The Facebook Platform, Three Years Later

Today marked the third anniversary of the Facebook Platform but the day has been overshadowed by an ongoing privacy fiasco which has forced the company to redesign their privacy settings. While analysis of the privacy situation varies from person to person, it’s easy to forget the impact that the Facebook Platform has had in the past year as the company grew from 225 million to almost 500 million users.

FarmVille

If there was one word that could sum up the past year on the Facebook Platform, it would have to be “FarmVille”. The application launched just under 1 year ago and has spawned an entire ecosystem of companies trying to duplicate Zynga’s business model. In just 12 months we have watched Facebook turn into the largest gaming platform around, making it the talk of every single industry conference.

While games have been around on the platform for years, FarmVille reached levels never imagined. At it’s peak, FarmVille reached 83,755,953 monthly active users. That was on March 11th, around the time that the Platform took a (hopefully temporary) turn for the worse.

Facebook Clamps Down On Virality

Following the increased volume in spam from applications and one developer after the other exploiting viral loops on the Platform, Facebook decided to create a massive overhaul, which included a redesign of the homepage. In late October, rumors surfaced that Facebook was preparing to shut off all viral aspects of the Platform in order to clamp down on spam, among other things.

Within days the rumors were confirmed and Facebook hosted an event for top developers in Palo Alto to announce the impending changes. During that event the company announced a Platform roadmap which highlighted the changes that were coming to the Platform. Developers looked on as they learned about the death of multiple app-to-user communication channels.

It was pretty obvious that applications would be negatively affected, but how dramatic the impact would be was not yet known. Six months later it was pretty clear what was happening as Facebook turned off the viral spicket by killing notifications on March 1st. The results were felt immediately by developers.

While some developers have proclaimed their ability to still go viral (there is still a feed which provides plenty of growth opportunities), gaming the system has become significantly more challenging. Today, FarmVille’s MAU (monthly active users) is down nearly 10 percent from its peak and its DAU (daily active users) is down more than 25 percent from its peak. In fact, the application hit a new low today of approximately 20.4 million users, off more than 35 percent from its peak at the end of March.

Despite the challenges, Zynga has entered into a 5 year partnership with Facebook, the terms of which were never announced.

Controversy Surrounds The Platform

In addition to the emotional roller coaster that developers have sustained over the past 12 months, there has also been plenty of lucrative arbitrage opportunities which were eventually exposed as manipulative of users and frequently misleading. We first highlighted the situation days after the Facebook Platform’s second anniversary.

In short order, Facebook banned two ad networks from the Facebook Platform. That wasn’t the end of the controversy however. Facebook was eventually forced to modify their advertising terms and provide additional clarity as third-party ad networks pushed the limits of ads including the embedding of user data within advertisements.

Developers, ad networks, and Facebook continued a game of ping pong for at least four months until Techcrunch finally jumped in the ring, launching what is now known as the “ScamVille” controversy. In a matter of weeks, the entire Facebook ad industry was transformed and most aggressive offers, which made many developers and ad networks very wealthy, were purged from applications.

A Crossroad For The Facebook Platform

On the third anniversary of the Facebook Platform, developers and Facebook are at a crossroads. In addition to cutting down on viral channels, and stepping up its policies against misleading advertisements, Facebook has been increasingly pushing their new Credits system as an integral part of games and other applications on the Facebook Platform. In turn, a new business model has emerged, something we highlighted at the end of March.

As the company attempts to silence the privacy backlash, celebrations of the Platform’s three year anniversary will take place in privacy this time around. The Platform has now grown up and Mark Zuckerberg is attempting to steer an increasingly large (yet relatively agile) ship toward what many employees and investors hope is the promised land.

While the company has come a long way in just three years, more challenging business hurdles lie ahead. For developers, determining whether or not to build on the Facebook Platform has become increasingly complex. With a push toward the new Graph API, and the death of most app-to-user communication channels, many developers have decided to sit on the sideline through what many developers hope is a calm before the next surge.

Over the next year we’ll have the opportunity to watch how the dynamic between Facebook, developers, users, and advertisers unfolds. While the past year has been a bumpy one, hanging on to the rocket that is Facebook has no doubt proven to be an exciting ride!