Facebook Home launches to eat Google's lunch

The company has rolled out a replacement for the Android home screen.

Facebook announced its long-awaited foray into smartphone development last night with Facebook Home, a replacement skin for Android phones.

Phones with Home installed have pervasive integration with the social network, as well as a user interface that clearly takes heavy cues from Facebook's universal design manual. As well as a traditional, app-led home screen, you can have messages – both Facebook chat and SMS – on the front page, and the lock screen displays photos and stories from your News Feed full-screen on your device. "Liking" is, of course, built-in.

It's an entry in to a competitive market from an oblique angle, but one which could work well for the company. Expectations before the event were that Facebook would announce new hardware, or, failing that, a forked version of Android which would be marketed as a Facebook OS. Doing either of those – roughly paralleling Apple and Microsoft's tactics in the smartphone market, respectively – would have required a considerably greater outlay than Home did, and may not have had commensurate benefits.

That's not to say Facebook was skimping on the hardware front. The launch also featured the reveal of the HTC First, as the phone company teamed up with Facebook to get the rights to build the "First" (get it?) phone with Facebook Home built-in as its core skin.

The First is clearly a mid-range Android device – HTC isn't going after the iPhone 5 and Galaxy S4 with this – but that could be in Facebook's best interests. Home is something the company wants to be in as many pockets as possible, and the more low-end devices it runs on, the closer it will be to achieving that aim. And the benefits to HTC are obvious as well; once you drop below the top end, differentiating any particular Android device from the scores of others with roughly the same specs gets difficult. Home could be a big deal in clearing that hurdle.

But the most interesting possibility for Facebook is that, by stopping short of developing their own version of Android, they've created something which can be installed with ease on nearly any Android phone. It provides the company with far deeper hooks into a user's life than just installing an app would, without a significantly higher hurdle to leap.

And, of course, where Facebook goes, advertising follows. At the launch, Mark Zuckerberg confirmed that "there are no ads in this yet, [but] I'm sure that one day there will be". It fits with the Facebook ethos that sees ads as just another type of content, which users should see with equal prominence in their news feed to the status – but when that "feature" is rolled out, expect some grumbles.

But an oblique entry into a crowded field doesn't make Facebook any less of a threat to the companies currently in the lead – and that goes double for Google, which really should be quaking in its boots at this move. The search giant's entire reason for making Android is to use it to harvest data and sell ads to mobile users. Home is clearly an attempt to eat Google's lunch in that regards, without taking on the expense burden of actually having to develop and maintain an operating system. Eventually, the two companies will surely come to a head over that – and I wouldn't like to make bets on who will walk away victorious.

Facebook Home on an HTC First. Photograph: Facebook

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR