Facebook (NASDAQ:FB) has been the social media kingpin for the last several years, claiming to have hit 1 billion active users in late 2012. The lifeblood of social media is data: data about what you like to do, who you know, and even your sexual orientation. And Facebook drowns in data. Facebook knows who your real-life friends are, and based on how much you view their profiles, how much you interact with them. This "social graph" data is valuable, and Facebook knows this. Recently Facebook announced that it will no longer allow competing social networks to import this data. This is a long-overdue escalation of the social media wars, and one that will allow Facebook to hoard more of your data for its own purposes.
Facebook has been mining your data for 9 years running. For these 9 years, it has let various apps and even competing social networks use a "Find Friends" feature that lets you connect whichever service you're about to use to your Facebook friends. This is a quick way to find users when you begin using a new service. Facebook realized it doesn't want to share this much data anymore, writing up a policy that details how it will distribute its precious information:
"Competing social networks: (NYSE:A) You may not use Facebook Platform to export user data into a competing social network without our permission; (NYSE:B) Apps on Facebook may not integrate, link to, promote, distribute, or redirect to any app on any other competing social network." (Source: developers.facebook.com/policy/)
Obviously, this wasn't always the case. Facebook has long allowed apps to pull themselves up into relevance, simply by allowing them to access your Facebook friends. Times are changing, however, and Facebook has begun pushing away those that want to access its data. Back in 2010, the social network cut off Twitter from accessing its social graph, forcing Twitter users to find their friends manually. Retaliation did not happen instantly, or even for several years. During the summer of 2012, Twitter hit back: Instagram users could no longer find their friends on Twitter. Towards the end of 2012, Twitter also stopped allowing Instagram photos to come up in tweets.
Recently, Twitter released a video-sharing service called Vine, which allows users to share 6-second clips of videos with each other. The interface is eerily similar to Instagram's. Facebook, of course, identified the threat, and quickly pulled "Find Friends" functionality from the app.
Facebook's aggressive withholding of your information could go several ways. While it keeps competitors in the dark, it may also agitate developers who want to create new functions for Facebook. Several startups, including walkie-talkie app Voxer and a social search introduced by Yandex (a Russian search engine), have been stripped of all Facebook connectivity. This cripples the apps and stifles any competition that Facebook might receive from them, but it may also negate developers' desire to innovate and integrate Facebook into more applications.
What will this mean for the stock price? Facebook keeping more of its data in-house will allow it to monetize on information that is not available to anyone else; their massive ad network will remain supported and relevant. I think that this decision by Zuckerberg is the first of many that make Facebook meaner, leaner, and more able to generate revenue. The company will continue to aggressively maintain these policies, allowing it to keep showing you ads while competition starves for data. The corporation's decision is a good indicator of what's to come; going long Facebook is a solid bet.
Disclosure: I am long FB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.