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Facebook destroys billions of dollars of shareholder value with their open source projects

Facebook destroys billions of dollars of shareholder value with their open sourceprojects

Projects like React and React-native have exploded in popularity and shareholders are not being rewarded for it. The potential missed opportunity is well over 3 billion.

The software development community has access to an enormous amount of open source tools. From RabbitMQ to Materialize.css, high-quality tools are often distributed for free under the banner of open source. While Facebook isnt the largest open source contributor, but some of their engineers have spent their time creating some of the most sought-after libraries on the planet with React at the top of the stack. Shareholders have not received any of the value that these projects have created.

Popularity of React and ReactNative

The past four (q2, q1, q4, q3) quarters of conference calls have neglected to mention the explosive growth of any of their open source projects. React alone is used in at least 770 projects including the likes of Tesla, Amazon Video, Twitch, Bleacher Report, and Walmart. Github stars currently put React in 3rd place with an approximate compound annual growth rate of 52%. Downloads on NPM, the de facto standard for Javascript packages is nearly 3 Million for the week of October 13, 2018. Its declarative nature makes reusing Components (bits of code) easy and nearly seamless. There are tons of tutorials, resources online as well as a massive technical community. There is no doubt the product is fantastic and will likely improve in the future.

Facebook has done an enormous service to the development community but they accomplish this at the shareholders expense. They also forfeit the opportunity to diversify their revenue sources as they increasingly become reliant on the nonrecurring advertising model. Even if they built services around their open source projects as Amazon does with Aurora DB, that would be a better outcome for shareholders than nothing.

View the entire spreadsheet here

If you havent seen part two yet, view it here.

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