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Why a top Facebook app maker vanished

By Julianne Pepitone, staff reporter

NEW YORK (CNNMoney.com) -- Facebook said Wednesday it has deleted all applications created by Pencake, wiping out widgets used by an estimated 45 million Facebook members.

Pencake, based in Hong Kong, developed the massively popular "Create Your Quiz" app. Unofficial data tracker AppData lists Pencake as Facebook's No. 3 most popular outside developer, trailing only Zynga and Electronic Arts.

But Facebook says Pencake built its vast user base by going rogue.

"We recently disabled applications created by Pencake for violating Facebook Platform policies," Facebook said in a prepared statement. "We enforce these policies regularly and will continue to take appropriate action against applications we find do not provide a trustworthy experience for users."

A Facebook rep declined to specify which policies Pencake violated, but she cited the "main principles" of the site's code of ethics, which discourage Facebook users from spamming or infringing on members' privacy.

Pencake has been known to push the boundaries on Facebook. Members and other developers have complained that the company's apps used spammy tactics like automatically publishing stories to users' pages.

Some Chinese developers even claimed that Pencake admitted in a Hong Kong paper to spamming users at one point, though the company also reportedly said that it was working to scale back those methods.

It would hardly be the first to build Facebook traffic in unsavory ways.

The most notorious scofflaw is Zynga, whose games include FarmVille, FishVille and Mafia Wars. The developer once piled users' Facebook pages with a constant barrage of game notifications, which helped it lure in more players.

Facebook eventually tightened the reins on third-party notifications, but Zynga had already grown powerful. It claims to have 235 million active users a month -- almost half of Facebook's total 500 million users.

Zynga reportedly sucks in revenue of $1 million a day daily, mostly from users paying real money for virtual goods like tractors and animals for their online farms.

Social gaming is fast becoming an M&A battleground, with Zynga one of the few remaining independent developers with a sizeable user base. Electronic Arts (ERTS, Fortune 500) jump-started its presence by snapping up Playfish in November for $275 million in cash plus other incentives, and Disney acquired Playdom this week in a deal it valued at up to $763 million.  To top of page

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