This article mostly explains correctly why MySpace and Facebook are not accepted by Japanese.
joining SNS by real name regarded as dangerous
Yes, when Facebook people visited Japan and explained their strategy to expand their market in Japan, by advertising "trusted by real name" network, we found it mostly funky. As the article explained, it is already achieved by mixi. And by that time, mixi is already regarded as dangerous "by exposing real name too widely".
One of the example accidents happened in 2005 August, at the comic market. Comic market place is usually flooded by terrible numbers of otaku people, and they used to be looking bad in general. One of a part time student workers at a hot dog stand wrote an entry in "mixi diary" like: "there was a lot of ugly otaku people there. eek!"
While it is pretty much straightforward, those otaku guys got hurt (at least some of them loudly claimed so), upset and started "profiling" who is that student. It was very easy in mixi, because mixi at that time encouraged to put real-life information with real name. No sooner she was then flooded by a lot of blaming voices, she disappeared from mixi.
OK, she was too careless, or ideally she should not write it (it is always easy to say something ideal). But she was not a geek and does not really understand how the network (mixi) is "open" to others (it is not really "open" by invitation filters, but as mixi grew up to have millions of users, it is of course not "trusted network" anymore). She didn't blame a specific person, and hadn't felt guilty until the company forced her to apologize. This kind of "careless" accidents has kept happening in mixi and it became a social problem.
Nowadays we have the same issue around "zenryaku-prof", where not a few children has faced troubles (for example sexual advances) by the face that the network is "open" to the web by default, while they think it isn't.
Though there must have been similar incidents outside Japan too (for example people fired by his or her blogs), the above (I believe) is the general understanding of the situation in Japan.
Mobile web madness
Another obvious point for Japanese, but would not for else, is that Japanese mobile web support is more important than anything, to get more people joined. Mixi is of course accessible from our cell phones. Even more funky example is "mobage-town", which used to limit access only from cell phones(!). (It is done by sending "contract ID", which is terrible BTW.) Mobage-town is one of the mega hit site in Japanese mobile web. It is mostly for games on the cell phones, but also has a huge SNS inside. It is also funky that the network used to be mostly filled by under-20 children. (Now children grew up to above 20, so the number is not obvious.)
Typically Japanese people spend a lot of boring time, between home and their offices or schools, on trains or buses. They can only do some limited "interesting" stuff. It used to be readings for example, and nowdays it is the mobile web.
When facebook is advertised with its API, what came to my mind was: "Is it even possible to make it for Japanese mobile web? nah"
While we, as a member of "open" world wide web, do not really like this mobile-only web (probably we should read Jonathan Zittrain), it is not a trivial demand that a cell phone is accessible to the mobile-only network. For example, iPhone 3G does not support it (iPhone BTW lacks a lot of features that typical Japanese people expect: for example, camera shake adjuster, it does not provide mobile TV capability, the mobile wallet etc.). It is often referred as "Galapagos network", which is intended as failing to expand their businesses abroad (one of the commentor on the TechCrunch entry mentions it. It is even funny that those iPhone enthusiasts try to claim that their web applications are "open" (as compared to Japanese mobile-only network).
BTW a commentor on the TechCrunch entry tries to object the fact written by the article by quoting google trends worldwide. But (including the graph on top of the article) it is a typical failure on measuring Japanese web access statistics: it does not reflect mobile web access. It is already explained (in Jaanese) very well. The simple fact is that it is becoming less ambient through Alexa, google trends or whatever similar.
SNSes are often domain specific
We would have seen similar phenomena in everywhere else. In China it is QQ. Orkut quickly became SNS for Brazil. There is no universal best.
What other SNSes find business chances in non-mainland countries is some specific purpose. For example, MySpace in Japan is good for producing musicians with its rich UI (many of them would also use mixi as well though).