter. Geolocation startups like Foursquare and Gowalla began to seem less like fun games and more like serious businesses, with serious subscriber bases and acquisition offers from big names. At the same time, Facebook has yet to enter this fray; its potential role is just one of the question marks hanging above geolocation services in the second quarter.