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Summary:

The way Facebook and Twitter have been controlling and/or closing down their platforms to outsiders may have parallels to the way other technology leaders have behaved in the past, but both companies need to be careful that they don’t ruin their platforms in the process.

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There has been a lot of virtual ink spilled lately about the way Twitter has been flexing its platform muscles by cracking down on the use of its API and — some argue — squeezing the life out of its ecosystem, but it’s worth noting that Facebook is not above throwing its weight around as well. Developer and entrepreneur Dalton Caldwell has written an enlightening tale about a meeting he had with the company’s platform and partnerships team, in which he says Facebook basically threatened to destroy his startup if he didn’t agree to sell it. While social networks like Twitter and Facebook may be relatively new, the struggle over control vs. openness when it comes to platforms is as old as technology itself.

Caldwell — who has since pivoted his startup, called App.net, and is trying to turn it into a user-financed version of Twitter through a Kickstarter-style funding campaign — says in an open letter to Facebook CEO Mark Zuckerberg that he expected the meeting to be about how his company could work with the social network to benefit both sides, but it turned into something much more threatening. As Caldwell describes it:

“Your executives explained to me that they would hate to have to compete with the ‘interesting product’ I had built, and that since I am a ‘nice guy with a good reputation’ that they wanted to acquire my company to help build App Center.”

Sell it to us, or we will kill it

The obvious implication, Caldwell says, was that Facebook was prepared to destroy the startup venture unless the entrepreneur agreed to sell it: a modern version of the old mob shakedown routine, in which the enforcer says something like “Nice family you got there — be a shame if something was to happen to them.” Or as Caldwell puts it in his letter to Zuckerberg, “Your team doesn’t seem to understand that being ‘good negotiators’ vs implying that you will destroy someone’s business built on your ‘open platform’ are not the same thing.”

Ironically, Caldwell says in his letter that one of the reasons he wanted to develop something on top of Facebook was that the Twitter platform was “even more of a joke than the Facebook platform” when it came to treating outside developers well. Twitter’s moves to close down more of its API — as it did recently by shutting off Instagram’s access to the follower list of Twitter users — have caused widespread criticism from developers, many of whom argue that outside services were a large part of what generated the social value that Twitter is now trying to monetize.

Both Facebook and Twitter have gone through a similar evolution in their relationship with outside developers and third-party services: Just two years ago Twitter held a developers’ conference called Chirp that was aimed at reaching out to companies — in part to smooth over some of the bad blood between the two, a relationship that co-founder and former CEO Evan Williams later admitted had been handled badly. And at almost the exact same time Facebook held a developers conference called f8, where it launched the “open graph” platform that services like Caldwell’s app center (and Zynga’s social games) were built upon.

As the pressure to monetize their networks has increased, however, both have stepped up the control they exert over their platforms — by restricting what outside services can do, by acquiring companies or recreating the features that they offer, and in some cases by making veiled threats of the kind Caldwell describes. As entrepreneur and venture investor Chris Dixon noted on Twitter, this kind of behavior is not really new:

Is platform Darwinism just the way things work?

In fact, there are some obvious similarities between what both Twitter and Facebook are doing and the approach taken by previous technology giants such as Microsoft and Apple. Microsoft was infamous for what was internally called its “embrace, extend and exterminate” strategy, which some say often involved meetings with outside services whose features were then duplicated by the software giant. Apple, of course, is well-known for controlling its platform more tightly than probably any other technology player in recent memory — and for making changes that benefit it, regardless of the impact on others.

In some ways, this kind of process is completely natural and even has some parallels outside technology. For example, Jonathan Glick of Sulia has compared the approach that Twitter and Facebook have taken to the economic doctrine of “mercantilism,” in which states try to control the way their subjects and colonies can trade with outside parties. Not surprisingly, this approach has also been the cause of a number of wars (and the real kind, with guns, rather than the metaphorical kind). And others have called it “API Darwinism,” implying that it’s a form of natural selection that favors the strongest.

So does that make what Facebook and Twitter are doing right, just because it is common behavior? That depends on whether you are an investor or a developer or a user. And even developers themselves can’t seem to agree: In the comments at Hacker News on Caldwell’s post, there are just as many arguing that Facebook’s behavior was completely justified and normal — and that the entrepreneur was naive to expect otherwise — as there are supporting him in being critical of the social network. Meanwhile Google+ head Vic Gundotra is trying to position his network as the friendly alternative.

What both Twitter and Facebook have to be wary of is becoming so controlling and dismissive of their ecosystem and/or their users that they wind up giving their competitors more ammunition and eventually lose their network effects to a newcomer (as Myspace did to Facebook). Apple may have been able to increase its dominance despite taking a strong-handed approach, but if recent history has shown us anything, it is that not everyone can be Apple.

Post and thumbnail images courtesy of Flickr users Tony Margiocchi and Rosaura Ochoa

  1. Charlene Fairchild Thursday, August 2, 2012

    It’s ultimately the users who will have the say. Squeeze us hard and we will go somewhere else when the new product gives us what we want. Good luck to the developers!

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  2. If anyone is going to cause grief to Facebook, it will be Facebook.

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  3. Great piece, Matthew. The Age of the Platform is here and at least Mr. Caldwell was asked. On the other hand, Twitter nuked StockTwits with nary a phone call or email to its founder.

    As you point out, the tension between open and closed it particularly acute these days. It seems as if Facebook and Twitter started with a more open mind-set and then incrementally closed each platform. As I write in the book, the notions of frenemies and coopetition are tricky ones for smaller companies and developers to navigate.

    To me, there are more questions than answers.

    Phil

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  4. Facebook and twitter both are doing the same work and that is their business promotion. Both of the companies are going to become successful from each other. That is why you can say that it is Golden war…

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