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Unformatted text preview: E A RN I N G OBJ E C T I V E S
1. Understand how Facebook created a platform and the potential value this offers the firm.
2. Recogniz e that running a platform also presents a host of challenges to the platform operator. In May 2007, Facebo o k f o llo wed News Feeds with ano ther initiative that set it head and sho ulders
abo ve its co mpetitio n. At the f irm’s f irst f 8 develo pers co nf erence, Mark Zuckerberg sto o d o n stage
and anno unced that he was o pening up the screen real estate o n Facebo o k to o ther applicatio n
develo pers. Facebo o k published a set o f applicat ion programming int erf aces (APIs) that
specif ied ho w pro grams co uld be written to run within and interact with Facebo o k. No w any
pro grammer co uld write an applicatio n that wo uld live inside a user’s pro f ile. Geeks o f the wo rld,
Facebo o k’s user base co uld be yo urs! Just write so mething go o d. Develo pers co uld charge f o r their wares, o f f er them f o r f ree, and even run ads. And Facebo o k let
develo pers keep what they made (Facebo o k do es revenue share with app vendo rs f o r so me
services, such as the Facebo o k Credits payment service, mentio ned later). This was a key
distinctio n; MySpace (a larger f irm at the time) initially restricted develo per revenue o n the f ew
pro ducts designed to run o n their site, at times even blo cking so me applicatio ns. The cho ice was
clear: Facebo o k had ro lled o ut the welco me mat and develo pers f lo cked to the site. To pro mo te the new apps, Facebo o k wo uld run an Applicatio ns area o n the site where users co uld
bro wse o f f erings. Even better, News Feed was a viral injectio n that spread the wo rd each time an
applicatio n was installed. Yo ur best f riend just played a game? Maybe yo u’ll check it o ut, to o . The
predictio ns o f $ 1 billio n in so cial netwo rk ad spending were geek catnip, and legio ns o f
pro grammers came calling. Apps co uld be co bbled to gether o n the quick, f eeds made them spread like wildf ire, and the early mo vers o f f ered ado ptio n rates never bef o re seen by small gro ups o f
so f tware develo pers. P eo ple began speaking o f the Facebo o k Eco no my. Facebo...
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- Winter '14