Business

About Face(book)

As he celebrated his 26th birthday Friday, Facebook CEO Mark Zuckerberg’s friends list was shrinking noticeably.

Business partners, popular tech bloggers and everyday users of the popular social networking site are forming a growing revolt against Zuckerberg and the changes he has made to the site — tweaks to its business plan aimed at improving the site’s profitability ahead of an expected initial public offering.

And while the changes — to the privacy levels that distribute more personal info to a wider group of marketers and to agreements with business partners that can flatten the partners’ profits — have pumped up Facebook’s value to a staggering $20 billion, some serious problems are appearing.

Last week, for example, reports surfaced that Facebook’s biggest and most popular game developer has threatened to walk — a move that would cost the company a sizeable amount of revenue that members spend on the game.

At the same time, some very high-profile users have lobbed verbal grenades at Zuckerberg’s moves and are planning to unplug from the site.

These latest problems are raising questions as to whether Zuckerberg’s changes to his recipe and his aggressive growth tactics are working against him — like Coke’s ill-fated attempt to change its formula. Sure, the fast-growing site with 400 million users is on track to become a one billion member social networking site, but the momentum behind the race toward an IPO could be slowed with so much revolt by its users.

On the business side, Zuckerberg angered partners who develop games and other applications for Facebook’s users with the introduction of a virtual currency it calls “Credits.” Facebook takes a 30 percent commission every time the currency is used, which has led to a feud with Facebook’s biggest game developer, Zynga.

Zynga already had its own, more profitable payment system — paying a lower portion of its revenue to service providers like Paypal. The rumor is that Zynga, staring at lower revenues, is at a breaking point and ready to walk away from Facebook as a result of the new payment system.

A Zynga spokeswoman declined to comment. A Facebook spokesman said the company has “conversations with our large developers all the time” and cannot “comment on specific discussions.”

In the past, Facebook officials have defended the Credits as a way to increase the number of paying customers, thus leading to all parties making more money.

Michael Lazerow, CEO of Buddy Media, a startup that helps companies and brands build and maintain their Facebook pages, said that it is in “Facebook’s interest to have great game developers.”

But some critics have decided the latest scuffle has sealed Zuckerberg’s reputation as the kind of businessman who will always change the rules of the game to benefit himself.

“My prediction is Facebook will bake all popular applications into Facebook over the coming years and screw their partners even more,” Jason Calacanis, CEO of Mahalo.com, a search engine, told The Post last week.

On his blog last week, Calacanis, a frequent Facebook critic, ripped into Zuckerberg’s overall business tactics, calling him “an amoral, Asperger’s-like entrepreneur” and dredging up rumors of Zuckerberg’s past, including “stories of him screwing over his former employers at ConnectU and his early partners at Facebook.”

While Facebook feuds with Zynga, some high-profile users have been deactivating their Facebook accounts, leading to discussions over whether Facebook has lost its cool.

Peter Rojas, co-founder of Engadget, a Web log that covers gadgets, tweeted on May 6 that he was shutting down his Facebook page. Among the reasons cited, he mentioned both “not having real control over what I’m sharing” and the trend factor.

Brent Marcus, a senior digital strategist at IPGs Emerging Media Lab, said while the backlash is primarily coming from the “digerati” — a small but influential group of online entrepreneurs — it is spreading to the broader public. At the same time, he said there is really no viable alternative to Facebook, making it difficult for people to flee the site.

“For those individuals that cancel their accounts, where are they going to go?” Marcus said.

CEO Mark Zuckerberg is changing the face of Facebook as it moves from dorm-room startup to “Fortune 500” company prepping for an IPO.

About-face:

* Tells game app developers they must use Facebook virtual currency and pay company 30% commission.

* Facebook keeps rolling out more privacy settings, making it harder for users to limit dissemination of personal info.