Fortune iMeme: Building New Internet Platforms; Facebook Has 1000s Of Third Party Apps
I'm at the opening session of the Fortune iMeme conference at the Ritz-Carlton of San Francisco, where the hotel has no parking left. But I am sitting on a cushy Aeron chair - someone from Herman Miller came …
Context & Ripple Effects
A month after CNET catalogued Facebook's app feeding frenzy, Fortune's iMeme conference opens with the platform question front and center: Facebook is confirmed to be hosting thousands of third-party applications built on its site, and the developer gold rush has become the conference's organizing theme rather than a side note.
The stakes for that debate were set over the prior week. Facebook declined Yahoo's $1 billion offer in 2006, is reported — though unconfirmed — to have weighed a roughly $6 billion sale conversation with Microsoft, and on July 9 hired ex-AOL executive Chamath Palihapitiya to find new revenue streams. Add its July 6 decision to build its own search engine rather than license existing ones, comScore's finding of a flood of new traffic, and active industry argument over what an app is even worth, and iMeme becomes the venue where the platform thesis gets priced.
First-order effects
- Thousands of app developers are riding Facebook's free distribution while the four-factor valuation debate remains unresolved — whether to sell early or hold for scale is the immediate decision each faces.
- TechMeme discussions call Facebook's advertising ineffective, putting direct pressure on Palihapitiya, whose newly created mandate is precisely to find revenue beyond the current ad product.
Second-order effects
- Venture attention concentrates on thin application shells built atop one company's social graph instead of standalone destinations, shifting how seed capital is allocated across the consumer web.
- Any rival social destination that wants to keep developers must match open-platform distribution, because the app economy has made Facebook the default channel for reaching flooded, growing traffic.
Third-order effects
- If the pattern holds, the web's basic competitive unit shifts from destination sites to platforms that host third-party ecosystems — and the deciding factor becomes whether distribution can be converted into revenue through ads, apps, or the internally built search engine.
- Building its own search rather than relying on outside engines points toward platforms internalizing discovery inside their walls, a structural step that would make the host, not the open web, the arbiter of which apps get found.
The trend: Consumer internet companies are consolidating into platform-plus-developer ecosystems, with Facebook's thousands of third-party apps serving as the live test of whether social-graph distribution converts into durable revenue.