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Zuckerberg on Eric Schmidt's ad nightmare

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Facebook founder Mark Zuckerberg is downplaying the possibility of the social networking giant rolling out a web-wide advertising network that targets ads based on your behavior and the behavior of your Facebook friends.

On Wednesday evening, during an appearance at the Web 2.0 Summit in downtown San Francisco, Zuckerberg was asked if Facebook was on the verge of unleashing such an ad network, and if the company had reached a point in its history analogous to the moment when Google took its on-site ad expertise and rolled it out to the web-at-large in the form of its AdSense network. He hemed and hawed a bit, but he eventually indicated that such network isn't coming any time soon.

"I think it's [at an] earlier stage than when Google did that," he said. "I have no idea when or if it would make sense to do something like it."

Apparently, Facebook is now making billions of dollars via targeted ads on its site. But Zuckerberg downplayed this as well. "We're doing OK," he said. "I think we have a lot left to do." And though it was pointed out that the company had been very successful in rolling out various other Facebook-centric tools on the web, including Facebook Connect, he continued to hem and haw.

But he did say he's confident that over the next few years, the "social graph" — Facebook-speak for "data about all your friends" — will be applied to anything and everything on the web. "Most industries are going to be rethought to be social and designed around people," he said. "This is the whole evolution we've seen at Facebook."

From the beginning, he continued, Facebook had better "usage per user" than anything else on the web. Today, Facebook has 500 million users, he said, and half of those 500 million use the site every day. "And now that's growing because of all the mobile stuff." Over the years, Facebook has built various applications atop its platform (most famously, its Photo-sharing application), and it has allowed third-party developers to do the same (most famously Zynga). Such applications, he argues, have a certain advantage over others.

"Our initial photo product didn't have high-resolution photos. It didn't have printing. You couldn't even reorder photos in an album. But the thing that it had was that it was very deeply social-integrated. You could upload a photo and your friends could immediately all see it and they could interact with you around it," he said. "It turns out that that social feature was more important than any other feature put together. And very quickly our photo product became the most-used product on the web...

"A social version of anything can almost always be more engaging and outperform a non-social version."

That's a bit of an overstatement. At the very least. How many third-party developers have been as successful of Zynga on the Zuckerbergian platform? But you get his point. And clearly, the likes of Google agrees with him. On Monday at the conference, Eric Schmidt said as much, saying that the company aims to improve its search engine in much the same way, targeting results based on data related to whom your online friends are, and this has been a common theme from the search giant.

The rub for Google is that Facebook knows more about your friends than it does. And that's why it's fighting to hard to force Zuckerberg into releasing his grip on that data.

A Facebook-driven AdSense competitor is just what Google doesn't want. And you can bet it will happen. Eventually. Zuckerberg said he "doesn't think of exporting an ad system or anything like that any time soon." But he does see the company making money from the "socialization" of all sorts of other industries.

"Our view is that we should play a role in helping to reform and rethink all of those industries," he said. "We'll get value back proportional to what we put in." ®

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