Facebook is reeling from the ongoing fallout Cambridge Analytica saga. The company has quickly entered the overreaction phase, as evidenced by Instagram's drastic and unannounced changes to its API.

Without any warning or even an after-the-fact public announcement, Instagram locked down its API last Friday, removing access from a number of apps while reducing the limit for API calls for all others to just 200, down from the previous limit of 5000. Many apps that relied on Instagram's API suddenly broke, without warning. Instagram even took down the sections of its developer website that referenced API limits.

Facebook Pivots to Privacy

For Facebook, the move comes after it had already announced tighter limits around the Facebook API in addition to placing a freeze on reviewing new Facebook apps.

Instagram had already announced forthcoming changes to its API in January, but those weren't slated to roll out fully for two years, with the first round of changes not being enforced until July. That timeline has clearly changed now.

The Cambridge Analytica scandal triggered a sudden shift in business priorities for Facebook. Data access is out, and user privacy is in. Aiming to placate concerned users and, more directly, potential regulators, Facebook's Mark Zuckerberg announced that Facebook would be limiting developer access to user data.

Instagram's sudden, unannounced shift shows just how far the company is willing to go.

Déjà Vu for App Entrepreneurs

Unfortunately, this isn't the first time that Facebook has suddenly changed its API policy. When it first launched the Facebook Platform in 2007 ­- in the era of Farmville and incessant Newsfeed spam - Facebook left a lot of data open to developers. As the Cambridge Analytica debacle shows, probably far too much.

The goal then was to attract as many developers as possible. User privacy was less of a focus. These developers were a boon to Facebook's bottom line in the short term. Just one of them, Zynga, contributed as much as 19% of Facebook's revenue in the year leading up to the Facebook IPO.

For a little while, this state of affairs was great for new developers and for Facebook. But for users, who were getting sick of invite spam and other developer abuses of the API, not so much. So Facebook changed its API policy to limit notifications and the ability to post to users' walls from Facebook apps. Facebook subsequently limited developer access to user data in 2014, turning off the Friends data API that Cambridge Analytica now infamously used to gather its data. (So did the Obama campaign during the 2012 election.)  

These changes left many developers feeling like they'd been victims of a bait and switch. They'd built businesses on Facebook then Facebook suddenly took away the punch bowl. Many developers are expressing similar feelings this time as well.  

Facebook Closing Off Its Platforms

Facebook's sudden pivot to privacy makes sense from a business perspective, given the political environment. But for many entrepreneurs, it signals the effective closing of Facebook's apps as ways to build a business.

Facebook has been slowing locking down its ecosystem for years now, to both content creators and app makers. For example, the drastic reductions in organic reach from Facebook Pages were viewed as ways to try to push more companies toward paid ads. But Facebook's newer apps like Instagram or WhatsApp have typically been a little more open, and they've served as better channels for many new businesses than Facebook itself.  

Instagram's unannounced reversal signals that these days are likely numbered. Faced with regulatory pressure, Facebook appears to be moving all of its platforms much more toward user privacy. You'll still be able to get much of the same user data you're used to for ads - that is Facebook's core business model after all. But many businesses have successfully tapped into Facebook's network in other ways to build their user bases. Many of those avenues are suddenly gone. Some of them will remain, but you should, of course, expect to pay.

While Facebook's focus on privacy may be good for users, for those who depend on its platforms for business, this shift is likely bad news.