How Facebook Home Screws Apple

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How low will Apple go?

First, Apple CEO Tim Cook was forced to grovel and kowtow to the Chinese Communist Party over their obviously false and politically motivated claims about Apple’s warranty.

Now, Apple is being publicly insulted and used by Facebook.

There is no way Steve Jobs would have put up with this kind of humiliating abuse.

Here’s what’s going on.

Facebook CEO Mark Zuckerberg announced this week new Android software called Facebook Home. 

To oversimplify, Facebook Home is a layer that sits on top of Android which favors Facebook pictures and messages over all other uses of the phone.

Facebook Home becomes available April 12 for download, and will run on some of the newer Samsung and HTC phones. It will eventually come pre-installed on a bunch of Android phones. Over time, it may function on the majority of global Android handsets counted in the hundreds of millions.

The two most conspicuous features are “Cover Feed,” which is a full-screen, swipeable view of pictures sent on Facebook, and “Chat Heads,” which are the profile pictures of Facebook friends that live in movable circles on top of whatever Android app you’re using. When that person says something, you can chat on a layer over the application.

Let’s look at the big picture here.

Who’s Got the Upper Hand?

The phrase “upper hand” comes from informal neighborhood baseball games.

To decide which team gets to pick who bats first, one guy tosses a baseball bat to another, who grips it where he caught it. Then the tosser grips just above the catcher’s fist, then the catcher grips and so on right up the bat. Whoever ends up laying his hand palm-down on the top of the bat gets to pick — he has the upper hand.

That’s exactly the game everyone in the industry has been playing since the mobile phone has been invented. Carriers, handset makers, mobile OS makers, application developers and others have been using the upper hand system to see who ends up on top and in control of the game.

When Apple came along, carriers had the upper hand. They intended to monetize mobile contracts by selling ringtones, apps and services.

Apple forced carriers to accept a different proposal. Carriers got to make phone and mobil data revenue from the iPhone, and in exchange for that privilege, Apple is the one who gets to sell and control the content. Apple gained the upper hand right from the start, and still has it.

Then Google copied the Apple model, and now the two companies each have the upper hand on their respective platforms.

Except lately Google has been losing it. First, Amazon gained the upper hand with it’s Kindle Fire products. Now, Facebook has gained it with Facebook Home.

By asserting itself as the main interface on Android phones, Facebook gets to decide the default choices for which messaging systems to use (Facebook’s), which photo galleries to use (Facebook’s) and eventually which search engine to use (Facebook’s partner Microsoft), which advertising to display (Facebook’s) and which apps and games to favor (Facebook’s).

Google is losing the upper hand on Android as the price for being open.

There’s no way Apple would ever lose the upper hand and allow even a partner like Facebook to control the user experience on iOS.

How Facebook Home Affects Apple

Everybody’s attention these days is riveted on their phones. And whoever controls what people see when they look at those phones has access to the most powerful business on earth. Phones direct us to advertising and to electronic content.

From a business and platform perspective, Facebook Home is by far the best idea Facebook has ever had.

It gives Facebook the upper hand on the Android phones it’s installed on, and drives up usage, user data available for harvesting and ad exposures. It’s all good for Facebook, as long as Facebook users are using Android phones.

So how is this bad for Apple?

To date, Apple has probably sold more than 500 million iOS device. That’s about half the size of Facebook’s user base. (The actual numbers of users of both iOS and Facebook are probably significantly lower than published numbers.)

Apple’s user base constitutes the most lucrative market in mobile by far. Two data points bear this out: app revenue and online usage. Current Apple users are the ones companies — say, Facebook, for example — wants to advertise to simply because as a group they do more and spend more.

Apple has tremendous power in directing its relatively deep-pocketed, active-using user base toward or away from any social network it chooses by way of integration.

For example, when you take a picture on an iPhone, and click the mini icon showing a box with an arrow pointing out, Apple lets you share via Mail, iMessage, Twitter or Facebook. There are similar integrations on other apps.

Apple does not offer to let you share via the #2 social network, Google+, or Pinterest, Tumblr, Linkedin or Pheed.

Mail and iMessage are Apple’s. But Apple has anointed Twitter and Facebook as the social sites to receive the massive advantage of being the default, built-in sharing services in every iPhone, iPod Touch and iPad.

This amounts to a massive promotion by Apple of Twitter and Facebook and a huge advantage for those companies.

But while Apple has been promoting the use of Facebook, now Facebook is promoting the use of Android.

People who have become enamored of Facebook now have a very good reason to switch from iPhone to Android in order to get Facebook Home.

Everyday users shopping for phones may now find themselves torn between Apple loyalty and Facebook loyalty. It used to be easy: Just get an iPhone and run Facebook’s app, which was the same on iOS and Android.

But now, some unknown number of Facebook fans will choose their family and friends (via Facebook Home) over Apple. And that choice leads them to Android.

Zuckerberg was also subtly insulting to Apple in the announcement. He said, in a nutshell, that the 30-year-old “UI model” of browsing icons, then opening applications from those icons — you know, like on the iPhone and the iPad — “is actually largely the same.”

Facebook Home with its “Cover Feed” was created to bring the “UI model” into the present day, rather than being stuck in the past like the iPhone is.

And it was built with major input from engineers poached from Apple.

Facebook is playing Apple, big time.

The only major company Facebook is really loyal to is Apple’s competitor, Microsoft, which owns a percentage of Facebook, and whose Bing and Skype technologies complete Facebook’s feature set.

In the announcement, Zuckerberg pointed out that the Home initiative involved partnerships with Apple’s biggest competitors, besides Google itself, including Samsung, HTC, Huawei, ZTE, Lenovo and others. Expect a lot of mutual ass-kissing, back-scratching and favor-doing between Facebook and Apple’s competitors.

More to the point, Facebook Home is about training users to embrace Facebook Messages, a direct competitor to iMessage.

Apple’s willingness to favor and advantage a company that is playing favorites with Apple’s competition may be yet another example of how Apple’s obsession with competing against Google is hurting Apple. Facebook Home is obviously a slap in Apple’s face, but it may be acceptable to Apple because it’s also a punch in Google’s mouth.

Will Apple keep driving users to Facebook so that Facebook can drive them to Android?

Time will tell.

I’m not suggesting that Apple should declare thermonuclear war on Facebook. But at least stop favoring them in the apps.

What would Steve do?

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