No iOS 5 Integration, No Credits Deal — The Facebook-Apple Relationship Cools

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By Eric Eldon Comment

Until the launch of Ping, the music social network feature in iTunes, last fall, Apple looked like it was getting close with Facebook. After yesterday, though, the two companies have never looked more distant. Facebook is not getting any special integration with Apple, and the two companies do not appear to be working together on Credits — contrary to a recent statement by a gaming executive from Ubisoft.

A relationship had at one point seemed natural. Facebook wanted to counter the threat of Google social products, while Apple was aiming to differentiate itself from the Android mobile operating system. Facebook for iPhone, the best-in-class mobile social networking app that has dominated the iTunes App Store for years, seemed to prove that millions of people wanted the two companies together.

Instead it has been Facebook’s microblogging rival, Twitter, that has gotten the special attention, as Apple reinforced yesterday at Apple’s Worldwide Developer Conference in San Francisco. Twitter is being built directly into iOS 5, the new version of the mobile operating system coming this fall. Users will be able to tweet directly from in-house apps including Camera, Photos, Contacts, the Safari web browser, as well as (Google-derived) Maps and YouTube. Meanwhile, Twitter API access in iOS 5 will make it easier than ever for mobile app developers to integrate it as a single sign-on option.

The only time Apple speakers referenced Facebook yesterday was an off-hand mention of its iPhone app as one of a variety of apps that you could get notifications for in the new Notifications Center.

Up until the launch of Ping last year, a Facebook-Apple relationship had looked much more likely. All sorts of Facebook integrations were appearing in developer code for pending Apple product updates over the course of 2010, along the lines of what Twitter ended up getting yesterday. Apple went so far as to file patents that showed mobile app syncing features for Facebook. Facebook chief executive Mark Zuckerberg and Apple’s Steve Jobs were even reported to be spending quality time together last summer.

But when Ping launched, Facebook was visibly scrubbed out of it, with Jobs telling a reporter the day of the launch that Apple couldn’t agree to Facebook’s “onerous terms” around data ownership. A couple months later, Apple added Twitter as the main way to share activity, song previews and purchase links from Ping. Evidently the positive results with Twitter in that product — and the lack of progress with Facebook — inspired the announcement yesterday.

Another prospective area for Facebook and Apple to work together is also not happening, from our understanding. A Ubisoft executive said this week that the company would be offering a way for users to exchange equivalent amounts of money in iTunes with Facebook’s virtual currency Credits, so users could have a more seamless buying experience across the platforms. However, this appears to be a Ubisoft effort alone — Apple and Facebook are not cooperating to allow this to happen.

Conclusion

Long-term, Apple appears to have identified Facebook as a competitor for developers and for app user revenue, and for ownership of the users themselves. While the two companies offer distinct types of platforms, they are both trying to attract developers. In Apple’s case, apps drive hardware sales. And in Facebook’s, virtual currency revenues via Credits drive a meaningful share of the company’s revenue.

Consider that Facebook has held off on releasing a native tablet app and hinted that a more likely path for the company is to pursue an HTML5 version of the site. There are partly technical reasons for this. But another way to think about it is if Facebook accumulated a large user base for a native app, it would be lending strength to a rival ecosystem that effectively excludes it from downstream revenues through gaming, virtual currencies, subscriptions and other types of third-party business models. And it would come at a time when many developers from the social gaming world are migrating to mobile, slowing momentum behind Facebook’s platform.

More strategically, Apple realizes that if it makes Facebook central to its own products, then Facebook could push users towards its own currency and ads.

Twitter, which is more useful for sharing interests than for the private, real-life networking that Facebook provides, doesn’t compete against Apple for user revenue, but still provides social features that Apple hasn’t figured out how to offer well.¬†If the WWDC launch showed anything significant about Apple’s future social plans, it’s that Facebook is not going to be a part of them.