Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Facebook Inc (FB) Cracking Down Too Hard on App Developers?

Page 1 of 2

For mobile application developers, Facebook Inc (NASDAQ:FB) can be a blank page of possibility, offering a springboard for a huge potential audience. But after the social media giant blocked a popular new Twitter app, as well as releasing a policy statement that sounded about as diplomatic as a benevolent overlord, Facebook Inc (NASDAQ:FB) proved it can giveth, and it can taketh away. Is it wise for Facebook to take such dramatic action now, when its stock is shakily trying just to reach its IPO price?

Facebook Inc (NASDAQ:FB)The statement, and the Twitter ban
On Jan. 25, Justin Osofsky, Facebook Inc (NASDAQ:FB) director of platform partnerships and operations, issued a statement on behalf of the website. It was short and concise, no longer than a standard Facebook message, and called out those app programmers who had “replicated [Facebook] functionality” and “bootstrapped [app programmer] growth in a way that creates little value or people on Facebook.” The statement included link to the company’s latest policy update, which detailed requirements for making apps directly shareable to Facebook Inc (NASDAQ:FB).

All of this might sound reasonable in theory, but it starts to take a different tone when you look at the events surrounding it. On Jan. 24, Twitter announced Vine, its new 6-second video service, and Facebook Inc (NASDAQ:FB) promptly went about blocking it from its website, without any clear explanation. Try and find an Facebook friend who uses Vine, and you get a box that reads “Vine is not authorized to make this Facebook request.” Vine is an application that is directly shareable to Facebook, and yet Facebook has made it unusable. And if the company can block Twitter, who’s to say it can’t block a lesser-known programmer, for just as vague a reason?

Potential stock affect
After Facebook Inc (NASDAQ:FB)’s historic IPO debacle, the last thing it needs is more controversy. The company’s stock recently regained its footing at around $30, $8 away from its opening price, thanks in part to buzz around its new Graph Search engine. But it’s hard to get over a burn, and less than a year after an IPO that quickly turned into a fisco, investors are still wary. If the general sentiment believes the company has a totalitarian agenda, it could be the straw that breaks the camel’s (or in this case, the Facebook friend’s) back for many users.

While users could fret over Facebook’s new enforcement of its policies, for now, however, Facebook appears to be in no danger of investor backlash. Its P/E stands at 3,000, which is so large its not meaningful. Facebook still sells at over 12 times sales, which as a comparison is significantly above the five times sales level Google Inc (NASDAQ:GOOG) sells for. Following the Jan. 25 Twitter soap opera, the company’s stock actually rose 5%, nearing $34.50, before sinking back to $30.70. For a company that was stuck at $19 just a few months earlier, this price is not too shabby.

Good plan for developer stock?
Facebook might be fine, but what about some of its developers who have chosen to go public? Has the social media platform helped launch game programmer Zynga Inc (NASDAQ:ZNGA) , responsible for such Facebook mainstays as FarmVille, into the Wall Street stratosphere?

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!