Yesterday, as the Mobile World Congress’ Keynote Speaker, Facebook CTO Bret Taylor laid out the company’s plans to “help” the mobile industry and developers work around the pesky control that Apple and Google now share. While unveiling two key programs that Facebook is looking to lead, he addressed Facebook’s plans to tackle both the in-app purchasing and the setting of HTML5 development standards and guidelines. Looking at both, they could be seen as either a uniting of factions to create a better mobile experience for all, or an end run at increasing the company’s power and market share.
Facebook CTO Bret Taylor speaking at Mobile World Congress in Barcelona. (Credit: Stephen Shankland/CNET)
To be fair, the move does seem like a win for Telcos – who were left out of the app monetization scheme by Apple and Google – and App developers – who have to go through heavy testing phases to ensure their product work across the wide range of systems and hardware. But, it seems that Facebook’s real goal is to enable themselves to make more money in the long-term. And that’s not a bad thing – just a worrisome one.
First off, the changes to in-app purchasing are much-needed and could benefit users as much as the telcos (and Facebook) it will most likely support financially. I question what Facebook’s role is in finding that solution. Don’t they already have a monetization model via Facebook credits? As more of their business moves to mobile and the subsequent ad revenue opportunities are diminished in the mobile experience, it is unclear what they will be able to garner from this immediate development. It does look like they will be able to offer the Telcos a piece of the revenue pie by reaching the umpteen million Facebook users, but their ultimate upside for Facebook will be that they are now playing in the same 30% playground that Apple and Google control.
The other part of Taylor’s address was related to general Mobile Web standards. There is an obvious need to come to some general standards and Facebook has the weight behind it to lead other publishers and developers in that quest. If they are putting together a consortium, hopefully it will be more effective than the ones we’ve seen in the entertainment industry (that come together to then decide they are going to do things their own way.) If they are building technology – specifically the Ringmark product they announced for testing purposes – as an infiltration tool (think back to those AOL CDs that came in the mail to get users to join) things could possibly get messy. Developers will be keen on tapping into Facebook’s Open Graph, but will it help those same developers with other testing that might have nothing to do with Facebook? If it is too narrow, it could end up being counter-productive.
It is far too soon to tell which way this will go, but my initial reaction was one of concern. That concern is based on the confusion about whether the company is facilitating the consortium or leading it. They are certainly in the position to facilitate the connection of many companies to reach a higher (and competitive) good. My concern is that it seems that they are actually looking to extend their fingers beyond their core to generate an even further stake in the digital realm. The positioning as an alternative to Apple and Google is a noble business decision, but will it spread them too thin? Also, if they are leading the charge and bringing on partners to do a bunch of dirty work that might show those companies an up-side in the short-term for Facebook’s further domination in the long-term, that could be a cause for concern.
Of course, there is not anything “evil” in either case – it just seems like it could end up being dubious. Or, perhaps I’m too fixated on an “Evil Empire” narrative of some sort.
Posted in Ruminations
Tagged Apple, Apps, Bret Taylor, Business, Developers, Development, Facebook, Google, HTML5, Market Share, Mobile Monetization, Mobile Web, Mobile World Congress, Ringmark, Standards, Strategy, Technology, Telcos, Testing
Following up on the post from July 26th, there are a number of site launches and legal challenges to Apple that are bringing their pricing practices into question. We focused on the standard 30% take of anything sold through Apps and questioned what it would take to change that – including HTML5 web versions to curtail that charge. The issue was also the seemingly arbitrary figure of 30% – or any particular pricing that does not take any market considerations like demand, product or competition in mind. Just one look at this morning’s Cynopsis Digital presents these three bits of news related to those charges and pricing issues:
- Digital movie service Vudu, purchased by Wal-Mart last year, is bringing its service to the iPad using a mobile-optimized website instead of a dedicated app. The move will enable Vudu to avoid paying Apple its 30% cut – becoming the first provider to directly compete with Apple’s iTunes store – but there are some sacrifices that had to be made. Movies from Disney, whose largest individual shareholder is Steve Jobs, will not be available for rental or download-to-own. Also, video delivery will be limited to standard definition.
- The computer/gadget giant finds itself as a defendant in a new lawsuit brought by 5 of the 6 largest U.S. publishers, claiming that Apple is using its clout to illegally fix eBook prices. Hachette, Simon & Schuster, Macmillan, HarperCollins and Penguin allege that Apple has used its market power to raise prices by 30-50% above similar books published under the wholesale model.
- Amazon has also come up with a workaround to give iPad users access to Kindle books without having to give Apple its 30% cut. The company unveiled a new HTML5 Kindle mobile app for the iPad, the free Kindle Cloud Reader, providing access to Kindle books via a web browser that works on Google’s Chrome or Macs Safari browser for the Mac, PC or iPad. It pretty much mirror’s the native Kindle app for the iPad, with a few features such as passage highlighting missing. No download or additional installation is needed. This could be the beginning of a new renaissance in browser-based apps, as in addition to doing end-around Apple’s restrictive policies, they provide media companies with quick reach to multiple devices at once without having to launch a half-a-dozen separate apps.
Certainly, there are trade-offs when you are not providing a native app. Those include simplicity (both in interaction and payment) and the loss of some features – like HD video for Vudu and the loss of passage highlighting for Kindle. But time will tell if that makes any difference.
What remains to be seen is if these companies make their prices lower on those non-apple outlets. If the only beneficiary of the removal of the 30% charge is the publisher, I question whether users will make the change to an experience that will not be as full (or fulfilling) as the native version. It is interesting to see major players leading the scuffle and we can only hope they do it smartly and effectively.
As I really do like Apple and feel they are really the ones who blazed and legitimately built a new revenue stream for many companies, I feel there needs to be a happy medium here. My hope is that they will make their pricing structure more fluid and less seemingly arbitrary. Google will have to follow suit as Apple is clearly in the driver’s seat. I really don’t know how Apple would be able to continue with the practice if they hold their policy and more publishers “jump ship” to HTML5. It’s not like Steve Jobs can later decide he’s banning HTML5 to stem the flow when he drew the line in the sand a couple of years ago by pushing for HTML5 development to strike down Flash.
I also don’t want Apple to stop being the leaders in development and innovation because they are so bogged down in litigation or just trying to defend their turf. We certainly don’t want to run into the mess we saw when the government went after Microsoft years ago. My simplified view of that episode is that it stunted Microsoft’s business, its innovation and it cost a lot of tax payers’ money for what ultimately became a non-issue.
When all is said and done, nobody can afford draconian or absolute measures at this point, in this economy. Something’s gotta give…And hopefully not at the consumers’ detriment.
Posted in Ruminations
Tagged Amazon, App Publisher, Apple, Apps, Chrome, Cynopsis Digital, Google, Hachette, HarperCollins, HTML5, In-App Purchasing, Kindle, Kindle Cloud Reader, Macmillan, Penguin, Politics, Safari, Simon& Schuster, Transactions, Vudu, Wal-Mart