Whatever Happened to Facebook's Unbundling Strategy?

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"In mobile there's a big premium on creating single-purpose, first-class experiences. So what we're doing with Creative Labs is basically unbundling the big blue app."

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-- Mark Zuckerberg

Back in 2014, there was an undeniable trend in the evolution of mobile apps that saw many companies transitioning away from bloated, multipurpose apps in favor of stand-alone, single-purpose apps. This was not lost on Facebook (NASDAQ: FB), and it was around this time that the social network embarked upon an ambitious unbundling strategy that involved creating a wide range of single-purpose apps. The underlying rationale is intuitive: It's a lot easier for the user to go straight to a single-purpose app than spending time digging through a multipurpose app to find some function buried within.

The biggest move was when Facebook unbundled Messenger. Despite some initial backlash (the internet tends to overreact about these sorts of things), it proved to be the right call: Monthly active user (MAU) growth took off in a big way once Messenger became a stand-alone app. Messenger has over 1.3 billion MAUs these days, or 6.5 times the 200 million MAUs that Messenger had when it was unbundled.

Big blue keeps getting bigger 

Yet despite the initial success of unbundling, Facebook has slowly but surely been cramming more and more features into the core Facebook app (the "big blue app," as it were). The most recent example is the ability to order food for local delivery or pickup from within the app, but another notable instance would be Marketplace, an online classified section similar to Craigslist.

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If you look at the right sidebar in the app (which resembles the left sidebar on desktop), it's getting awfully long. If that doesn't fit the definition of bloated, then I don't know what does. Case in point, you have to dig through the big blue app to find Order Food, although Marketplace -- a service that Facebook is not directly monetizing -- gets its own dedicated primary tab in the interface.

That last one is particularly confounding, since live video (and video ads) is a massively important financial push that Facebook has invested literally billions of dollars in, yet Top Live is buried in the sidebar. The new Facebook Watch platform that hopes to challenge YouTube? It will make it to the big blue app one day, but it's not there yet.

Messenger incorporated person-to-person (P2P) mobile payments years ago, but many users may not realize this functionality is in the big blue app also because it is hidden in the sidebar. Not that P2P payments are all that important to Facebook, but the space is about to get a whole lot more competitive, and Facebook risks irrelevance in mobile payments.

Just because some apps failed doesn't mean the strategy was wrong

The point of all of this is that Facebook was on the right track to provide a growing family of single-purpose apps that could provide easier access to the most strategically important initiatives that the company was focusing on, but Facebook reverted back to cramming new stuff into the big blue app.

Doing so directly undermines those initiatives and all of the resources that Facebook has invested into them, since it needlessly limits user exposure. Users probably don't realize half of those sections are there, which is precisely the problem.

The inflection point was likely in late 2015, when Facebook quietly shut down Creative Labs, the internal division that was primarily responsible for developing these stand-alone apps. It's true that some of the new single-purpose apps were flops, like Slingshot or Rooms, among others, and that developing stand-alone apps costs more than bundling into the core app, but that doesn't mean the strategy itself was flawed. Rather, the execution or vision for the services was lacking.

More recently, it seems that Facebook is focusing more on growing through acquisitions or by replicating features from other social media platforms. His Zuckness also hopes to turn augmented reality (AR) and virtual reality (VR) into the next major computing platform, so there's that, too. But if Facebook wants any of these experimental new features and services that have optionality to actually succeed, it needs to give them a better shot by making stand-alone apps.

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Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.