The API rating agency

How to stabilize the API economy? With trust. Here I am trying to find a rating model that helps developers manage risk and opportunities in using APIs. Every critical point of view is welcome, this is a tool for us, let's build it together. Mehdi Medjaoui, from Webshell.io
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The 20th century was also about the arrogance of giant companies.

Banks and insurance companies presumed to do the worst short-term businesses in order to make yet more money, without any vision, doing high-risk business, with no consideration for final customers.

They were doing it because they managed to become the basis of the whole system. Those companies knew they were getting so big that, no matter the gravity of their mistakes, they would always get rescued by the government, thus by the people.

We were their customers, we were buying their products, they were redistributing some part of the profits to shareholders: everything was normal.

But when they fall, we have to pay the price for it: we happen to be the last stupid investors of an undead company. Why?

Because they were too big to fail.

It became too dangerous to let them down because all the system was based on them and we would not be able to bear the consequences of a default or a bankruptcy, we could rapidly dive into chaos.

This is, for instance, the story of AIG which has been rescued by the US government after the subprime crisis, or the story of the current Greece and Spain debt crisis which resulted in a rescue plan by the European Union.

The same applies to the API economy system. It is based on trust and long-term vision for developers, but often short-term vision for giant API suppliers.

When developers integrate APIs into their applications, they make a long-term loan from API suppliers. Most of the time everything is fine, business goes well and the ecosystem is growing.

However, some APIs have taken a large part of the market share in their field (Google Maps for Maps, Facebook for personal data or Twitter for tweets for example) and are now too big to fail in the API economy.

They all are the base of an ecosystem of mashups and applications. A lot of startups and developers have based their business on these kind of APIs and are now at the mercy of them.

For example, Twitter has now an estimated more than 1 million 3rd-party applications, Facebook more than 600 000 ones and  Google Maps represents 40% of all the referenced mashups according to programmableweb.com and is now on more than 350 000 websites providing a map, and it is natively integrated on iOS and Android.

But can we do business without them?

When there is enough competition, it is indeed possible. The map ecosystem, for instance, has enough competition to provide other trustable API suppliers.

Big companies can manage the API risk management and have a B plan. This was the case for Apple, Foursquare and Wikipedia. They have decided to leave Google Maps in favor of Open Street Map.

It is just a matter of competition.

But what can we do when there is monopoly?

This is the case for Facebook and Twitter. Facebook has the monopoly on friend feeds in the largest parts of the world (exceptions are Russia, Brazil, India and China) and for now Twitter is the only service dedicated to tweets (seems obvious, I know!).

Concerning the latter, for 2 years now, it is even forbidden to provide complete tweets in a 3rd party Twitter client in order to preserve the official Twitter experience on twitter.com.

Developers have to know that if they base their business on these fabulous social media companies, they are walking on a rope where they can fall at each wind of API change.

And this wind of change, terms and condition change, or quota/rate limit change can come suddenly, without any warning. These providers had this behavior in the past; they will have it again.

Developers have to know that by using today this kind of free monopolistic open APIs coming from companies without a proven business model, they are betting on investors’ monetization strategy that can evolve and change very fast, without any warning.

I would strongly advise developers to preferably trust companies with a proven and viable business model. Even more if their business model is based on APIs. This will greatly enhance the probability that their policy stays the same in the future. Only idiots or short-term investors would change a winning strategy.

If a company with an API, goes out of business or breaks its API then developers, just as insurance customers we all were in the AIG case, will pay twice. First, with their development time and second, with the time they spent on maintenance or on replacing the API with an alternative.

If possible.