Facebook’s timing is perfect. They just released an API that gives third party developers deep access to Facebook functionality and it’s 20 million users. Not only can these third party startups get a widget placed on people’s Facebook profiles, but they can also get viral distribution through users’ news feeds and access core Facebook features. Using the tools that Facebook made available, developers could build new versions of some of Facebook’s own applications, like Facebook Photos. Users can then remove those default applications and add the new ones. Like Microsoft with Windows, Facebook is now competing with application developers on its own platform.

What makes this interesting is that not only is Facebook insanely popular and growing by 100,000 users a day, it provides an almost complete platform for relating to other people. Imagine, for example, a future where you can not only check out what music your friends are listening to these days, but you can instantly purchase the song from iTunes and give your friend a commission for the recommendation. 

Social Media Optimization (SMO) is a new term that was recently coined by Rohit Bhargava and has since been taking on life of its own. In his introduction to SMO, Rohit draws similar comparisons to SEO. SMO tactics can drive huge amounts of people to a website and can also determine whether a startup, website or idea will make it or not. It involves driving traffic to a website through new channels because search engines aren’t the only sites that drive big traffic anymore. While it’s not taking over SEO yet, it has the potential to someday soon.

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Why? One thought is that it kept down the price since people didn’t really know it was Google snatching up this stuff (they’ve done it under a number of different corporate names). But if price was the issue, then why hasn’t Google just bought the companies that own the fiber? It made no sense until I scratched my head and thought a bit further, at which point it became obvious that Google wants to—in its own way—control the Internet. In fact, they probably control it already and we just haven’t noticed.

Google intends to take over most of the functions of existing fixed networks in our lives, notably telephone and cable television.

The Internet as we know it is a shell game, with ISPs building their profits primarily on how many users they can have practically share the same Internet connection. Based on the idea that most users aren’t on the net at the same time and even when they are online they are mainly between keystrokes and doing little or nothing when viewed on a per-millisecond basis, ISPs typically leverage the Internet bandwidth they have purchased by a factor of at least 20X and sometimes as much as 100X, which means that DSL line or cable modem that you think is delivering multi-megabits per second is really only guaranteeing you as much bandwidth as you could get with most dial-up accounts.

It is becoming very obvious what will happen over the next two to three years. More and more of us will be downloading movies and television shows over the net and with that our usage patterns will change. Instead of using 1-3 gigabytes per month, as most broadband Internet users have in recent years, we’ll go to 1-3 gigabytes per DAY—a 30X increase that will place a huge backbone burden on ISPs. Those ISPs will be faced with the option of increasing their backbone connections by 30X, which would kill all profits, OR they could accept a peering arrangement with the local Google data center.

Seeing Google as their only alternative to bankruptcy, the ISPs will all sign on, and in doing so will transfer most of their subscriber value to Google, which will act as a huge proxy server for the Internet. We won’t know if we’re accessing the Internet or Google and for all practical purposes it won’t matter. Google will become our phone company, our cable company, our stereo system and our digital video recorder. Soon we won’t be able to live without Google, which will have marginalized the ISPs and assumed most of the market capitalization of all the service providers it has undermined—about $1 trillion in all—which places today’s $500 Google share price about eight times too low.

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Sure, that Monday, often dubbed ”Cyber Monday,” will see the highest traffic this season. But CoreMetrics predicts that sales on the following Monday, December 4th, will be 19 percent higher than “Cyber Monday.”