Every click, every like, every comment and every connection is used to build up a rich profile of each user. Photograph: Robert Galbraith/Reuters
On the Facebook platform, the glue that keeps everyone hanging around is content. The first phase was personal our status updates, thoughts, feelings and witty punditry, but we quickly learned that our friends werent as interesting as we thought. The second phase was photos. The rise of smartphones meant that everyone had a camera in their pocket and a newfound belief that a single image could tell a thousand words about their latte or hotdog legs. But not everyone is a great photographer.
So Facebook evolved. Its this power for transformation that has allowed the company to thrive where others (MySpace, Friends Reunited, even Twitter) have withered, moving from a digital directory for college kids to a communications behemoth.
When the company recognised that we often want to keep our conversations private it turned
Messenger into a standalone app with huge success. When photo-sharing startup Instagram was gaining traction Facebook bought it, but instead of incorporating it and killing the brand, it allowed it to continue as a satellite.
And now we find ourselves in the third phase: sharing articles, videos and images created by media organisations and seeded on to the platform. Its appealing to the media because thats where everyone is already. They dont have to lure people to their websites; they can simply deliver stories to peoples news feeds. The strategy has been extremely successful at
driving traffic to publishers websites typically around a quarter of visitors will come from the social network.
Facebooks latest move is instant articles, which allow publishers to show smartphone users a fast-loading view of entire articles without ever having to leave the social networking app. Its good for the reader, but the creator of the content loses the traffic to its own website and control of how its presented. Publishers can try to sell advertising on instant articles themselves or let Facebook do it for them for a fee, of course.
The newly launched live video tool stress-tested by BuzzFeed, who drew an audience of 800,000 for a demonstration of how to explode a watermelon using rubber bands (the footage has since been watched more than 10m times) is likely to present a similar dilemma for broadcasters.
Facebook has incredible power and influence over all news brands now, a developer from a major global media company tells me at F8. Most of our growth over the last two years has been driven by Facebook and Google.
Facebook has such sway that it has started to dictate the innovation strategies of media companies. When Facebook announces new features, publishers scramble to rearrange their own priorities for fear of being relegated by Facebooks algorithms.
Having gobbled up a hefty chunk of the news industry, Facebook has also set its sights on digital services that can be brought into the nest and regurgitated for hungry Facebook users: bookmarking, 360-degree video,
customer service robots, payments and virtual reality. For each of these things, there are free simple-to-use tools to let businesses plug in. They dont have to use them, but its easier to piggyback on Facebooks prowess than build a system from scratch.
The company is slowly removing the reasons for leaving its site whether its to book a taxi, watch video content, make phone calls, pay for things or read news articles. And the Facebook experience is sanitised, shielding users from the big bad internet with strict rules about what content it deems appropriate.
If live video is Facebooks phase four, then artificial intelligence and virtual reality look like being big parts of phase five. Both of these fit its strategy of monetising as many of our social interactions as possible.
I think it makes sense that computers start to get closer and closer to the way we experience the real world with our fingers, mouth and with no keyboard, says the companys chief product officer, Chris Cox.
Facebook already uses artificial intelligence to personalise your newsfeed, identify you in photos and translate your posts. The company has built technology that can recognise objects even different dog breeds in photos and videos.
The ultimate aim is to develop algorithms that can understand the nuances of peoples physical interactions. This is particularly important if social VR, which would allow us to have conversations with distant loved ones in which they feel as though they are in the same space as you imagine Skype in 3D is going to take off.
Facebook demonstrated a crude prototype at F8 to illustrate how people might hang out with friends in virtual spaces viewed through
Oculus Rift VR headsets, but using cartoonish avatars with only very basic facial features and hand gestures. Achieving a real sense that the person is right there with you will require a system that can capture a persons movements down to the subtlest gesture, and turn that into a digital doppelganger inside a virtual world.
Yaser Sheikh, who leads the
Oculus Rift research team, is using a camera-lined dome called the panoptic studio to record the movements of people placed inside from all angles. He is categorising the thousands of gestures and expressions that people use to interact. This library of gestures is what American anthropologist-linguist Edward Sapir described as an elaborate and secret code that is written nowhere, known by none and understood by all.
We need a computational understanding of Sapirs code, Sheikh says. In other words, Facebook wants to be able to read our intentions and emotions. Its not hard to imagine how this could be exploited in areas beyond VR. Chief technology officer Mike Schroepfer says an augmented reality device perhaps smart glasses or earbuds could give you additional information about someone while you were having a conversation with them, without them consciously offering it up.
Maybe I get a warning indicating that youre really sceptical about what Im talking about and so maybe I should stop and clarify, he says.
Zuckerberg says in his keynote speech: Our goal with artificial intelligence is to build systems that are better than people at perception seeing, hearing, language and so on.
So Facebook could lift itself out of the confines of its apps and into the realm of ubiquitous virtual assistant that can help people navigate complex social situations.
Sheikh says: We are a long way from producing a computational model of social interaction, but a lot of progress has been made and Im confident well get there.
Attendees watch the opening keynote at the F8 conference. Photograph: Stephen Lam/Reuters
In the meantime, theres plenty more money to be made with Facebooks existing offering, particularly as the company commercialises properties that have been hitherto ad-free. They havent turned on the monetisation switch for WhatsApp and Messenger yet; it wouldnt take much to make a lot of money from those audiences, says Jan Dawson, chief analyst at Jackdaw Research.
This is where the bots come in.
Messenger bots, launched at F8, are lightweight apps with conversational capabilities that sit in the messaging app. You dont download them, you just send queries to them through message threads as if they were another contact.
Our experiences with businesses, services and brands are super fragmented, says David Marcus, head of Messenger. We call them, fill out forms on websites, email and download apps. Bots, he says, can help automate many of the simple requests we have, whether tracking an order, checking in for a flight or ordering flowers.
Bringing these bots into Messenger also allows Facebook to eavesdrop on peoples one-to-one conversations with brands, providing more data-mining and monetisation opportunities. Marcus mentions sponsored chatbot messages as one way to make money, but its not difficult to see how, when combined with a credit card payment system or PayPal (where Marcus came from), it could help Facebook to become a powerful retail engine.
Its a model thats worked well for Tencents WeChat service in China, where users can interact with more than 10m branded official accounts to order food, buy movie tickets, send money to friends and pay bills as well as follow news, recognise music and book appointments.
Dawson believes that this is part of a strategy to take on Amazon. They seem to be building a commerce platform by stealth. Every company has a Facebook page, advertising already takes place on Facebook, you can talk to customer service bots. Its everything except the process of selling you a product, he says.
Its unlikely Facebook would get into the logistics of fulfilling orders, but it could certainly create a customer relationship, and then push for a slice of each sale. And thus retailers follow publishers and marketers into the same Faustian pact.
Mark Zuckerberg talks about chatbots and Messenger at F8. Photograph: Eric Risberg/AP
Its easy to forget that Facebook faced its only real existential threat when it failed to anticipate how quickly its users would migrate from desktop to mobile. After years of foot-dragging, the company spent $1bn buying Instagram and focused on working out how to make money from people using its apps on smartphones. Since then its been incredibly aggressive at buying or cloning challenger technologies.
Its unlikely but not impossible that a competitor could step in with a Facebook substitute. Facebook simply has too many users and too many tentacles into different parts of our lives. Anyone that looks like a threat gets acquired, as we saw with Instagram and
There remains, however, a thorn in Facebooks side: Snapchat. Facebook tried to buy the messaging service, which has 100 million daily active users, for $3bn in 2013, but Snapchat turned it down. Facebooks response was to build a clone called Slingshot, which didnt take off. Its since been experimenting with incorporating many of Snapchats popular features, such as ephemeral messages and photo-editing tools. More recently Facebook launched face-altering filters and scannable personal identifiers called messenger codes, almost identical to Snapchats snapcodes.
It might be irksome for Facebook, but analysts dont think Snapchat is a major threat. Snapchat is clearly a competitor, but its not yet clear to me how it will make the leap from focusing on a single generation. Theres a network effect that comes from being really big thats really hard to overcome, Dawson says.
It might be a threat to Messenger and WhatsApp but its not a threat to Facebook, which is a system, adds former Facebook employee Paul Adams, who now works at Intercom.
It would be like trying to disrupt telephone calls, its so ubiquitous.
Whichever way you look at it, Facebook is booming; publishers, businesses and brands are clinging on for the ride.