Facebook: Mobile could be our worst enemy
Company discloses that its mobile app use is growing but that its mobile app is for the birds.
Buried in Facebook's filing for its much-ballyhooed initial public offering is the sort of contradiction that might sink a lesser company: The more that people use Facebook's mobile offerings, the worse the company's bottom line becomes.
It's a pretty big oops.
To be fair, Facebook can pat itself on the back for turning out a product that's wildly popular with users. More than 425 million people were using Facebook mobile apps in December 2011. And management isn't turning back. Looking to the future, Facebook says that it intends to continue to encourage mobile usage.
But then the unresolved riddle: Facebook doesn't "directly generate any meaningful revenue" from mobile and the company frankly notes that its "ability to do so successfully is unproven."
Take that one in for a moment. If the computing world continues to develop according to expectation and more people access the Internet on mobile devices, Facebook will be a victim of its own success because the growing popularity of its mobile app will eat into the bottom line.
Unless of course the company can engineer its way past this dilemma and figure out a viable monetization strategy. The trick is how to do it without loading down the pages or otherwise annoying the hell out of Facebook's mobile fans by shoving advertisements in their faces.
Another potential concern: the platform gatekeepers like Google and Apple could decide to fiddle around with Android and iOS in ways that make the mobile Facebook experience miserable.
Since Facebook doesn't control mobile operating systems, it remains vulnerable to tweaks that might hurt its products' functionality or, even worse from Facebook's perspective, afford preferential treatment to rival products.
That latter scenario might be a stretch, but the company's lawyers had to include the usual boilerplate warnings. Should Google ever go that route in a bid to make life more difficult for Facebook, it's safe to believe that the trustbusters would invite themselves down to Silicon Valley on the next flight out of Washington.
The bigger issue is whether Facebook can muster the engineering talent to architect its way out of this dilemma. On the surface, one might assume this is doable. We're not talking about a company that is strapped for funds. In the last three years, research and development expenses at Facebook climbed from $87 million in 2009 to $144 million in 2010, and $388 million last year. With that sort of dough at its disposal, Facebook easily can employ the best brains money can buy.
By now, you might have assumed that at least one of those bright boffins would have figured out an answer.