In his regular column at The Register, Matt Asay points out that using another company’s API can be a quick and easy way to get going, but it carries significant risks:
In tech today, it has become a truism that “if you’re not paying for it, you’re the product”. Somehow we have applied this wisdom to consumers without recognising that the same principle applies to enterprises and their developers. Recently, however, Netflix and LinkedIn have reminded us just how precarious it is to build on someone else’s platform — or API.
Paul Graham, one of the founders of Y Combinator, has described APIs as “self-serve [business development]”. It’s a great story: open and document your API and watch a thousand businesses bloom, bringing you cash and legitimacy. All of which may be true, if done correctly.
But the other side of Graham’s “business development” is the difficulty of predicting the business planning on the other side of the API. Twitter was pretty free with API access in its early days when it was seeking adoption rather than income. Now that the company has grown up and continues to tighten its grip on how and where users interact with tweets, Twitter terminated its tweet syndication partnership with LinkedIn and has promised to clamp down even more tightly on how developers use its API. Twitter is doing this because it can, as professor Joel West points out, but also because it must: its advertising business depends upon it.
So where’s the banking similarity come in?
There’s one other thing to consider, as venture capitalist Bill Davidow opines in The Atlantic, and that is the very real possibility that this API mercantilism is a sign of how the technology world is changing, and not for the better:
At both Hewlett-Packard and Intel, where I next worked, money was important — but it wasn’t the top priority. The goal was to do the right thing and do it well. If you did that, over time, rewards followed and shareholders supported your efforts…
Many other things have changed in the valley over the past five decades. I’ve become increasingly concerned about one thing that is seldom discussed: the valley is no longer as concerned about serving the customer, and even sees great opportunity in exploitation. We are beginning to act like the bankers who sold subprime mortgages to naïve consumers…
Or sold developers subprime APIs?
