As Facebook grows up, ambitions get reality check

REUTERS: Facebook, which once seemed poised to take over the Internet, is showing its limitations: A host of newer services are gaining ground among trendsetting youth; a much-hyped smartphone app has received a tepid response; and grand ambitions such as taking on Google in the search business seem ever more fanciful.

In a volatile Internet industry where companies can rise and fall almost overnight, one might even say that the nineyear-old Facebook Inc is suffering a midlife crisis.

Yet even if the social network falls short of its goal of becoming an all-encompassing Web destination that consumers turn to for everything from messaging to shopping, experts say Facebook has likely achieved enough scale and ubiquity to assure its staying power.

“They’ve gotten so big that it’s one of those things you have to use,” said Dan Niles, Chief Investment Officer of techfocused hedge fund firm AlphaOne Capital Partners, which does not have a Facebook position.

“You may not like the electricity company but I guarantee you you’re still getting electricity.”

Concerns that Facebook is losing its grip on consumers, underscored by a recent report from Pew Research that showed declining enthusiasm among some teens, have kept a lid on the company’s share price even as stock markets rallied.

With 1.11 billion users, a rich trove of data on those users’ interests and relationships, vast personal collections of photos and online identity profiles that serve as the log-in for many other services, Facebook faces little near-term risk that consumers will abandon it in large numbers.

Consumers spend significantly more time on Facebook than on competing online properties such as Google, Microsoft or Yahoo, according to Nielsen Media Research.

And the number of Facebook users who visit the site every day increased to 59.9 percent in the first quarter, compared to 58.3 percent in the fourth quarter.

“The newer, exciting stuff is coming from startups, but Facebook is really going to be the glue at the middle,” said Bill Lee, an entrepreneur who has started several Web companies.

For that reason, he said, Facebook is not going to “pull a MySpace,” referring to the one-time social networking leader that was bought by News before it all but collapsed when users lost interest and decamped to Facebook.

Death by a thousand snapchats?

Teens use Facebook more than any other social service, according to the Pew report.

But in focus groups that were part of the same study, many mentioned waning enthusiasm for the site, citing the increasing number of adults on the service and the flood of frivolous posts shared by friends. The most immediate threat to Facebook, analysts say, comes from a new crop of mobile apps designed for messaging and photo sharing that are attracting millions of users and threatening to siphon some of their time away from Facebook.

Japan’s Line has racked up 140 million users since launching two years ago, for example, while SnapChat, which allows users to send photos that disappear after a few seconds, said in December that 50 million photos are shared every day.

Facebook Chief Operating Officer Sheryl Sandberg dismissed the notion that teenagers were leaving for newer services. She noted during a recent talk at the AllThingsDigital conference that Facebook continued to grow even as other social