Twitter has an enormous advantage over Facebook in one key area: while people on Facebook tend to friend their friends, people on Twitter tend to follow their interests. The social graph that makes up Twitter is worth far more on a per-account basis because it is directly monetizable in a way that Facebook’s generally isn’t – you can show prophylactic advertisements to Twitter users based solely on the people they follow, and probably get a much higher rate of interest. Compared to other social display ads, Twitter ads, it is rumored, work extremely well.
Outside of the direct value from its graph, Twitter is in an extremely unusual position for a social service. While it is ostensibly a sharing service, it is actually a broadcasting medium. People use Twitter more like they use TV; they follow accounts they are interested in, namely celebrities and companies, and then they consume the content as a form of entertainment. Normal people have very little incentive to use Twitter except to communicate unidirectionally with their interests. This is why it has been shown that the vast majority of Twitter users who sign up never tweet, even though a huge number of those people view their feed often.
I suspect the reason that Twitter is cutting off apps from using its “friend finder” feature is because most people do not create content in Twitter and therefore have no incentive to use Twitter outside of the value of its graph. Unlike replicating or using the Facebook graph externally, relocating the Twitter graph can have disastrous consequences for Twitter. Lots of celebrities use Tumblr, and if you can instantly relocate your Twitter graph into Tumblr, then what value does Twitter have, other than a more restricted set of content? What about App.net? Twitter is in an even worse position than MySpace to fight off a disruptive competitor.
The solution Twitter has taken involves barricading the walled garden, keeping the valuable tweet data inside Twitter, and removing all incentives for people to move to other, similar platforms.
The problem with this solution is that Twitter was built on the backs of the very developers it is now blocking. It now expects those developers to continue supporting Twitter by syndicating content into its platform, but it no longer wants to provide any value to developers in return. This is an extremely dangerous position because it creates resentment in the minds of the people most likely to influence the future. When the disruptive competitor comes along – when, not if – who are the developers going to side with? And since Twitter has little value outside of its graph and contains only shortly-lived, ephemeral content, where the developers go, the users will follow.