Facebook sees startups adding to revenue in boom or bust

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SAN FRANCISCO (Mar 26): Facebook Inc. anticipates that startups will provide a steady stream of revenue as they use the social- networking service to promote installations of mobile applications.

Deborah Liu, platform director at Facebook’s product group, said software developers will probably keep paying Facebook over a long period of time, regardless of the fluctuations of the technology market. Her comments come weeks after venture capitalist Bill Gurley said Facebook could face trouble if it becomes too dependent on ad revenue from startups that are overvalued and are at risk of going bust.

“We work with developers, they spend over time, and they are seeing a good return on investment for adding customers,” Liu said in an interview when asked about concerns regarding a technology bubble. “They’re going to continue to spend over a long period of time.”

Liu, who helped build Facebook’s mobile business by attracting startups seeking to boost app downloads, said that Facebook’s mobile-app install ad business is a small part of $12.5 billion in annual revenue. She declined to give a specific figure.

Gurley, an investor who has backed Uber Technologies Inc. and Snapchat Inc., said it’s risky for Facebook to rely on young, venture-backed companies. His comments alluded to the over-valuation of startups that led to the crash of the technology bubble in 2000, when companies like Yahoo! Inc. got a majority of revenue from dot-coms seeking eyeballs, and didn’t factor in the risk.