The Agenda

The Facebook App Economy

Leena Rao of TechCrunch reports the findings of a new University of Maryland study:

Although the U.S. employment and jobs economic outlook is bleak, a new study released today reports that Facebook is creating a thriving economy around its social network. According to new research from University of Maryland, the Facebook App Economy has added at least 182,000 new jobs and contributed more than $12.19 billion in wages and benefits to the U.S. economy this year. Using more aggressive estimates, the Facebook App Economy created a total of 235,644 jobs, adding a value of $15.71 billion to the U.S. economy in 2011.

The study evaluated jobs created in the app industry (direct employment), jobs created in other sectors of the economy from Facebook’s ecosystem (indirect employment), and the economic value of those jobs, including salary and benefits.

The Facebook app economy is only one example of a U.S. knowledge company creating a platform for related services and products, the other familiar examples being Apple’s iOS and Google’s Android OS. As Henry Chesbrough, author of Open Services Innovation, has argued, “innovating in services is the escape route from the commodity trap.” One potential problem is that innovation in heavily regulated services, like health and education, is difficult to achieve due.

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.
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