Zynga’s IPO Means More Visible Feedback for Facebook’s Platform Product and Policy Teams
Since the Facebook Platform’s launch four years ago in May 2007, the company has made many changes to its Platform APIs and Platform policies that have had significant ramifications for all developers in the Facebook ecosystem. And when Zynga goes public, the temperature of broader market’s perception of ramifications of changes that happen after that point will become much more visible.
For example, here are a few of the bigger changes to date:
- In 2009, Facebook suspended many applications for using ads provided by banned third party ad networks, sending ripple effects throughout the third party monetization ecosystem.
- In 2009 and 2010, Facebook made substantial changes to the way the news feed worked and removed application boxes from the profile page, two of many product updates that created significant changes for the ways some developers designed application interaction patterns for “viral” growth.
- This year, when Facebook announced Credits universal virtual currency would be mandatory and all other paid virtual currencies would be banned, this created major changes for developers’ payment flow designs and, not least, operating margins.
In general, when Facebook has made these changes, it has received feedback from developers through a variety of channels, including direct feedback to Facebook’s (relatively small) team of developer relationship managers, group meetings with larger developers concerned about specific changes, and public channels like the developer forums and comments here.
Less visibly, updates to Facebook’s broader Platform product and policy direction have clearly impacted the private financial markets as well. Funding has become harder to come by for many small developers over the last 18 months, though some larger and growing developers have still been raising money at healthy valuations.
However, when Zynga’s IPO occurs, the market will become the most visible real-time feedback channel yet for Facebook’s Platform product and policy teams. Although a couple of smaller developers, like SNAP Interactive, are listed (in STVI‘s case on the OTCBB), Zynga will be the first large independent developer of social games on Facebook (and thus a company whose fortune depends to a relatively high degree on Facebook’s product and policy directions) to be listed in public equity markets.
Thus, when that happens, the stakes will be higher for Facebook to detail how changes to its Platform features, monetization services, organic communication channels, and developer policies fit into its its vision for the long term success and growth of the Platform. If it doesn’t, the consequences will be increased volatility for not just developers and private investors, but now public investors as well.