It's the APIs, stupid!

One way to make lots of money is to create and control a popular platform. But sometimes it's possible to control a platform without creating it, often by creating an abstraction layer to unify previously disparate APIs.

Such is Google's soon-to-be-announced "Open Social" initiative, covered today by Business Week, O'Reilly, Wired, and the WSJ.

The idea that the Google APIs will provide commonality (and thus direct network effects) by combining a range of 2nd tier social networking sites, including Friendster, LinkedIn and Google's own Orkut. Noticeably absent are the US market leaders, MySpace and Facebook. (This confirms the point I made a few years back that shared or common APIs are always a strategy of losers trying to catch winners).

As Business Week reported:

If the plan is successful, Google could bring its leverage to bear on the social networking market and potentially slow the momentum of high-flying Facebook. "This is an open version of what Facebook has done," says Marc Andreessen, a co-founder of Ning, which provides tools for building social networks. Andreessen was the founder of Netscape Communications in the '90s. ...

For Google, OpenSocial is the first step in a plan to hit back at Facebook and Google's chief rival, Microsoft (MSFT), which on Oct. 25 announced a $240 million investment in Facebook (BusinessWeek.com, 10/25/07), beating out Google for a stake in the fast-growing company, now worth an estimated $15 billion.

Today was also the day that Google's march to world domination reached another milestone with a $700+ stock price and a $220 billion market cap that left America's largest banks in the rear view mirror. Only four US companies have a larger market cap: Exxon Mobile, GE, Microsoft and AT&T.

A pretty good week for a company that still has yet to announce its major platform initiative of 2007 (the gPhone).