Friday, August 17, 2007

Windows Live ID opens up to developers

Following the efforts done by Yahoo! and OpenID to build a third party based authentication system, Microsoft releases the APIs to let people deploy their applications with Windows Live ID as the authentication method.

What is the advantage to the web application provider?
Any application provider need not build his/her own user base, design or implement a sign-up procedure, he/she needs just to glue the third party code to the web application.

What about the user?
Evidently, users can access a web application by using an already known user-password pair. Moreover, users need not worry about the management of their web identity as they should do when giving their passwords to services like meebo.

OK, it's a WIN-WIN strategy for users and web developers. But what about Microsoft, Yahoo, OpenID and the rest of them?
This is a more subtle value discovery. Community service providers discovered that they cannot confine their users into their walled gardens.
People churn as rapidly as a new sign-up is needed. But since users are lazy, if they don't need to signup again for a nice service, if only they can recycle a previous access key, they will.
It is a war strategy, well known to experienced warlords:
If you cannot control the ground, control the access gates.

By doing this, the value of the community (as the number of active users that sign in at least once in a month) is retained.

Now the point is: how Identity management systems can build up a profit?
Firstly, as they retain the user login, they can instill advertisement into the login process. Please note that each identity management system has user profiling, it should be evident what's worth.
Secondly, they can acquire important information about new web applications and the real user base dimensions and service usage. Companies like Microsoft and Yahoo! can work on real data before acquiring the innovative start-up.
Last, but not least, if you know how people herd across the web, and how information spread along the various identities, you can resell these figures to companies specialized in market surveys.

And what about the big G? Is Google planning to do anything like this?
Well... Google started all this, actually. When people access Google search engine, Google installs a "unique" temporary cookie that allows full profiling: instead of questioning "who and what are you?" and then infer "what you are interested into, and what you want to buy", Google has first-hand knowledge of what are our interests.
Unfortunately, Google cookies are anonymous and have no persistence, they can be removed, refused, etcetera. That's why Google provides free web services like Gmail, picasa, and so on, where an authentication step is needed. Google can then bind the anonymous data with the help of identity-persistent data, still keeping them as anonymous data.

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