Facebook Totally Caved To Apple On Its New Mobile Platform
Facebook announced a huge extension of its mobile platform today, and as long rumored, the company is going to be spreading its payment platform, Facebook Credits, to the mobile versions of all Facebook apps.
Context & Ripple Effects
Facebook first opened a mobile platform back in October 2007, but the money side of mobile stayed unsettled while the company built its web business. In January 2011 it made Facebook Credits mandatory for game developers on the desktop web, giving it a single virtual currency and a standardized revenue share there.
Today's announcement closes the loop: Credits now extend to the mobile versions of all Facebook apps, and Business Insider frames the design as a capitulation to Apple's rules rather than a fight against them. The New York Times picking up the story alongside the long-awaited iPad app release shows how much weight rides on Facebook finally getting native mobile right.
First-order effects
- Game and app developers building on Facebook's mobile platform must route purchases through Facebook Credits, folding their mobile revenue into the same currency-and-cut structure Facebook already imposed on the desktop web in 2011.
- Facebook accepts Apple's in-app payment terms as the price of distribution on iOS, trading a slice of its payments economics for guaranteed access to iPhone and iPad users.
Second-order effects
- Apple's leverage is validated by the largest social platform on the web conforming to its rules — a precedent every smaller developer negotiating with Apple now inherits.
- Credits becoming cross-platform gives Facebook a unified payments layer spanning web and mobile, strengthening its hand against standalone virtual-currency providers serving social game developers.
Third-order effects
- If the pattern holds, mobile operating-system owners — not the app platforms built on top of them — set the terms for digital-goods payments, forcing even giants like Facebook to structure their currencies around gatekeeper rules.
- The tension between native-app payment mandates and the open web's cheaper rails becomes a durable fault line in platform economics, one that will shape how social and content companies monetize mobile.
The trend: Mobile platform gatekeepers are consolidating control over digital-goods payments, compelling even the largest web platforms to accept the gatekeeper's cut as the cost of distribution.