Facebook Adds “Good Enough” File Sharing To All Groups. Dropbox Should Worry About Growth

Today Facebook begins rolling out file sharing to all Groups, and while it’s got many restrictions, it could be good enough to limit the long-term growth potential of cloud storage / file sharing services like Dropbox, iCloud, and Google Drive. Music and any copyright files aren’t allowed and file size is capped at 25mb, as Mashable first reported. But this is just the first version, and you can be sure Facebook will keep hacking away at it.

Last month, the social network started letting users share files within Groups for Schools, but now we confirmed with Facebook that within a few days all Facebook users should have the option to upload and share files from the Groups post composer.

Facebook users often talk about downloadable files, but now they’ll be able to share those Word docs, images, e-books, PDFs rather than having to upload them elsewhere. The addition of file sharing has been a long time coming, as Facebook CEO Mark Zuckerberg had previously worked on a peer-to-peer service called WireHog, which was shut down due to concerns about copyright infringement. It also comes after Facebook’s acquisition of New York City-based file sharing Drop.io in 2010, which brought Sam Lessin on board.

File sharing could help Facebook fight its public image as a distraction from getting real work done. If you already have a Facebook Group to organize discussion about a class, work project, or vacation with friends, file sharing will fit right in.

You’re not going to be able to share huge home movies or zip files of photos, and sadly amateur musicians won’t be able to share their own creations with friends. But Facebook file sharing could be good enough for a lot of people, especially if it ups the file size limit, creates perma-URLs for files, and creates a tab in groups specifically showing shared files. Most important it would need extend file sharing to the general news feed to really become competitive. If it makes these improvements though, it could pull market share from other file sharing system by focusing on convenience.

There’s still plenty of use cases for the big cloud storage / file sharing services…such as sharing copyrighted files. Plus people might feel like their files will be more private on a dedicated service, even though Facebook Groups are quite secure. Products specifically for file sharing might always rule for business, but free personal usage that Facebook could chip away at has been a huge lead generator for enterprise sales. That’s why Facebook moving into the space could limit their long-term growth potential — something investors who sunk $257 million into Dropbox don’t want to see.

Let me be clear: this won’t kill Dropbox or reverse its stellar growth. We’re fans of the service and it won the TechCrunch Crunchie for overall startup of the year. But Facebook could make it hard for it become so popular that it could deliver to investors a serious multiple on the huge amount of funding its received.

The “good enough” approach is becoming a Facebook staple. It’s asymetrical, interest graph follow feature Subscribe was late to the game by years, but because it lives in the news feed where 900 million people already spend their time, it could stunt Twitter’s growth. The same thing could happen here. Facebook’s popularity and how deeply it’s ingrained our lives give it a big advantage. Power users may always crave specialized products, but for average joe, the option to send a file from the Facebook account they already have might be enough to stop them signing up somewhere else.

[Additional reporting by Ryan Lawler. Image Credit: How Stuff Works]