Is Facebook really the new Yahoo?

At this point, Facebook is clearly the undisputed 600-pound gorilla of the social-networking world, having vanquished Myspace and virtually all other competitors, with more than 600 million users and billions of dollars in revenue, and the ubiquitous “like” button installed on hundreds of millions of websites. But other web giants have toppled before, or are in the process of toppling — like Yahoo, for example, which seems to be drifting aimlessly, waiting to be broken up. In a blog post at Datamation, writer Mike Elgan argues that Facebook is the new Yahoo (s yhoo): a fading giant reduced to copying other networks like Twitter and Google+ (s goog) instead of innovating. Is he right?

In a nutshell, Elgan argues that Facebook didn’t really come up with anything all that new or interesting that would justify its massive growth and current position at the top of the social-networking food chain. All it really did, he says, is come along at the right time:  a time when the combination of technology and social behavior online was primed for the introduction of a social network that anyone could use. By starting with universities, it slowly built critical mass until it effectively became the default social network for an emerging generation. Says Elgan:

At just the moment when the world was ready for everybody using social networks, Facebook let everybody in… Facebook’s “idea” isn’t particularly interesting. Its design isn’t revolutionary. The company’s engineering isn’t especially impressive. But Facebook’s timing has been perfect.

Elgan goes on to say that Facebook’s time has come and gone — that so much of the web has become social that a single all-encompassing network is no longer necessary.

Facebook knows what its members apparently do not, which is that today’s Facebook won’t allow the service to survive on the social Internet of tomorrow. Facebook used to be special. But now social is everywhere. Facebook finds itself trying to sell snow to Eskimos.

Too big to innovate, but big enough to fail?

As a result, Elgan argues that Facebook is trying desperately to launch new things and more or less failing with most of them. As examples, he gives the social network’s location-based Places and group-buying Deals offerings — both of which have been shut down, or at least drastically reduced in scope — and the launch of Facebook mail and the all-in-one inbox, which he says no one really uses. In addition, the network has been reduced to just copying Google+ by adding new list features and the new “subscribe” option, he says.

So is this all just “flame-bait,” as a commenter on Hacker News described it? In part, perhaps. Elgan’s piece goes overboard in some directions: for example, Facebook’s programming is fairly complex, and some of the failed offerings he mentions are arguably a sign of a company trying to remain innovative. At least Facebook moves a lot faster than some other web behemoths — including Yahoo and AOL (s aol) — when it comes to killing off or reinventing its failures.

When it comes to the copycat aspect of Elgan’s argument, there’s some truth to that charge. As Farhad Manjoo points out at Slate, there’s a consistent theme running through Facebook’s history that involves being a “fast follower” — in other words, not inventing a new concept, but introducing a better version of something that has been around for a while (just as Facebook itself followed Friendster and other networks). That’s not necessarily a bad thing. Making it easier for people to filter their friends is probably a good idea, although I’m less sure about the benefits of letting people subscribe to posts, since that is a pretty major departure from the “symmetrical” friends-only approach the network was built on.

Facebook has lots of users, but how much are they worth?

So does the comparison to Yahoo have any truth to it? Yahoo is also a gigantic web company, with hundreds of millions of regular users — it’s consistently number two in most web traffic rankings — and has a huge advertising business based on all those eyeballs, just as Facebook does (although Yahoo creates content, and Facebook doesn’t). And that ad-based focus is the biggest risk for the social network when it comes to avoiding Yahoo’s fate: Facebook has shown it can aggregate users, but it still has to prove its ads are better than the regular kind Yahoo and AOL have been flogging for a decade or so.

In the end, Facebook’s biggest challenge is just its sheer size. With over 2,000 employees and 700 million users, it’s a lot closer to being Yahoo or Google than it is to the plucky startup whose CEO wears flip-flops and has a business card that says “I’m CEO, b****.” At that size, it isn’t enough that a new offering like Places or Deals is cool or even useful — it has to immediately appeal to hundreds of millions of users, and produce a billion or so in ad revenue, or it’s just not worth doing. That’s why Google has been paring back the things it offers that aren’t working.

One thing Elgan points out might worry Facebook even more: the idea that being a large social network where people can see who has a birthday — or share photos of their graduation, or play games with virtual farm animals, or pretend to be a Mafia don — just isn’t that interesting any more. The real nightmare might not be that Facebook becomes the new Yahoo, but that it becomes the new Microsoft (s msft): huge and profitable, but also boring.

Post and thumbnail photos courtesy of Flickr user Stephen Brace