Free Gifts one-ups Facebook using their own platform

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By Jonathan Lipps Comments

People have speculated that Facebook may have shot themselves in the foot by allowing third-party developers to create virtually any kind of application to run inside their site. While most agree that the platform is a good move in the long-term, we now have some short-term evidence to the contrary, in an app that literally takes money from Facebook.

Facebook has been in the virtual gift-giving business for a while. A “Gifts” app comes standard with every Facebook profile, and allows users to purchase little icons to send to friends, whether public or private. These picture gifts cost $1. Facebook donates a certain portion of each gift to charity, but undoubtedly makes a profit on pixels nonetheless.

But, with the advent of the app platform, Zachary Allia saw an opportunity to recreate this same functionality without the (he thought) high price tag, and so he developed Free Gifts, an app which mirrors Facebook’s Gifts in almost every respect – except it’s free. In an informal interview with InsideFacebook.com, we asked him why he thought Free Gifts needed to be made, and the answer was simple: “I just didn’t like the idea of paying for those images. They do have some good looking ones, but I wasn’t ready to fork over money for them.”

Apparently, the much-touted icon design of Susan Kare is not worth it for over 717,000 other Facebook users either! Free Gifts has been radically successful, despite not yet having even made it into the official Facebook directory. Allia’s nonchalant about that latter fact, and thinks that it will be included sometime this weekend, and will moreover bump his user base to over a million.

With 717,000 users, some will be disgruntled – and indeed some have complained about the quality of the images as compared to the standard Facebook ones, or the fact that in not buying Facebook-sanctioned gifts, users are not donating any money to charity. But, in the end, it’s hard to complain about someone offering a free service.

And that’s what might be worrying Facebook execs about this source of revenue which comes directly from users. As far as we can tell, however, Allia’s application is not controverting Facebook’s TOS, and he himself is sanguine about competition in general: “I didn’t think [Facebook] would mind, because it…doesn’t steal users from them.” I suppose that’s really the question – would a user who otherwise would have paid a $1 for a gift use Free Gifts instead? Or is Free Gifts being used mainly by people who would never have paid for a gift in the first place?

In the longer term, it will be interesting to see if the Facebook platform effectively blocks Facebook from rolling out other apps like Gifts that generate income, since, for the time being, it seems that almost anything Facebook can do, an app developer can do for free.

[tags]facebook,app,apps,applications,gifts,free-gifts[/tags]