Color’s Implicit Social Graph and How Facebook Could Respond

Last week, photo sharing app Color launched in the iOS and Android stores after announcing it had received $41 million in funding. The app’s most important feature is its ability to colocate users and determine their “implicit” social graph, or the people they spend time with. This data be could be extraordinarily valuable to marketers in similar ways to how Facebook’s explicit social graph and interest graph are.

However, Facebook has already been collecting this data through Places check-ins and photo tags, and could potentially distribute its own colocation feature to its enormous native mobile app install base to develop a more accurate implicit social graph.

There’s been a great deal of discussion about the value to users of of Color’s first generation photo sharing app. However, with strong talent including Bill Nguyen, founder of music streaming service Lala that sold to Apple, and plenty of money in the bank, Color has the resources to improve or pivot the user-facing experience.

What’s important is that Color find a way to acquire active users that can populate its implicit social graph, which maps who a user spends their time near instead of who they’ve explicitly listed as their friends.

Currently, when users take a photo, they’re turning on 20 to 40 of their phone’s sensors, including the microphone, accelerometer, light sensor, antenna strength, and Bluetooth readings. While the accuracy of Color’s technology is yet to be proven, this data can be matched with that of other Color users to determine if they’re in proximity.

According to the app’s end user license agreement terms of service, Color

“…may collect and use personal data, technical data, and related information to facilitate the provision of software updates, product support, and other services. Color may use this information, as long as it is in a form that does not personally identify you, to improve its products or to provide services or technologies to you.”

This means Color can potentially use the data to target advertising, deals or other monetization services. In fact, Nguyen says Color is “much more of a research company and a data mining company than a photo sharing site.” This data could be the revenue stream that validates its funding, and makes it a threat to Facebook’s ownership of the social graph.

Facebook has long been charging advertisers for access to aggregate forms of its graph of explicitly defined friend connections, user profile information, and the interest graph of connections to brands and other entities. It seems unlikely that Facebook would allow Color to stake a claim on this new data stream without getting into the game more directly.

Facebook could try to develop its own colocation technology (Color says it has six pending patents). Rather than using this as an unfamiliar location-based photo sharing feature similar to Color, Facebook could use colocation to suggest nearby friends to tag in Places check-ins or photos.

Facebook could roll out the feature to its 100 million monthly iPhone and Android native app users, according to AppData, and instantly begin collecting more data than Color. Colocation data could be combined with existing Places check-ins and photo tags, though biased by a user’s explicit social graph, to create the implicit social graph.

Alternatively, though less probably, Facebook could acquire Color. Facebook has said it plans to acquire up to 20 companies this year. However, this one would be at a much higher price than Facebook’s typical acquisitions, and Nguyen has said he has no interest in selling. Still, paying an inflated price might be the easiest way for Facebook to ensure its continued supremacy.

Either way, Facebook already has the advertiser relations to leverage the implicit social graph, and it could use the data internally to refine its news feed algorithm.

Color is trying to tap into a data stream with enormous implications for the future of social networking and marketing. It might be the first technology with a chance to disrupt Facebook’s dominance, but don’t expect Facebook to sit back and let that happen.