Causes, Inside Facebook notes, is part of Facebook's "Great Apps" program — handpicked applications which enjoy special treatment from Facebook, including more frequent appearances in users' news feeds. What makes Causes a Great App? One hopes it doesn't have anything to do with Green being Facebook CEO Mark Zuckerberg's Harvard roommate. (Chart by Inside Facebook)

By Facebook's math, one $25,000 grant + one $250,000 grant = a total of $250,000. In announcing the Round I winners, Facebook's Catherine Lee pulled a $225,000 figure out of thin air: "Once round two closes in December, we will announce our five finalists, each of which will receive up to an additional $225,000 in funding." I'm sure Facebook flack Elliot Schrage has some highly entertaining explanation for this which he will deliver straightfaced to other reporters, who will then call us and howl with laughter. For now, we're content to just blame Sheryl Sandberg.

Facebook had first promised an announcement for September 22, then October 10. The results finally came today — only after Valleywag pointed out the ongoing delay. Facebook is now spinning the "amazing diversity" of its winners. Translation: They gave up and picked them at random. A suggestion to Facebook's grant-granters: If no one deserves a prize, it's totally okay not to give one.

Here's an update for anyone who didn't get the memo: Facebook's applications "platform," a set of software tools for embedding timewasting entertainments within the social network's pages, is not a level playing field. Some applications are more equal than others. That's only become clearer since Facebook foolishly put Facebook's platform in the hands of its top flack, Washington-trained bloviator Elliot Schrage. Facebook's Great Apps program, meant to designate higher-quality applications, has become a shameful excuse for nepotism.

Awarding money on the merits is hard enough. When you mix in the need to help out your COO's brother-in-law's pet startup, or your ex-president's latest venture, it complicates matters. Is Facebook going to come out with a list of apps to fund that it's truly proud of? Or will this look more like an appropriations bill after it's made its way through Congress, larded with earmarks?

Build, or perhaps buy. In July, RockYou acquired Speed Racing, one of the top games on Facebook. But RockYou, in diverting its attention from its rivalry with Slide, will face well-funded competitors in startups Zynga and SGN. By the time all this becomes a serious business, isn't it just as likely Electronic Arts will be the Electronic Arts of social games?

"I already have users complain that they can't find apps again on the new profile after first using them. the latest changes will make it even harder," writes one developer. Another: "Yup, this is a very intense change. And pretty useless from a user experience point of view. Hopefully they roll it back immediately or it was just a mistake."

Zynga makes its games easier to win for users who successfully spam their friends into signing up to play. See the above image for how Zynga does this with Attack, its version of world-concquering game Risk. The problem for Zynga and its new investors: The executives who run Facebook's platform don't like this kind of viral growth. In a blog post Monday, Facebook's Paul Jeffries explained:

Facebook is about empowering and connecting people through the sharing of information. That’s undermined if users who receive an invitation or other communication suspect it was sent for an ulterior motive, such as gaining points in a game.

Yesterday, Jeffries' thoughts became rules for the Facebook platform. According to Inside Facebook,

Applications are no longer allowed to “create artificial or inappropriate incentives to use Facebook features (including, for example, sending requests and adding profile boxes).

In the past few weeks, Facebook has temporarily banned apps by top widgetmakers Rock You and Slide, and has punished other popular app makers too, making it clear that widgetmakers which break Facebook's ever-changing platform rules — "crack its code," so to speak — don't get away with it anymore.

That is, unless they're announcing funding from Kleiner Perkins on a day dedicated to convincing Facebook developers that such a sweet deal could happen for them, too.

No wonder. From a Facebook Developers' blog post

Because we want you to follow a more normal sleep schedule than we Facebook engineers swear by, the Hackathon won't last all night long, and instead will be held from 3pm till 11pm.

According to Sarah Lacy's Once You're Lucky, Twice You're Good, those hours means this year's F8 hackathon doesn't deserve the name:

The hackathon is a hallowed tradition at Facebook. It starts when someone in the course of any workday calls for a hackathon. This usually happens about once a month. Anyone except Zuck can call for one. They settle on a night, and over junk food, beer, and Red Bull, Facebook's corps of engineers stays up all night coding. A hackathon has only two rules: the project has to be something cool and it couldn't be something they'd normally work on. Once the sun comes up, they all go to breakfast somwhere together and then they crash the entire next day. All meetings on that day are canceled. [Zuckerberg] knows they could get the same production just working a normal day, and it wouldn't screw up everyone's sleep schedules. But he could never replicate this esprit de corps.

The whole point, in other words, is screwing up people's sleep. But how would you expect an aging flack like Schrage to understand such fine points of hacking?

There may be some wisdom here nonetheless. With animosity brewing between third-party Facebook platform developers and the social network, perhaps trying to create "esprit de corps" between the groups with a groggy all-nighter would have just made things worse. Still, we're sure Zuck is sad to see the F8 hackathon go. The early bedtime means he won't have a chance to replicate last year's "John Hughes moment" with girlfriend Priscilla Chan, also documented by Lacy:

Long after the keynote was done and everyone left was hacking away, Zuck and Priscilla were walking hand in hand, amidst a floor of empty chairs, locked in quiet conversation. The scene was more like a moment from a John Hughes move than the pivotal point that would rock Silicon Valley's startup world. As if they were going to start to slow-dance at any moment.

• Stay up to date with Facebook’s changes to their guidelines, especially in the Developers Wiki.
• If a rule is ambiguous, err on the conservative side. Don’t push the limits.
• Look at other apps, but be wary about borrowing.
• If Facebook has taken any action, As soon as you identify the issue, alter your code and contact Facebook to let them know.
• Focus on building highly engaging apps.
• If you feel like your app is in the clear, spend your time working on the new profile redesign!

If that's the case, Zuck needs to hurry up and buy in. Venture capital for Facebook-application startups is drying up. One way Facebook could make its hangers-on flush again would be with a payments system which allows users to buy and sell things — two activities we've heard many experts consider crucial to any economy.

VCs already were asking why should I not worry about Facebook copying [your widgets]. But it was a theoretical question. Now, it is practical and amplified. I think that Facebook has really killed the potential for investment in the platform or the attractiveness to entrepreneurs. I am unaware of a single VC investment in a Facebook app company post the new regime (Sheryl, Elliot, policy enforcement). and now this will definitely affect matters. The last two VC investments I believe were Friends For Sale and SGN [Social Gaming Network] — doubt either investor is happy nor would they do the same deal again.

If our widgetmaker source is correct, it is bad news for at least two Facebook hangers-on — Zynga, a widgetmaker and SocialMedia, an ad-network for Facebook widgetmakers. Both are trying to prove him wrong by raising a new round of financing.

A source tells us SocialMedia founder Seth Goldstein spent last week in New York trying to raise $20 million. A VC in the community confirms he's recently heard Goldstein's pitch. Goldstein himself tells us, "We're talking to investors," but he wouldn't confirm the terms.

Zynga, which in January raised $10 million in funding from Union Square Ventures, Peter Thiel, Reid Hoffman, and Bob Pittman, is said to have hired a bank in order to find more funding.

Goldstein says that those worried about worried whether Facebook's aggressive moves against Slide will stunt VC investment in startup widgetmakers should worry about top widgetmakers like Slide or its closest rival, RockYou, instead.

These guys wanted to believe there wouldn't be a long tail of apps on the Facebook platform. But Facebook wants lots of little apps relevant to lots of little groups. Two guys from Estonia will be able to beat a team of 45 top flight engineers. Facebook doesn't want three major developers taking over the platform like some kind of CBS, NBC and ABC. Top Facebook apps aren't all going to be made South of Market.

Remember, Goldstein's a Facebook bull because his business depends on it. But one way to read his comment is as a confirmation that no one — including VCs — should expect widgetmakers to turn into large media companies. There may be a future on the Facebook platform, but last year's frenzy that once led HotorNot founder James Hong to declare the Facebook platform "the new Internet"? It's over.

"Yes, we view this feature as directly competitive to a relatively small part of our Top Friends functionality," Slide's Keith Rabois told us. "A developer on any platform must expect that their popular, but simple, features will be absorbed into platform over time."

But none of this has the salesman in Rabois down. He goes on:

You can see that Top Friends has a very large number of complex features that have a complicated back-end (Awards, Visual Personality, Music, world-class skins) — we expect those will continue to be long-term strategic advantages over other large developers and the platforms themselves

The secret of social networking revealed: world-class skin! We always suspected as much.

Rival widgetmaker Slide went through similar traffic troubles a couple weeks ago when Facebook shut down its popular Top Friends app over privacy concerns. But in an earlier conversation, Slide executive Keith Rabois told us that in instead of buying up smaller apps, Slide is pursuing a different strategy:

Slide is in the business of building deeply engaging branded applications, at the same level of complexity and quality as a destination website, and is not interested in assembling a broad portfolio of light weight applications that are merely impression-drivers in an ad network.

There are policies Facebook has issued, but there is always room for interpretation - and in light of current changes, the interpretation is a lot more stringent now in contrast to before.

Facebook's probably getting strict because its preparing for a relaunch of its design in July. Or — and this pure speculation — the third-party security firm Rock You's rival Slide hired to audit its own privacy might have gotten paid a little extra to take a close look at the competition and alert Facebook to any infractions. We wouldn't put it past hypercompetitive Slide founder Max Levchin and his crafty sidekick, Keith Rabois.

Slide rival Rock You's Super Wall saw traffic plummet 70 percent in the last week. InsideFacebook's Justin Smith speculates the dip is due to "some kind of punitive action against the application" over privacy concerns by Facebook, "perhaps by restricting feed access or by lowering the application’s notification or invitation limits." Another source tells us Flixster, the widgetmaker behind the Movies app, is going through similar punishment from Facebook over privacy concerns.

• Track 1: User Experience
• Introducing the New Facebook Profile & More — Learn how to cope with us killing all the viral tricks you used to get users to add your applications.
• Integrating Facebook Connect into your Website — See how easy it is to let our users use all your features and stay on our site, as our users. We're the platform; you're the app, bitch.
• Building Great Applications on Facebook — We'll discuss guiding principles and best practices. For example: no more apps based on R.L. Stine characters.
• Design and User Experience at Facebook — Hear directly from the Facebook Design team on how we think about design and how little we think of yours.

• Track 2: Technical
• Advanced App Building — It's easy to build a simple Facebook app in a couple hours, but you'll just be embarrassing yourself and annoying our users. In this talk, learning the caching features of FBML, advanced features of FBJS, smart uses of the API, and more.
• Feed and Social Distribution — With the new Facebook profile, you won't be able to spam users into submission. Learn how to design great Feed stories!
• Building to Facebook Scale — Facebook handles hundreds of millions of requests per day. Your apps probably can't. We'll try to help you fix that.
• Made for Mobile — Mobile devices are opening up and creating new opportunities. For Apple iPhone developers. Why are you here?

• Track 3: Business
• Building a Business on Facebook / Metrics & Analytics — Learn everything about how to build a business on Facebook Platform from developers who are doing it. This way you'll believe its possible, and they'll be flattered by our attention.
• Marketing your Application on Facebook — You've developed an application. Now what? This session will cover how to trick users into thinking their friends won't like them anymore if they don't install it.
• Entrepreneurship on Facebook Platform — In this session you'll hear from industry luminaries in venture capital and seasoned, multi-company entrepreneurs who owe us favors or are living off past successes and have nothing else to do.
• fbFund: A Look Inside — Seeding Opportunity on Facebook Platform — Learn about the inner workings of fbFund and see what the grant winners are developing so you can spend all your time copying them while some developer in Austin who stayed away from this pointless gabfest actually builds something no one else saw coming.

Commagere, in the past, hasn't helped clarify matters. Last year, he told GigaOm that RockYou hosted his applications and provided some cross-promotion, then hastened to give the company more credit:

At this point I’ve partnered with them on the app and they are contributing far more resources than just infrastructure. It’s eased my pain of looking for more programmers and I’m now enjoying being able to focus more on the creative aspect of it.

He must now regret those comments, which won't help his case in breaking free from RockYou — if that's even his goal. Talk about your words coming back to bite you.

Why the $150 million drop from March to June? In part, RockYou founders Lance Tokuda and Jia Shen can blame Facebook's spam-killing redesign, which will eliminate some of the tools RockYou used to increase the popularity of its widgets. But our source takes a shot at Tokuda and Shen, too. He tells us:

The reason the round took so much time was because the valuation expectation was inflated. They had unrealistic expectations and "team" really matters when you raise capital.

Not that that's so unfair of a shot, considering Tokuda and Shen's lawsuit-wracked history.

Facebook's upcoming redesign eliminates much of the viral growth widgetmakers such as Slide enjoyed during the platform's first year and these developers aren't happy about the changes. Last month an executive at one of the widgetmakers told us this lost enthusiasm for the Facebook platform seriously damaged the company's value.

FB's valuation is driven by the perception it can serve as a platform (or launching pad) for derivative businesses. Without that perception, FB is a $3-5 B company. Period.

Byron Ng, the inquisitive Canadian computer technician who found a hole in MySpace's linkup with Yahoo, tipped me off to this trick, which works with a wide range of widgets, he says, whether or not you're friends with a given user. (SuperPoke has a private-actions option, but it's hard to find and few people seem to use it.)

Is it scandalous to learn that, say, Slide CEO Max Levchin has "bitten" Facebook CEO Mark Zuckerberg? Not especially (though Levchin went through a rather disturbing biting phase last month). What it tells us, really, is just how unseriously people take the widgets on Facebook. That these applications have remained wide open just goes to show that they don't do anything worth hiding. And where's the fun in that?

The news, long expected, that Facebook would open-source its platform is not reviving the buzz. And the comparisons people are making now are not as complimentary.

A revamp of how Facebook handles third-party applications is "Orwellian," one observer says, which I suppose makes Zuckerberg Big Little Brother. "We've heard from many users that adding applications is cumbersome," writes Facebook developer Pete Bratach. And yet application-tracker Adonomics reports that Facebook users have installed more than 912 billion applications. The real effect of Facebook's redesign is to make it less likely that Facebook users will install applications their friends use. This may reduce complaints about annoying applications, but it will also slow the spread of applications on Facebook from user to user — an overwhelming part of the Facebook Platform's appeal.

It's sensible for Facebook to do something about its reputation for being all about zombies and pirates. What doesn't make sense is dissembling about the reason it needs to. Facebook's problem isn't that applications aren't popular enough; it's that they've become too popular, and grown out of control. The changes to how applications get added, as well as changes to the design of profile pages which downplay applications, will put more of Facebook's screen real estate back in its control. Why not just say that?

Because Facebook needs to maintain the loyalty of developers, if only for appearance's sake. I've never been convinced that widgets add that much to Facebook in a business sense. But they gave Facebook Valley buzz, which it cleverly, and profitably, capitalized on. Microsoft would never have invested in a mere social network — but start talking about Facebook as a computing platform, and the likes of Bill Gates get interested fast.

Which is why, when Facebook executives get up on stage talking to a Wall Street crowd, as Mark Zuckerberg and Sheryl Sandberg did last week at the D6 conference, they're swift to talk up the work of developers. But on the site itself? They'd just as soon the developers disappear.

(Photo by Brandee Barker)

• No incentives may be given to a member for sending a message, bulletin, comment, or any other form of communication. This includes "points," "bucks," increased standing, or even features within the app.
• It must be very clear to a member what they are sending, when they are sending communication. "Share with friends" is not sufficient messaging, the link must state "send comment," "send bulletin," and so on.
• The "no popups" rule we have had in place since day one applies to messaging windows. This means no more popping up a messaging window the first time someone tries to use an app. No popping up messaging windows without a user clicking on a very clearly marked link.

FB's valuation is driven by the perception it can serve as a platform (or launching pad) for derivative businesses. Without that perception, FB is a $3-5 B company. Period. When developers lose enthusiasm for the "platform," every FB employee has their net worth cut by 67%.

Building gimmicky widgets that serve no real use, third-party developers had too much success, too early, too easily, on Facebook's platform. For all his puffery, Facebook CEO Mark Zuckerberg is correct that useful applications could and should be built on the connections between people and their shared interests. Yet so far, I can't think of a Facebook application I've installed that I can't live without. So why should the developers who built so much junk continue to be successful? They shouldn't. And if Zuckerberg's new rules force these developers to dream as big as he does — sometimes awkwardly and in public — then good.

His other argument is that sponsored applications, such as Federated Media's BMW "What Drives You?" campaign, can provide — take a deep breath — "more directly aligned and integrated brand experiences" than Facebook's own Pages product, which maybe lets users post some video if they like.

Smith is preaching to the choir. His readers are mostly hopeful developers who have already bought into Facebook CEO Mark Zuckerberg's promise of an ecosystem on the Facebook platform, so we're sure his optimism is appreciated. The problem with Smith's theory is that for apps to take advantage of user intent, they need to offer actual services in specific areas like travel, finance and shopping. So far, all most of these optimistic developers have built are apps intended to provide a pixelated picture of "fun," or prey on adolescent insecurities.

Users have already learned to ignore app invites and Zuckerberg surely realizes it. That's why Zuckerberg felt comfortable downplaying applications with his original plans for Facebook's upcoming redesign, provoking strong reactions from developers. It's hard to say which side was greedier, and which more richly deserves its comeuppance .

Think your friends are hot? Let them know by adding them to your 10 Hottest Friends List! Get friends to add you to boost your own Ranking!

Developers, both small and large, told us they hated the idea. Still, since Facebook owns the platform, Zuckerberg should have been able to ignore their criticisms and protect Facebook's new moneymaking plan. Now, instead, there's a new tab on user profiles for just the News Feed. When he launched Facebook's platform, Zuckerberg drew comparisons to Bill Gates, the creator of another powerful platform. But Gates bullied developers, not the other way around.