Google has launched a pilot programme that will provide funding to developers using its gadget API to develop their own applications.

Under the scheme, developers can apply for a grant if their app is in Google’s gadgets directory and has at least 250,000 weekly page views.

Grants worth $5,000, (£2,500) will be handed out to developers, while seed funding of up to $100,000 (£50,000) will be awarded to those who want to build a business around the Google gadget platform.

The move aims to encourage innovation while ensuring that Google has a stake in  businesses created by the developers.

It also points to the growing importance of third party developers to big internet firms.

Meanwhile, the FT reports that MySpace may alter its widget development policy, with co-founder Chris DeWolfe saying that the network will bring in more developers. Whether this means they will lift the restrictions on advertising is unclear.