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The loading screen of the Facebook application on a mobile phone is seen in this photo illustration file photo taken in Lavigny May 16, 2012. (VALENTIN FLAURAUD/REUTERS)
The loading screen of the Facebook application on a mobile phone is seen in this photo illustration file photo taken in Lavigny May 16, 2012. (VALENTIN FLAURAUD/REUTERS)

Social Media

Facebook’s rocky road for apps casts an antitrust shadow Add to ...

“We were flattered that Facebook called us a competitor,” Katis said. “It’s their platform. They can do whatever they want. But it’s just another cautionary tale.”

Later that month, Facebook blocked Yandex, the Russian search engine, from crawling through its network. Facebook said that those companies took advantage of its network without sharing any information back.

Facebook’s Purdy denied the company is being less collaborative, saying it is seeking to have “nuanced and mature” discussions with developers when conflicts arise.

Although there are no indications that the Federal Trade Commission, which has wrestled with Facebook over privacy issues, has looked into its competitive practices, experts broadly say that this is all but assured as Facebook continues to grow.

“One of the issues that Facebook faces that is also true for Google is that it supports so many developers,” said David S. Evans, a professor at the University of Chicago Law School who has advised Google and Microsoft on antitrust matters. “Just by the law of large numbers, you’re going to get complaints. That’s a real vulnerability for the big Internet platforms.”

For now, developers say they are frustrated mostly because they cannot anticipate the vagaries of Facebook’s EdgeRank. Last week, Facebook took the rare step of publicly refuting comments by a New York Times writer who opined that the social network might be artificially suppressing user posts as a way to encourage people to pay to disseminate their posts.

“You have the combination of few tools available to build your business and no clear lines of communication,” said the founder of a startup who spoke anonymously because his company still depends on Facebook for its traffic. “Is it worth it for founders today to quit your job, raise a bunch of money, hire a bunch of people, only to get to a point where it’s really hard to get viral?”

But even if it left some companies in ruins, app makers who take the long view concede that Facebook’s crackdown had an unintended benefit: It helped deflate a social media bubble propped up by unsustainable startups.

“You need a real business model now,” said Aaron Ginn, an expert in Web traffic development who formerly worked for StumbleUpon, a website discovery app. “You can’t rely on viral growth.”

Branchout Chief Executive Rick Marini said his company was in the midst of improving its own offering.

“Facebook made several changes to the viral channels and app developers needed to react,” Marini said. “For Branchout, the silver lining is that we’re focusing more on our product development instead of viral user acquisition.”

Meanwhile, a much leaner Viddy consolidated operations under co-founder J.J. Aguhob and released a new version of its iPhone app.

O’Malley, the Viddy investor, said in hindsight, the boom in traffic from Facebook – and the stratospheric investor expectations that followed – set the company on the wrong track.

“With the Facebook traffic and with the larger round, did we lose focus on what was important? Yes,” O’Malley said. “If you can get traffic from Facebook, great. But don’t bank on it.”

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