Inside Facebook

According to a statement released at 12:01am tonight, Microsoft and Facebook have formed a strategic alliance that grants Microsoft exclusive ad sales rights on Facebook. The rumored three-year deal was hashed out in only the last week after Google agreed to pay MySpace a minimum $900 million over the next three years in shared advertising revenue.

Via PRNewswire,

Microsoft will be the exclusive provider of banner advertising and sponsored links on Facebook using Microsoft’s digital advertising solutions and the Microsoft adCenter platform.

…The two companies began talks about the relationship only last week and expect the new advertising experiences to appear in the early fall.

Currently, Facebook sells ads through an inside sales force, AOL-owned Advertising.com, and DoubleClick. As of tonight, no ad sales positions are listed in Facebook’s job postings.

Historically, social networking sites have had a hard time monetizing their traffic through traditional CPC and CPM ads, though Facebook is rumored to perform better than most social networking sites in general. It appears that Google’s initiative with MySpace lit a fire under Microsoft BD leading to what are likely favorable terms for Facebook. No word yet on guaranteed payouts over the life of the deal.

Update: Coverage in New York Times

Sarah Williams has a nice summary of a new Facebook “FaceLift” Firefox extension available from StudioLD. The main feature is full profiles that pop-over upon rolling over friend thumbnails. Reminds me of Browster and MySpace!

Today, Facebook released a set of APIs that allow developers to retrieve and display proprietary Facebook information in web and desktop applications.

Information that is available via the documented functions includes profiles, friends, photos, and events. At first glance this is a fairly comprehensive set of information. However, important restrictions are placed on the use of this data in the terms of service–primarily, that developers must preserve the data access restrictions that are in place at Facebook.com:

…You may not in any event display to any user of your Application or any other person any Facebook Properties that such user or person would not properly be able to access through the Facebook Site (for example, and without limitation, you may not display information contained in any Facebook Properties that relates to one user to any other user unless such other user is a Facebook Site “friend” of the first user, is in one of the first user’s “networks” as identified on the Facebook Site, or is otherwise able on the Facebook Site to view such information relating to the first user). For the avoidance of doubt, the foregoing will not prohibit you from displaying information to users that you collect entirely independently of the Facebook Development Platform, even if such information is identical to information contained in Facebook Properties.

In addition, no Facebook data may be edited in any third party applications, and each developer account can only make 100,000 API calls per day.

Facebook also reserved the right to charge for proprietary data in the future. If third party apps are widely used, Facebook may also be able to serve ads as they do on Facebook.com, just as Google may soon serve local ads in Maps that are served via the Google Maps API.

As TechCrunch says, this is an attempt by Facebook to build a bigger ecosystem around its proprietary data set.  This is an interesting strategy to build a bigger product around an otherwise closed social networking system.  I’ll keep track of Facebook API apps and let you know what comes out…