It's Facebook's platform. Sometimes they are going to create internal products that compete with developers' ideas. The fact that they brought you in, explained what they were doing, and raised the possibility that they were willing to give you what I assume to be a boatload of cash to compensate you for your efforts seems almost comically generous to me.
The simple fact of the matter is that they CAN crush your business. They seem to be cognizant of that fact and were wiling to do something to help you. All I can say is that I'll bet most people reading this wish they had this kind of "problem" and would be writing "thank you" letters to Mark Zuckerberg, even if we ultimately rejected the offer. The title of this story could easily have been "This Just In: Facebook Has a Heart".