Why Did Facebook Spend $19 Billion on WhatsApp but Not $185K on .Facebook?
Posted by Jennifer Wolfe on 27th March 2014 in ClickZ

In the last few weeks, commentators have speculated as to how Facebook arrived at the whopping $19 billion valuation of start-up WhatsApp, with just $20 million in revenue and 50 employees but 450 million users. While there have been some good comparisons to other deals acquiring users and placing value on the future of those users, it still left me wondering why Facebook would not have applied for its own top-level domain when the price tag was a mere $185,000.

It certainly couldn’t have been because of the cost. While Facebook is surely focused on monetization of its 1.3 billion users and acquisition of new technologies to stay on trend, how could they have missed the opportunity to own its most important asset at the registry level – its website? While many have opined on what Instagram and WhatsApp provide to Facebook, allow me to offer a few ideas on what Facebook could have done with .Facebook.

Security. One of the reasons for a technology company to run its own registry is security. For a company plagued with concerns about privacy, the ability to operate its product on the root of the Internet rather than through .com or any other second-level domain could improve its ability to control the security and integrity of its site. While it doesn’t prevent hacking, it is an additional layer of security and a closed ecosystem from other websites. Why would Facebook, as global tech giant, pass up this opportunity?

Speed and Net Neutrality. When users currently go to their Facebook page, they are entering a .com, which has to be resolved along with the millions of other queries every second for other .coms. If Facebook ran a .Facebook registry, consumers accessing their Facebook page would only be resolving with others accessing .Facebook. While that could still certainly be a lot of users, it’s not as many as in the broader Internet and could provide faster resolution, particularly when integrating video and streaming content. With net neutrality continuing to be debated at the delivery level, every millisecond can count at the resolution level. Speed within your own controlled environment as a registry operator could have given them one additional benefit to provide to its users. New technology, coupled with fiber optic delivery of the Internet, will also be developed to better utilize the closed brand gTLD for this purpose.

Choice and Segmentation. As Facebook users find themselves inundated with messages and ads from all their friends, the opportunity to build out more segmented spaces for users could have been explored. For example, pages and discussions by geography, likes, alumni groups, career paths, hobbies, and other interests could be built out in new ways. Rather than being accessed within the generic Facebook.com/login to the fire hose newsfeed on your personal page, the expanded opportunities within the gTLD ecosystem could have provided more niched newsfeeds to better segment between business and personal friend groups. Facebook could have built out a today.facebook or music.facebook page for the top stories of the day or built on current events and news with clear and succinct landing pages above and beyond the existing personal page approach to consider disruptive thinking to the existing platform. As Facebook architects the digital world and digital life so many inhabit, working within .Facebook could have given them limitless, easy-to-remember landing pages and portals to expand the opportunities within the digital world of .Facebook.

Sponsorships and Advertising. So, too, could advertisers no longer advertise facebook.com/chevytrucks or facebook.com/chevycamero but, they could build a landing page in chevy.facebook, camero.facebook, coke.facebook, or other options that are a lot easier to remember in a television or print ad, on a billboard, or in any other traditional media that cross promotes with digital. While Facebook could certainly create a chevy.facebook.com page, the authenticity and robustness of the opportunity in a closed ecosystem of.Facebook is greater. As Facebook builds out innovative marketing solutions for advertisers, the possible landscape of ideas would be much more authentic in a .Facebook environment.

Disruptive Innovation and Technology. Finally, the most important reason Facebook should have applied for .Facebook is that it could use the platform for disruption and as a catalyst for innovation. The technology needed to fully leverage the brand registry as an asset has not been invented yet. But, with their team of talented leaders and engineers, they could have invented it for themselves as a competitive edge.

Half of the world’s top brands, including tech rivals, Google, Amazon, Yahoo, Apple, Microsoft, and others, applied for gTLDs as a closed ecosystem to use in creating a better digital experience for consumers. It’s not hard to imagine that their teams of engineers will soon develop technology to further leverage the gTLD as a technology asset and not just a domain name or website. Amazon filed for .pin and .tunes, likely to build new social and music spaces for consumers. Why not apply for .Facebook even if it was just to acquire the asset for future use and innovation? With the current timeframe for roll out of the existing new gTLD program still a year or two away from completion, it will be years before Facebook could apply and be up and running with a .Facebook technology platform

I think this issue was largely overlooked by Facebook and many other tech brands who did not apply for a brand gTLD, including eBay, Twitter, Pinterest, Pandora, Groupon, Verizon, Time Warner Cable, Disney, Digg, and others. The brand gTLD is not just a website or a domain name, it’s a technology platform at the root of the Internet. The potential uses are just being discovered, just like in the 1990s when websites first became a possible business platform. What will the hundreds of big brands who applied do with their gTLD?

As Facebook tech counterparts explore use cases for their new gTLDs, the idea of building niched social platforms will surely be among the ideas discussed. And when many of Facebook’s advertisers now have their own gTLDs, you have to wonder if their needs will shift to how they build their own digital world for consumers