Facebook’s Dilemma With Native iOS Apps: Relevance or Revenues

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Facebook’s New App Center Is Here: The Details

Facebook revealed some healthy new stats about how it drives traffic to Apple’s iOS ecosystem at an event today in San Francisco.

The platform drove people to Apple’s App Store 83 million times last month. On top of that, it sent people back to iOS apps they had already downloaded 134 million times. Facebook was also integrated into seven of the top 10 grossing iOS apps and six of the top 10 Android apps. The company’s emerging power on mobile platforms has been very visible in the surprising rise of apps like SocialCam and Viddy.

But the thing to keep in mind is how huge a strategic turnaround this is for the company. Last year, Facebook was all about HTML5. The company spent months unifying how they build and ship their mobile apps with HTML5 so that they didn’t have to build seven different versions of Facebook for the desktop web and multiple mobile platforms. Then they spent months trying to lure top developers into building with HTML5 and used a web-based version of Credits.

However, over the last several months, Facebook has backtracked away from HTML5 because the technology just isn’t ready yet for many popular kinds of apps. It does work for lower-bandwidth applications like media and music, but there are too many latency issues for it to work with games. Then video and photo apps need to hook into the camera so they need to go native.

What this means is that Facebook is forgoing short-term revenue opportunities in exchange for reach and relevance right now. Facebook isn’t going to be able to tap into Apple’s or Android’s 30 percent cut of in-app purchases unless it negotiates a special agreement with either company. There is a standard affiliate program that Apple has, which pays out a 5 percent fee to companies which refer customers who make purchases in iTunes. But this is standard, and it probably wouldn’t add up to anything material. On top of that mobile-web based Credits probably won’t generate profits for Facebook in the near-term, since the company is likely handing a majority of its 30 percent cut over to the carriers. Google has the same issue with carrier billing inside its store Google Play.

That said, today’s app center launch and Facebook’s big push into distribution for mobile apps is positive for the company. It shows that the Facebook platform matters more than ever for mobile developers, which is a big step forward from last year. With Facebook’s expected integration into Apple’s iOS 6, they’ll become even more of a necessity.

But it doesn’t answer the question of how Facebook will monetize its mobile platform when it is building on two of its frenemies’ front lawns.