Web 2.0: End of Innocence

David Galbraith, a good friend of mine, is not a man of extremes. Polite to a fault, he uses logic to make his arguments. Today, in response to our My Maps post, he wrote a stinging piece, The Day Web 2.0 Died. Hyperbole? I don’t think so, though I would like to make his case, while opting for a milder headline.

tiedyedshirt.pngThe Web 2.0 story so far has been about taking APIs, mashups, low cost infrastructure and building applications that are then offered to customers for pretty much free, backed by an ad-supported business model. Think of this as the tie-dyed-free-love hippie phase. The Web 2.0 conference held in San Francisco in Fall 2006 was its Woodstock.

A lot of good things happened, innovation blossomed, but now we are entering a more pragmatic phase, where the large players like Google and Amazon who distributed the API elixir are taking control back.

Google My Maps is a case in point, where the company is competing with its “users.” Don’t worry – it won’t be the last time you will see Mountain View adopt tactics that in the past were associated with Microsoft. Keeping that $145 billion market capitalization intact is a bitch!

Google is not alone, as one of my readers points out. Michael Arrington has been following the feud between Amazon-owned Alexa.com and Alexaholic (or whatever it is being called this week.) In the end Alexaholic/Statsaholic features ended up becoming part of Alexa.com offering. Why let a little seemingly parasitic service live if you can make ad dollars off those page views?

The Flock-Coop conversation from earlier this week is yet another part of the Web 2.0 jigsaw. The emergence of hybrid web applications or MySpace flexing control over its widget ecosystem are all part of a fundamental trend that can be summed up in two words: Get Real!

The fundamental tenets of Web 2.0 or what I like to think of as the connected web are as valid as ever before, when Tim O’Reilly wrote his manifesto. However, innovators, entrepreneurs and even larger players have to take off the rose-tinted glasses, and worry about web giants’ ability to go from friend-to-foe almost overnight.

What do you do then? How is your business model impacted by such moves, and how much wiggle space you have to charge your customers? In other words, one can’t be wide-eyed about anything anymore.

The current situation is no different than the dating process. The first few months of flirtation are full of romance, where all you choose to focus on is your partner’s best qualities. Three months into the relationship, the nose hair, shoe fetishes and other habits come as a bit of rude awakening. We all adjust, if we believe in the relationship. If not, we go looking for a new love.

It is hard to fault Google, Amazon or News Corp: they are publicly traded companies that have powerful shareholders, who demand (not that they get) some kind of financial accountability. As a start-up, you have to think of your worst case scenario.

In response to Google’s My Maps move, Platial had this to say on their blog.

While no entrepreneur is excited about potentially competing with Google, it had to happen…. There are a number of friend/foe relationships that spring up when you have alliances and markets with rapidly evolving needs. Our business will be disrupted too in some ways but it was time.

I would like to call it, the End of Innocence.