The industry P.R. frenzy over scams in ads and offers on social networks goes on: Facebook announced on Thursday evening in a post on its developer blog that since it updated its developer platform terms of service this summer, it has disabled two ad networks that it says were running deceptive advertisements.
This comes in the wake of allegations that some companies that power offer- and survey-related moneymaking operations for social-gaming applications on platforms like Facebook's have effectively been scamming users into paying for services without disclosing those costs. One of them, Offerpal Media, has been particularly visible in the crosshairs.
"This battle is not new and it's far from over," the post by Facebook's Nick Giano wrote. "We faced stimulus scam ads on our own system earlier this year and pushed them off the site with rigorous enforcement. We did the same months later when deceptive ads from third-party ad networks appeared in applications. We're doing that again now as we see them appear in the form of offers."
Additionally, Facebook--which has said for quite some time that many of the activities highlighted in the "app scam" controversy are already banned by its terms of service--included in the post that more than 100 developer applications have been either "suspended or brought into compliance" over advertising issues, and that more than half of them were used by at least 1 million Facebook members per month. It's not clear whether these were all related to scams, or to other advertising-related infringements like the Burger King marketing campaign that encouraged users to "unfriend" their contacts in exchange for a free cheeseburger.
Facebook representatives declined to name which ad networks or applications it has banned. But the company did ban two companies in June, Social Hour and Social Reach, citing ad network policy violations. It's possible that the two ad networks mentioned in Facebook's blog post were banned months ago, given the "since July" language.
Earlier this week, MySpace--another big destination for social-network apps--announced that it had updated its terms of service to ban app scams. Prior to that, several prominent application manufacturers announced that they had banned potentially deceptive offers, despite the fact that they are responsible for a big chunk of virtual-goods revenues.
An update was made to this post at 7:51 a.m. PT on November 6 to note that Facebook banned two ad networks in June.
A recent simplification of Facebook's user privacy controls wasn't enough for some policymakers.
On Thursday, in conjunction with the Canadian Privacy Commissioner, Facebook announced a new set of modifications to its user privacy controls as well as its developer API, and the targets of these changes are the thousands of third-party applications built on Facebook's developer platform. That means there may be major implications for developers--some of whom rely almost exclusively on Facebook activity as a revenue source.
The Canadian Privacy Commissioner's office released a set of recommendations for Facebook last month, specifically highlighting concerns that third-party applications could access a significant amount of users' personal data. "It's clear that privacy issues are top of mind for Facebook, and yet we found serious privacy gaps in the way the site operates," commissioner Jennifer Stoddart said in a release at the time.
Facebook's newest set of changes will require third-party applications to specify which fields of user data they access (birthdays, favorite music, geographic location, etc.) and will require users to offer explicit permission before an app can access any of their friends' profile data. This is also in tune with recommendations offered earlier this week by a chapter of the American Civil Liberties Union, which highlighted the amount of personal data that third-party apps can access--sometimes without a user knowing it.
"Our productive and constructive dialogue with the Commissioner's office has given us an opportunity to improve our policies and practices in a way that will provide even greater transparency and control for Facebook users," Elliot Schrage, Facebook's vice president of global communications and public policy, said in a release Thursday. "We believe that these changes are not only great for our users and address all of the Commissioners' outstanding concerns, but they also set a new standard for the industry."
But what does it mean for developers? This could make it difficult for some apps--particularly the sillier ones that rely on heavy viral spread and often one-time use--to gain traction and stay effective. These are similar concerns to those that arose when Facebook cracked down on apps that it deemed "spammy" (and often rightfully so). But on the other hand, the new privacy controls could stem off bad press that could easily paint the developer platform as a whole as unsafe or untrustworthy.
"It is important for developers to have access to information, but we want to balance that with transparency and control for users," Ethan Beard, Facebook's director of platform product marketing, said in a blog post geared toward developers.
"We have committed to making these enhancements over the next twelve months, and anticipate a lengthy beta period including opportunities for you to provide input, multiple blog posts, and updated documentation delivered well ahead of time," Beard's post continued. "Understanding that this will likely require modifications to your code base, we want to give you the earliest heads up that these enhancements are on our road map."
The Northern California chapter of the American Civil Liberties Union has put out a campaign designed to raise awareness of the privacy implications of Facebook's developer platform. It's focusing specifically on the popular "quiz" applications, like "Which Cocktail Best Suits Your Personality?" and "Which Wes Anderson Movie Character Are You?" These are largely one-time-use apps that many a Facebook user clicks on and tries out with little concern.
According to the ACLU chapter, "millions of people on Facebook who use third-party applications on the site, including the popular quizzes, do not realize the extent to which developers of quizzes and other applications have access to personal information. Facebook's default privacy settings allow nearly unfettered access to a user's profile information, including religion, sexual orientation, political affiliation, photos, events, notes, wall posts, and groups." For the promotion, it's put together a quiz about how much you know about Facebook-based quizzes.
Side note: Creating a Facebook quiz app to draw attention to the pratfalls of Facebook quiz apps is very meta.
"It's time for Facebook to upgrade its privacy controls so that quizzes can only see what people want them to see," Chris Conley, technology and civil liberties fellow at the ACLU of Northern California, said in a release. "Users need stronger protections than Facebook currently provides."
So are the ACLU-NC's claims legitimate? The most damning one asserts that "regardless of whether a user's Facebook profile is 'private,' by taking a quiz the user allows its developer to gain access to the user's profile information...by Facebook default, every time one of a user's friends takes a quiz, the quiz has access to that user's profile information." That could have particularly alarming security implications if an app turns out to be malicious.
Facebook does not deny this, but notes that "sensitive" information like contact details are not available to third-party apps, and that Facebook has settings for users to tweak exactly how much their friends' apps can see.
Last month, the company modified its privacy settings to make them more user-friendly.
The ACLU chapter recommends that Facebook make it an opt-in, rather than opt-out process for apps to access a user's friends' data and require that apps list the specific profile data fields that they will be accessing.
"We generally agree with (the ACLU's) recommendations and have already made public announcements about relevant changes that are under way," Facebook spokesman Barry Schnitt said in an e-mail. "Specifically, we recently disabled hundreds of applications, including quiz applications, that were inconsistent with Facebook Platform policies...We've also had productive discussions with the Canadian Privacy Commissioner about improving user data controls on Platform. We'd be glad to also have productive discussions with the ACLU and generally catch them up, if they want to give us a call."
The office of the Canadian Privacy Commissioner, which has taken issue with Facebook's privacy policies, is holding a press conference on Thursday to address the subject, and Facebook plans to hold a conference call with reporters in response.
Facebook posted a set of small announcements on its developer blog Wednesday, most notably a call for alpha testers for the virtual currency platform that it's finally launching after much speculation.
"We are currently conducting an alpha test in which select applications can accept Facebook Credits from users," the post wrote. "Our 250 million users can now buy Facebook Credits in 15 currencies and we believe that, as Facebook Credits become more broadly available on Platform, they will meaningfully improve developer monetization and provide a great experience for users."
Interested developers are encouraged to contact Facebook.
Facebook has also announced that developers who want to advertise the applications they have built to run on its platform, which it originally launched over two years ago, now have a new option. They can opt to target their ad to users who are (or aren't) connected to one of their applications already: to encourage existing users to try a new app from the same developer, for example, or to court totally new users.
New options for Facebook developers' ad targeting.
(Credit: Facebook)Huge businesses have already been built atop the developer platform: in fact, some reliable assessments have concluded that, at least for now, the apps on the platform combined make more money than Facebook itself.
There are over 50,000 applications built on Facebook's platform, but the company isn't stopping there. It's continuing to support budding developers with its second annual FBFund app funding competition, with the first 25 of 50 finalists announced Monday. The rest will be announced soon.
The batch of finalists was announced in a post on the Facebook developer blog by Dave McClure of the Founders Fund, the longtime Facebook investor that has provided financial backing for the seed fund. McClure will also be running FBFund's inaugural incubator program this summer.
What's different from when Facebook first announced the seed fund is that in addition to Facebook Platform apps, the finalists also include sites that use the Facebook Connect login product and apps built using the new Facebook Connect for the iPhone. In total, there are 13 Connect sites, eight Platform apps, and four iPhone apps.
The decisions were made with the help of a "Developer Council" consisting of prominent members of the app development and investment space.
The winners, who will be announced soon, will receive up to a $100,000 investment as well as an invitation to participate in the incubator program in Facebook's hometown of Palo Alto, Calif., which starts in mid-June. Last year's FBFund developers stood a chance at winning up to $225,000 (in the form of grants rather than investments), but the incubator program is new for 2009.
Finalists include odd-job seeker RunMyErrand, iPhone photography game Paparazzi, and runners' networking and route-tracking site RunThere. A full list of the first 25 is here.
You'd think, based on what the blogosphere is saying about dual sets of numbers in Advertising Age and VentureBeat, that Facebook has a new reason to freak out about revenues. Namely, signs point to the fact that the third-party developer platform that Facebook launched two years ago now collectively makes more money than the social network itself.
Well, of course it does.
From some of the headlines, you'd think that it were some sort of Silicon Valley equivalent of humans creating robots that eventually outstrip them in intelligence. While it's sort of amusing to think about Facebook CEO Mark Zuckerberg battling evil robots (cue up some Flaming Lips here), this actually should be a pretty unsurprising conclusion. Estimates indicate that the platform applications put together may make as much as $500 million in 2009, with the advertising-based Facebook pulling in $350 million to $500 million depending on who you ask. (It's a private company. They're allowed to answer that question with nothing more than sneaky smiles.)
Let's look at the latest (vague) figures. When Facebook announced the debut of its long-awaited "verified apps" program last week, the company said there are now more than 52,000 applications on the third-party developer platform--and counting. That's a lot. In other words, if the Facebook platform were a standalone business, I should certainly hope it would rake in a significant amount of money.
Granted, we'd have to crunch a lot of numbers and deal with a lot of variables in order to figure out the exact operating expenses and headcount of the platform. Some applications are created by lone developers living rent-free in a basement, whereas others are created by app development companies that employ dozens of people and pay hefty amounts of cash for office space in those trendy post-industrial lofts in dot-com-friendly neighborhoods.
It gets more complicated. Some apps are the Facebook-inhabiting arms of much bigger social media companies, or are branded advertising or marketing campaigns on behalf of corporations that otherwise have zilch to do with tech. Then there are the development firms, consultants, agencies, and countless investors who also have a stake in it. Facebook itself, last time we checked, still had fewer than 1,000 full-time employees.
Conclusion: I don't know how many people and companies can claim to be on the Facebook platform's payroll, but it's a lot. And considering the platform as a whole has been much more adventurous with revenue strategies than Facebook itself has, I should certainly hope it's been raking in the cash for some time now.
So then there's the assertion brought up by AdAge's Michael Learmonth, that Facebook is pretty much sitting on a goldmine here. Which brings back the evil-robot thinking. Once again, Facebook is dealing with a massive and extremely diverse set of individuals and companies here. Social games manufacturer Zynga may be rolling in cash, but there are loads of other apps on the platform that don't make a cent. Has Facebook let the platform get too big and too amorphous for it to wrangle decent revenues out of it? ("I'm sorry, Mark. I'm afraid I can't do that.")
Which is why there are two things to watch here. One is the rollout of Verified Apps, which may have some unannounced or even under-the-table benefits that Facebook hasn't hinted at yet. Facebook's key terms for Verified Apps acceptance are "trustworthy" and "meaningful." But I wouldn't be at all surprised if "can make money, and can help us do so, too" is an unspoken criterion. Verified Apps will give Facebook the opportunity to work closely with a much more uniform and manageable set of developers and companies who have already shown a decent degree of loyalty to the social network.
Second, there's Facebook's finally-coming-soon (or is it?) Holy Grail of revenues, which is either a virtual currency system for developers or a PayPal-like transaction platform, or maybe a bit of both. The latest signs indicate that Facebook will be expanding the "credits" system it uses for its in-house Gifts application to select developers. Beyond that, it's not clear how it will expand.
With both a potential monetization strategy in place, and a policy (Verified Apps) to keep it from turning into a free-for-all that could start eating up cash rather than pulling it in, Facebook is all set. Or, if you prefer the hyped-up version, it almost has the arsenal in place to take on those evil robots.
Facebook has announced a revamp of the way it lists and catalogs its directory of third-party developer applications, according to a post on its developer blog, and the most notable update is the debut of the "verified apps" program.
This was first announced in November. Basically, for a $375 fee, Facebook will review developer apps to make sure they fit security and transparency standards, and will award a graphic badge to apps that make the cut.
Security on Facebook has been making headlines in the past few weeks, in the wake of several prominent phishing attacks that have hit the social network. While most have been quickly mitigated, and most did not involve third-party apps, getting the verified apps system in place may help with some image issues for the massive social network.
"Ensuring that applications are trustworthy, meaningful (whether for entertainment or utility value), and easy to find is paramount to developer success, user engagement, and helping the ecosystem as whole to thrive," Facebook's Jerry Cain wrote in the blog post.
Verified apps are also ranked higher in the directory, which is a big deal considering it now contains more than 52,000 applications. The directory has also upgraded its category system so that you can find what you're looking for more easily.
This will all be rolling out in the next few weeks, Cain wrote.
Social-network creator Ning is letting those networks get even more customized: it's unveiled Ning Apps, the company's full plunge into the developer platform craze. It goes into private beta on Thursday and will launch in full later in May.
This announcement is a long time coming, as Ning launched a limited application gallery in October--and that was still nearly a year after it was among the original launch partners for the OpenSocial developer application consortium.
There are a couple of things that make Ning Apps different from the social platforms found on the likes of Facebook or MySpace. While the earlier, limited array of apps offered on Ning was strictly for members to embed on their profiles, the formal Ning Apps product is geared toward the creators and administrators of Ning social networks. They can add an application--from a cash donation widget for a nonprofit network, to a ticket sales app for a band's fan page, to a live video stream of what-have-you--and it'll mesh right into the social network.
"A Ning network creator selects one of these apps, that functions basically like a full-fledged feature on the social network, and by choosing to install an app the app has a presence on the front page of the social network," Jason Rosenthal, Ning's senior vice president of business operations, told CNET News. "It gets a dedicated tab within a social network, and perhaps most interestingly, by default the app is installed on every (member's) profile page of that social network."
Ning, co-founded by Silicon Valley notable Marc Andreessen, doesn't yet make any extra revenue off Ning Apps, even though the possibility is there for the social network to take a cut of financial transactions or ad revenue. "It does open an interesting new monetization opportunity for us," Rosenthal said, "but not today."
The company announced last month that 1 million social networks had been created on its platform.
iLike, a social music service that has created one of the more popular applications for Facebook's platform, has changed the app's name to the more straightforward "Music."
"Over 40 million music fans like you have used iLike to share music and discover concerts, and we're grateful to you for being one of them," an e-mail sent to members who have installed the app said. "To maintain consistency with other Facebook applications, we're renaming the 'iLike' application to simply 'Music.'"
The company name hasn't changed, and it hasn't yet reflected this on its Web site. But head over to Facebook, and the app's name has changed to "Music (iLike)."
"It's just a name change," iLike representative Emily Glassman told CNET News in an e-mail. "We did some research and saw that every other big app is named as a common noun ('Causes,' 'Movies,' 'Bumper Sticker,' etc.) and we wanted to be more consistent with what seems to be the norm on the Facebook Platform."
I'm going to put on my Web 2.0 tinfoil hat for a second and wonder if changing its app name to simply "Music" is something that iLike has wanted to do for a while, but couldn't because of internal regulations at Facebook. There were, at a time, loads of rumors that Facebook would be launching a music service of its own. One would think they'd want the name "Music" to be reserved for it.
It's a stretch, but iLike taking the "Music" app name could be taken as a sign that Facebook won't be creating its own service with that name. Either that, or maybe they'll buy this one. And that's too many conspiracy theories for a Saturday afternoon.
This post was updated at 5:16 p.m. PT.
In a post on the company's developer blog on Friday, Facebook founder and CEO Mark Zuckerberg announced some changes to the management of its third-party developer projects. This encompasses both the Facebook platform, which opened up the social network to third-party applications and took off like wildfire when it launched in 2007, and the newer Facebook Connect, which brings Facebook log-in credentials to participating outside sites.
No employees have departed the company or were laid off in the process, a Facebook spokesman told CNET News in an e-mail.
The new head of platform and Facebook Connect engineering is now Mike Vernal, who takes over from Charlie Cheever. Cheever will be "moving into a new role as an engineering manager where he'll be focused on building some of our new products and ways for people to share information," Zuckerberg wrote in the blog post.
More notably, platform marketing responsibilities will now be handled by Ethan Beard, who has until this point been in charge of business development at Facebook. He takes over from Elliot Schrage, Facebook's vice president of communications and public policy, who will remain in charge of his other tasks within the company.
This makes sense, since Schrage, who was hired away from Google in May to be Facebook's communications czar, wasn't the most logical fit for developer platform marketing. His background's in law, not programming; Schrage had taken over platform marketing duties when Benjamin Ling, another former Googler, left Facebook and returned to Google.
