Facebook has the eBay disease - the Farmville story

eBay went downhill because they made money off scams.

They didn't run the scams, but they didn't fight them that hard either. eBay's execs wanted the revenue, and they didn't worry too much about where it was coming from. Later, when eBay's reputation was about shot, new management started fighting the scams. Maybe too late.

It's hard for a publicly traded company to be virtuous. It's easy to separate revenue from sources. I give Google credit for avoiding this trap.

I think, however, that Facebook is deep in it ...

Slashdot Games Story | Scams and Social Gaming

... The article asserts that Facebook and MySpace themselves are complicit in this, failing to crack down on the abuses they see because they make so much money from advertising for the most popular games...

In Facebook you can hide people, or you hide individual apps, but you can't hide large classes of apps. On the iPhone FB app you can't hide apps at all. If you're annoyed by the social propagation of annoying apps you have to defriend the person -- who may be a family member.

Facebook gets a lot of money from apps. They don't get much money from direct ads (when was the last time you clicked on one or even remember seeing one?).

Facebook is at risk for the eBay disease. It might be too late for them already ...

Update 11/1/09: I was wrong. Facebook hasn't caught the eBay disease. In their case, it was congenital disorder. Wow. So FB's revenue stream is significantly based on getting cell phone numbers to promote phone fraud? Apparently I'm not the only one to ignore the ads.

By comparison, Google really isn't Evil.

Update 11/7/09: More on the effective conspiracy between shady apps and facebook.

Update 11/8/09: The NYT completely blows the story and Dan Lyons nails them for it. Old media fails. Lyons also recaps the story with links to all the Arrington/Tech Crunch coverage:

• Scamville: The Social Gaming Ecosystem Of Hell (play on Farmville)
• How To Spam Facebook Like A Pro: An Insider’s Confession
• Offerpal Tries Out A New CEO. Shukla, Queen Of Scams, Is Out.
• Zynga CEO Mark Pincus: “I Did Every Horrible Thing In The Book Just To Get Revenues” - such as getting users to download spyware
• “Horrible Things” Slink Back Into ZyngaScamville: Zynga Says 1/3 Of Revenue Comes From Lead Gen And Other Offers - "lead gen scams" explained. These trick users into paying for worthless recurring expenses like "learning CDs" and shady mobile phone subscriptions.
• Zynga’s FishVille Sleeps With The Fishes For Ad Violations: Farmville and other Zynga apps running scams make up 10-20% of Facebook's total revenue. Talk about a conflict of interest.