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If you are going to accept the live-or-die risk of being completely dependent on FB, please make some effort to understand their priorities. The effect of this week’s FB platform changes was completely predictable in October 2008.

Several people have called me in the last 48 hours asking, “Why won’t FB let us pay them for app notifications and are instead killing them off? Won’t FB’s traffic drop too?” Of course Facebook’s traffic will drop a little. Facebook knows and couldn’t care less. They don’t care in exactly the same way they didn’t care about the traffic drop that resulted from their July 2008 redesign. The traffic they will lose is traffic that does not increase the value of their enterprise. These changes are very smart and appropriate self-cannibalization for a company that is trying to take over the Internet. They no longer need to build more traffic at facebook.com. For now, all that matters is building a huge network of Facebook Connect sites.

If you have a good app attached to a well thought out external web site that authenticates using FB Connect, then this week’s changes probably HELPED your business. I know of two specific startups where that’s the case. My description of which apps are supported by the changes is intentionally very specific. There are very few categories of developer that FB cares about right now — and the FB Connect sites is the only category they care about for new/raw startup developers. If you help FB spread their JS and Authentication out into the world, they will support you until their network is too big to stop. They are at roughly 20,000 publishers now. At ~200,000 publishers, watch out! Their priorities will change again and they will start taking cash out of the FB Connect network instead of providing it with free traffic.

Facebook obviously cares about the big game developers as well. Without Notification access, Zynga and the rest of the game companies will need to buy more and more media on Facebook. Probably a third of Zynga’s $200M runrate is paid back to Facebook in advertising now. Expect Zynga to start paying Facebook 50% or more of their runrate (which may drop) as a result of these changes unless Zynga makes some very fancy moves in the next month.

Facebook makes no empty moralistic claims about avoiding Evil. They do a great job of acting in their own best interest, seem to act ethically, and don’t try very hard to hide their motivations. If you want to do business in that ecosystem, please study the host on which you are dependent or find someone to do it for you.

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