By Josh Quittner

I’m rooting for the kid.

It’s not an easy decision—it never makes sense to be on the other side of Google (GOOG), and I am all for open standards. But on this one, I can’t help myself, I am rooting for the kid.

Imagine starting a business that, within 18 months, goes from nothing to 50 million members. You do everything right. You take a bit of seed capital and you make all the correct decisions, you play a scratch game, you innovate, you make a big bet, and bam! You create a product that’s so compelling, you make a market where none existed.

And now imagine that a far bigger company—no, the fifth biggest company in the U.S.!—comes along and simply copies your idea. It bigfoots you and says, you know that beautiful thing you figured out? Well we’re going to do it, too. And good luck competing with us because we’re going to take your great idea, and give it away for free to our market, which happens to be twice as large as yours before we even get started here.

In so doing, it (seemingly) neutralizes you, robs you of all the value you created.

How can you NOT root for the kid on this one?

A lot of this reminds me of the Browser Wars, when Microsoft took a similar tactic with Netscape. (“You know that cool browser you created? You know how your business model hinges on selling it to people? Well we’re copying it and giving it away for free.”) Of course, Microsoft also made the mistake of tying its browser to its operating system, which cost it billions. No one can scream “monopoly!” here.

So I’m rooting for the kid. I don’t care that, in this case, ironically, he has Microsoft (MSFT) in his corner. He is still the underdog.

I hope Dave Winer is right and that tech companies who promulgate standards to undermine other tech companies usually fail. I don’t believe him in this case. The “standard” that Google is foisting on its partners is open. It’s HTML and Javascript. Facebook has the proprietary code here.

But still I am rooting for the kid. He has momentum on his side—50 million people, and so far, Google’s ploy isn’t a good reason for any of them to leave. And that means the developers will stay. I am hoping that come next Tuesday, when he lets Madison Avenue see what Facebook can do with social ads, he’ll change the game yet again. God this is fun. That’s why I’m rooting for the kid.

By Yi-Wyn Yen

All those years playing the video game Madden NFL has paid off for Electronic Arts CEO John Riccitiello. To succeed in the video game industry, Riccitiello suggests taking a playbook from the popular sports game. Learning to react quickly, trusting his team, and admitting defeat are some of the lessons he’s applying to EA’s (ERTS) new strategy.

Riccitiello is shifting the focus of the company from publishing licensed video games to making its own titles. Earlier this month EA acquired independent developers, Pandemic Studios and BioWare, for $860 million to bulk up its library of original, high-quality games.

Madden NFL’s game-play has also been valuable to surviving in the gaming business. During a recent gathering at Berkeley Haas School of Business, Riccitiello talked about four lessons he’s learned since he joined EA as President in 1997.

Embrace change even if it costs a lot. A half century ago the three major networks — ABC, CBS, and NBC — were so dominant that they resisted change. Thirty years ago the three networks had more than 90 percent of the television market. Today, the big three account for less than half. “They were extremely arrogant,” Riccitiello says. “They viewed the rise of cable as being insignificant.

Riccitiello says the $31 billion gaming industry will suffer if it doesn’t start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade.

“In the next five years, we’re all going to have to deal with this. In China, they’re giving games away for free,” he says. “People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.” As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.

Don’t let detractors define you. Riccitiello blames the media for characterizing video games as more violent than images shown on cable TV on a typical Sunday night. He compared video clips of violent scenes from Kill Bill, CSI and 24 to games like Gears of War, Halo 3 and Grand Theft Auto. “Our industry is exceptionally well-controlled. Every game gets rated” by the Entertainment Software Review Board, he says. “The desire by the media to censor games amazes me.”

Admit your mistakes. Riccitiello concedes he failed to turn premium online-gaming service EA.com into an industry-changing product in 1999. The site launched an interactive spy thriller game in 2001 called Majestic, which featured rich, dazzling graphics that were accessed over agonizing slow dial-up modems. “It was a great idea, but it was way ahead of its time,” he says. “We spent several hundreds of millions and frankly, when it failed it took a little bit of me with it. EA’s investors weren’t going to wait five years to see it right. I had to admit my mistake and move on.”

Put your trust in visionary people. The failure of Majestic didn’t stop Riccitiello from putting faith in EA vice president Neil Young, who created the game. Shortly after, Young negotiated a deal to make the Lord of the Rings franchise, which has brought in $725 million in sales since 2004.

Riccitiello is also banking heavily on two innovators to launch big first-party games. Will Wright, the creator of Sims, is working on his highly-anticipated followup, Spore, which is expected in early 2008. And Alex Ward, a game developer who believes crashing cars can be more fun than driving fast, will release EA’s Burnout Paradise in January 2008. Says Riccitiello, “I met Alex in an English pub, and I made a judgment that he’s going to be a mega hit.”

By Josh Quittner

If you can’t beat ‘em, join ‘em. And if you can’t join ‘em, get all your friends to band together—and gang up on them!

In a move that some Silicon Valley pundits are deriding as desperate, Google (GOOG) has unveiled a plan to fight back against social network Facebook. A dozen companies, including social networks LinkedIn, Ning, hi5 and Google’s own social network Orkut, have aligned together under Google’s “OpenSocial” banner to “make the Web more social,” said Joe Kraus, who’s managing the project. Business software makers Oracle and Salesforce.com also joined the alliance.

The announcement was supposed to hold until Thursday, but the New York Times never agreed to the embargo and broke the news in today’s edition (see here). You can read Google’s press release, dated Nov. 1, here.

The goal is to lure software developers back to the open Web from Facebook and create standards for applications that can run on any social networking site. In June, Facebook opened its site to apps makers, allowing them to launch their own applications on its social network, and make money from them. Some 5,000 applications were launched enabling Facebookers to do everything from play Scrabble to engage in virtual food fights. And that caused the young site to take off, with membership growing at the healthy rate of 3% a week. It now has some 50 million members and is expected to unveil a new advertising platform next week that, many believe, will cleverly target “social ads” at users, mining their connections for useful information. If it works, it could be a huge breakthrough in online advertising.

And that’s what’s got Google taking the offensive. Google’s business model hinges on selling ads targeted against search—a diminishing activity while people are cavorting within the closed-off walls of Facebook. Adding insult to injury, last week, Microsoft (MSFT) beat out Google and bought a minority stake in Facebook—valuing it at $15 billion. That secured Redmond’s role as the social network’s sole partner in international advertising, and potentially much more.

Google’s OpenSocial project aims to do Facebook one better: It’s opening the entire Web to developers and making it even more remunerative for them to create cool applications. How? For starters, Google will be sharing critical APIs—in this case, datastreams that divulge a user’s profile information, who their friends are and what applications they install. (Among other things, that info helps applications spread virally since people see which applications their friends just installed.) While Facebook does the same thing within its closed network, twice as many people are in the Google alliance—100 million—and it’s just getting off the ground. Better yet for the developers, Google isn’t extracting a penny from them. They can keep 100% of the revenues from advertising or referrals. Finally, while developers need to learn a special programming language to write apps for Facebook, they can write widgets in HTML and Javascript—the common language of the Web.

“It’s a little bit of an apples to oranges comparison, but the full application we’ve built on Facebook took us six months to write,” said Ali Partovi of iLike, one of the better-known music applications. “The one that we’re demoing here took us a matter of days to write.” (It also looked very slick.) Partovi said that since OpenSocial uses the common languages of the Web, it will also make it easier, and cheaper, to hire programmers. Developers such as iLike will continue to work with Facebook.

Ning founder Marc Andreessen applauded Google’s move. “This is more like what we always used to do at Netscape — someone does something proprietary, so we create or embrace an open alternative and get lots of people to support it,” he wrote in an e-mail. ” We did that originally with HTML (!!) and Javascript.”

While a hand-full of demonstration projects will be unveiled Thursday, Kraus said the goal of the announcement today was to invite in the developers and get them started on rolling out new apps. He said it would be about a month before consumers started to see the first OpenSocial apps. Ultimately, the widgets could run on virtually any website that elected to participate.

“They were totally desperate,” one Silicon Valley financier observed yesterday. “Google isn’t making a dime from this. It was just a way of keeping people off Facebook.”

Kraus said that Google’s interest was in preserving the open Web. “By making the web a better place to be, Google ultimately benefits because people spend a lot of time on the Web searching,” he said. Asked whether Facebook could join the alliance, Kraus said, “Obviously we would love to have them participate.” He declined to say whether Facebook was ever invited, however.