Zynga isn’t the only developer trying to be more independent from Facebook. Others are following suit, looking elsewhere to gain popularity. How did Facebook fall out of favor so quickly? Silicon Valley blogger and entrepreneur Andrew Chen examined why developers are souring on Facebook — offering lack of virality, the cost of doing business, and the finite nature of News Feed as reasons. Facebook’s Doug Purdy defended his company’s platform.
Chen was motivated to delve into this topic after reading an essay by Bill Gurley, which explores how much platforms take from developers. Facebook charges a 30 percent fee to build on the site’s platform, and at one point had a rather advantageous relationship with Zynga.
Gurley felt that the cost of building on Facebook’s platform is too high, taking into account not only the fee, but advertising:
When you consider that many of these same game companies were also large buyers of Facebook’s ad products, it suggests that the “actual” rake, the real cost of being competitive on the platform, was much higher than 30%. Given Facebook’s position as the leading global social network with high barriers to entry, there was no need to maximize revenue on day one. It was far more important to prove the platform as a viable and efficient distribution mechanism for a broad range of products and services, and to convince all partners of the unquestioned efficacy of the platform itself.
Chen noted that as more people play games and interact with applications through their mobile phone, that’s where more developers are going. He also talked about competition — not only within News Feed, but within the developer community. Apps that have features similar to Facebook’s products have been shut down or booted off the platform:
It also turns out that at least for some categories of services, Facebook actually thinks about the competitive aspects of their product and it’s not just a completely open platform. If you talk with folks who are working on messaging or photos or even walkie-talkie apps, you’ll hear stories about how apps have been shut down. Turns out, especially because so many folks are working on mobile these days, that a lot of overlap gets created. I’ve even heard that Facebook isn’t letting some messaging apps buy advertising on their platform – not just turning off the APIs, but actually refusing to accept money for ads. Pretty interesting stuff.
In a comment on Chen’s blog post, Facebook Director of Developer Products Doug Purdy responded to the writer’s claims:
Successful iOS and Android developers are integrating Facebook into their mobile apps. It’s not an either/or equation. In fact, as of this month, more than 81% of the top 100 grossing iOS apps and 70% of the top 100 grossing Android apps integrate with Facebook.
All categories of developers continue to build with Facebook (fitness, books, music, games, etc.) with over 10 million apps and websites integrated with Facebook. Notably, games continues to be an extremely popular category – more than 250 million people play games on Facebook each month, and canvas installs have gone up 75% in the past year. Most of our games developers had record years in 2012, and over 100 of these developers made more than $1M in 2012 (in total, we paid out more than $2B to games developers in 2012).
With regard to Platform policies, for the small number of apps that violate our policies (replicate our functionality, fuel their app’s growth at the expense of people’s experience or expectations) we take action as needed. But for the vast majority of developers building great social apps, keep doing what you’re doing.
Our goal is – and has always been – to give people a convenient way to login to apps, create personalized and social experiences, and let people share the things they care about through the apps they use.
Developers: Do you think the cost of doing business on Facebook’s platform is too high?