Since its founding in 2004, Facebook co-founder and CEO Mark Zuckerberg has crushed his rivals, with bogey marks including names like MySpace, Bebo and Friendster. And it even has managed to completely outshine G+, the social media entry from Internet titan Google (NASDAQ:GOOG).
But there’s still one company out there that one day might pose a serious threat to Facebook: Apple (NASDAQ:AAPL).
It’s true that market leaders usually are disrupted by startups, not large operators, as smaller, more agile companies often can and are more willing to take radical steps and try new business models to attack incumbents.
There are some exceptions. For instance, during the 1990s, Microsoft (NASDAQ:MSFT) was able to destroy the Netscape browser, primarily by integrating Internet Explorer into its ubiquitous Windows platform.
Unfortunately for Facebook, Apple might be able to pull off a similar trick. Apple could turn its mobile platform into a social network, with a focus on the iCloud.
Since its launch in October, the iCloud already has more than 125 million users — that’s about a tenth of Facebook’s user base, sure, but not all that far from Google’s horde of disengaged users.
Rumors already are swirling that Apple plans to add photo-sharing and commenting to the iCloud. This doesn’t sound too much unlike Instragram, which Facebook recently acquired for roughly $1 billion.
But considering it’s Apple, continued innovation certainly is likely. For instance, why not add the ability for users to, say, include friends and have status updates? Such things would not be tough for Apple’s engineers to pull off, and the company’s marketing department could create tremendous buzz with its always-catchy (if not annoying to some) commercials.
Of course, Apple might not even have to create its own social network to dig into Facebook. The company already is essentially a gatekeeper of its mobile platform, and it already requires its app developers to pay it 30% for all transactions. This could prove onerous for Facebook, which has been focused on monetizing its rapidly growing mobile traffic. And Apple has shown that it knows how to suck out much of the profits from an ecosystem, which it has done with industries like music.
Still, it seems more reasonable that Apple will evolve its own social network. If AAPL wants to keep up its growth, it has to focus on large markets — and social networking looks like a juicy-enough target.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
