Analysis of the Transformative Effect of Facebook in Economic Terms


It is undoubtedly evident that there has been a rapid increase in regards to the transformative entities in the contemporary epoch. Apparently, the majority of these entities encompass to a very large extent the significance of technological advancements. However, regardless of the technological advancements, the rapid increase of the entities can also be attributes to a reasonable assortment of factors in endurance presently.

Conspicuously, in this particular assignment, the transformative entity in selection happens to be Facebook. The company functions in the global dimension majorly as a social networking company. Conferring to the preceding years since the company was established, it is noticeable that Facebook has played an enormous role in prompting transformative implications to the majority of individuals concerning the utilization and understanding of the internet and the economic world (Kirkpatrick, 2011). The primary rationale for this is because the company has constantly involved itself in the advancement of social media applications for persons to link to each other through mobile phones, computer systems and other numerous platforms. Consequently this has enabled the majority of individuals to share sentiments, notions, pictures, videos and other numerous undertakings online.

source from Google

Type, History of Development and the Rise of the Transformative Effect


In regards to the type of this particular entity, it can be regarded to be a social networking service. Precisely, the service eases the manner in which people link with each other and also how they get to share stuff with their loved ones who may happen to be in far geographical locations.

History of its Development

source from Google

The majority of persons have often considered the history of development in regards to Facebook very fascinating. Initially, the service was founded by an individual known as Mark Zuckerberg. Mark at that particular time was of the age, 23 years. Besides, he was a psychology student at the Harvard University. Apparently, based on the fact that Mark was a robust computer programmer, he had previously developed multiple social-networking websites for his colleague students (Croft, 2007). Some of these sites included the Course-match, whereby the users were permitted to see the other individuals taking similar degree programs, and Face-mask, where a person could possibly rate other people’s appeal.

Specifically, the service was launched in February 2004. Subsequent to its launch, 1200 Harvard learners had already signed up within duration of 12 hours. Besides, after just a one month an estimated half of the undergraduate populace was in possession of a Facebook profile. In essence, this promoted Mark to want to extent the service to the other Boston learning centers, the Ivy League and ultimately all the United States universities.

In August 2005, the service changed its name and was consequently referred to as “”. This event took place subsequent to the purchase of the address. The majority of the learning institutions especially the high schools were able to sign up to the service as from September 2005 promoting the commencement of the global spread. Conspicuously, within a period of one month, the majority of the Unites Kingdom learning institutions especially the universities had already signed up to the service.

As of September 2006, the networking service happened to be protracted afar educational learning centers to any individual with a registered email address. Since then, the networking service has persisted free fro persons who may envision on joining and in most instance; generates significant amounts of revenue through the  advertisements. However, based on the service’s prosperity, several giant companies such as Yahoo and Google have expressed imperative attentiveness in a buy-out.

The Rise of the Transformative Effect

Facebook, in due course, has proved to have a significant transformative implication especially in regards to the economic dimension. Initially, the event of communicating between diverse business persons happened to be reasonably problematic. In addition, it was also anticipated to consume some significant duration. However, this has gradually changed since Facebook was founded. Specifically, the networking service has played a vital role in enabling worldwide economic undertakings. In essence, this has been arrived through the aid to unravel new breaks through linking diverse persons and business, lowering barricades to marketing, and ultimately inspiring innovation.

A roust research undertaken in 2014 clearly depicted the transformative effect that this particular networking service has had to persons. Conferring to the research conducted, it was estimated that through the networks of marketers, software developers and suppliers of connectivity, the networking service has enabled approximately $227 billions of fiscal effect and 4.5 millions occupations internationally. Essentially, the majority of these implications accumulate to mostly third parties that function mostly in the service’s bio-network, and eliminate the manoeuvres of the service itself.

Ownership and Business Model


Being one of the giant networking service, Facebook is owned by a few individuals. Apparently, the ownership of the service is based on the shares a specific individual holds for the service. Firstly, there is Mark Zuckerberg who tortuously hold about 12.18 million Class A shares through a succession of capitals, and a monstrous 365.72 million Class B shares. Notably, this information is in accordance to the service’s April 12, 2019, delegation statement (Marshall & Shipman, 2015). Secondly, there is Eduardo Saverin who is currently holding an approximate 7.5 million Class A shares of the service. Besides, Eduardo also has 45.9 million Class B shares that provide for 6.7% authority to vote (Marshall & Shipman, 2015). Thirdly, there is Dustin Moskovitz who presently is holding 32.6 million Class B shares. The list does not cease at this point. There are other numerous shareholders but the aforementioned hold the largest portion of the service’s shares.

Business Model

The Facebook business model is happens to be relatively meek: It involved the event of advertising for stuff through the numerous ads (Oxford Analytica).

source from FourWeekMBA

Information Regarding the Service

Its Place In The Industry

For the longest time, Facebook has been categorized to be in the social media networking and advertising industry. The primary rationale for this is that it offers an imperative platform or rather space whereby persons are able to link up together and in realtime. Besides, it has also established a critical space where businesses can be also to promote their commodities through various concepts of advertisements.

Working with Partners

As aforementioned, Facebook has incorporated major shareholders and also partners. In this contemporary epoch, the majority of organizations are finding it significant to incorporate multiple partners for the purposes of ensuring they create a robust market, generate numerous resources among others (Constine, 2013). Among the various companies that have partnered with Facebook include ad technologies such as AdRoll, Community management companies such as, Creative platforms such as EyeView, audience data providers such as Epsilon among others.

source from Google


Conferring to the issue of competition, Facebook competitors can be assessed in two major dimensions. Firstly, as social networking and secondly as an advertising service. Primarily, considering Facebook as a social networking service, it has numerous contestants globally such as Twitter, Instagram, Pinterest, and LinkedIn (Haucap & Heimeshoff, 2014). However, the service has constantly maintained its status of being the market frontrunner.

On the other hand, considering Facebook to be an advertising service, it still has an assortment of competitors. Over the preceding years, there has been a major shift in this particular industry. This is because, Facebook presently not only contents with Google, but is also contested by other entrants such as Amazon and Snap. Similarly, multiple ad networks have commenced doing very well also hence this ought to be a cause of apprehension for Facebook in the coming days.

Commodities Supply

For Facebook to conduct its business appropriately, the most significant role ought to be played by majorly the businesses and companies who envision on advertising in the service (Treadaway & Smith, 2012). Based on this, it is accurate to stipulate that most of the business and commodities supplies happen to be the business advertising.

Regulation of the Service

Recently, in one of the most, Mark Zuckerberg called for the congress to govern the service, Facebook. Specifically, in his post, Mark offered some significant in regards to four areas of policy. The four areas included the following: harmful content, election integrity, privacy and data portability (Douek, 2019).

Service Usage

The utilization of the service normally occurs in two dimensions; the advertising dimension and the social networking dimension. The advertising dimension is whereby businesses set up their profiles, and consequently pay so that they are able to advertise for their commodities (Lampe et al., 2020). Nonetheless, the social networking dimension usage involves a mere procedure whereby anyone on possession of an active phone number or email address can create their profiles and content with the rest of the individuals.

Relationship of Factors

Ways in Which This Entity Has Transformed the Utilization of the Internet

Conspicuously, there are plentiful ways in which Facebook has transformed the utilization of the internet by individuals (Eranti & Lonkila, 2015). One of these ways is the manner in which persons relates socially. Facebook has adequately established a space whereby individuals from different geographical locations can converse in real time, share diverse ideas and also send pictures and videos to each other. Unlike the convectional days, this has proven very imperative based on the fact that there are no intermediaries to aid in the communication processes. In addition, it has also ensured that individuals reduce the amount of expenses utilized in the communication procedures.

Concerning the utilization of the internet, Facebook has ensured that the majority of business and organizations now focus on the advertising platforms offered in the service. Essentially, this has been a major shift bearing in mind that for the longest time companies have solely focused on undertaking advertisements either on the radio or television platforms (Eranti & Lonkila, 2015). The service has adequately introduced a model whereby individuals can either connect freely or advertise their commodities through the running of the ads in the service.

Moreover, Facebook has been utilized effectively in the mobilization of cultural change. In essence, this is because in the event people from different cultures diverse, there is to a significant extent the exchange of cultural ideas. Consequently these ideas once executed play an enormous role in the modification of different cultural beliefs and traditional in regards to different individuals.

Ultimately, it is fair ti articulate that the emergence and the rise of Facebook has triggered new regulatory processes that are solely aimed at various aspects. Some of the concerns raised by Mark Zuckerberg have adequately commenced new regulatory measures to avert issues such as harmful content and data portability.


It is undoubtedly evident to state that Facebook has played an integral role in the transformation of the manner in which the internet is utilized. Persons are now able to undertake special product and services advertisements at the comfort of their residences. In addition, they are also able to communicate with their friends and loved ones in real-time. Some of the persons are also using the platforms to generate cash by offering created content that persons can watch in the event they want to .


References list

Constine, J. (2013). Facebook’s cutesy annual report to partners reveals first country-by-country mobile stats.

Croft, C. (2007). A brief history of the Facebook.

Douek, E. (2019). Facebook’s Oversight Board: Move Fast with Stable Infrastructure and Humility. NCJL & Tech., 21, 1.

Eranti, V., & Lonkila, M. (2015). The social significance of the Facebook Like button. First Monday, 20.

Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization ?. International Economics and Economic Policy, 11(1-2), 49-61.

Kirkpatrick, D. (2011). The Facebook effect: The inside story of the company that is connecting the world. Simon and Schuster.

Lampe, C., Vitak, J., Gray, R., & Ellison, N. (2012, May). Perceptions of Facebook’s value as an information source. In Proceeding of the SIGCHI conference on human factors in computing systems (pp.3195-3204).

Marshall, C.C., & Shipman, F.M. (2015, February). Exploring the ownership and persistent value of Facebook content. In Proceedings of the 18th ACM Conference on Computer Supported Cooperative Work & Social Computing (pp.712-723).

Oxford Analytica. Facebook’s business model may need to evolve. Emerald Expert Briefings, (oxan-es).

Treadaway, C., & Smith, M. (2012). Facebook marketing: An hour a day. John Wiley & Sons.