Facebook has become one of the most popular social media platforms today, garnering a range of users from around the world. Building on the idea of interconnectivity and online communities as its foundation, Facebook has been playing a significant role in transforming web technologies and both the online advertising and the social media industries. Facebook’s large user database and its role in online advertising has also become a growing influence in various social and cultural aspects.
Thus, I will be profiling and analysing the transformative effects of the social media platform Facebook through its historical development, business models, competitors in its related market and social and cultural impacts that it causes in the local and global context.
What is Facebook?
Facebook is an online social networking platform based in the US and it is described as “a social utility that helps people communicate more efficiently with their friends, family and coworkers” (Facebook, as cited in Mauri et., 2011, p. 723). The social networking site creates technologies which helps bring people together through building connections and communities, and also provides a space for businesses to grow (“About Facebook”, 2020). Facebook provides the social web tools for sharing, engagement and communication which enhances our social experiences without the need of face-to-face interactions (Hart et al., 2008). Some of Facebook’s features include sending private or public messages, posting status updates and photos, and the ‘like’ and ‘share’ button which all provide a way of engagement with others on the platform.
Historical overview of Facebook’s development
As reported in the Brandwatch article published in 2020, Facebook started as a website called “Facemash” by Mark Zuckerberg in 2003. It was created for Harvard students to judge each other’s physical appearances. The website had attracted many users in a short time span, however, it was met with controversy and was shut down by the Harvard Administration Board due to its violation on both Harvard and privacy policies such as the use of students’ pictures without their permission.
Picture showing Facebook’s original profile page
In early 2004, “Thefacebook” was launched to Harvard students. The platform allowed users to build social profiles, share pictures, interests and form connections with others online. The platform was met with immediate success and received numerous investments from other major firms such as Paypal and Accel. Soon after, the name of the platform was changed to ‘Facebook’. Due to its popularity, Facebook was made available to university students in the US and Canada and in 2006, the platform was accessible to all internet users. Since then, it has continued to see growth in the number of its members.
Facebook has played an important part in enhancing our previous offline relationships through an online platform. Users have first started to use Facebook as a way of maintaining relationships with others using the search tool to ‘find’ and ‘add’ old friends (Hart et al., 2008). Furthermore, the platform was perceived to be easy to use by its users and their experiences of activities such as browsing photos and communicating with others were seen to be positive (Hart et al., 2008).
Facebook’s business model
As a social media firm that integrates online advertising, attracting users and increasing user engagement were important aspects for Facebook. Stated in the Omnicore statistics report, Facebook is the most popular social media platform with over 2.7 billion monthly active users and 74% of its users who visited the website daily. Facebook was able to attract a large number of users, especially young adults since the launch of the platform and through building its brand awareness from targeting a niche audience of university students to a larger global internet-using audience (Hart et al., 2008). The video below posted by New York Times informs us on how user’s data is collected.
As Facebook continued to grow their user base, product and service providing companies were starting to take interest in such popular and widely used social media platforms as they are seen to have the ability to effectively spread information on their products and services to potential customers (Luarn et al., 2015). Thus, user engagement is the central focus of Facebook that could highly determine the success of social media platforms (Oliveira et al., 2016).
Using their large user base to their advantage, Facebook was not only using its platform to allow users to communicate and connect with one another but was also able to generate revenue through using it to promote advertorial content (Lin & Chiu, 2015). As Facebook users come across advertisements on their timeline, their engagement with such posts through likes and shares could further promote the content and help boost sales of the affiliated company of the advertisement (Lin & Chiu, 2015). Furthermore, Facebook collects user data through their engagement with news stories and posts which reveals information such as users’ interests, their geographical locations, and their political beliefs (Goggins et al., 2017). Through this collected user data, Facebook uses their own algorithm to segregate their audiences to see certain types of advertisements, according to their preferences and taste (China business report). As reported in the Investopedia article, Facebook generates almost all of its revenue through selling advertising to marketers and it earned a revenue of $21.1 billion in advertising in the third quarter of 2020 which is estimated to be 99% of the company’s total revenue. Thus, with Facebook’s strong market power in the social media industry, Facebook was successfully able to facilitate marketing activities through online advertisements (Yang et al., 2019).
Facebook’s internet ecology
As seen in the Smart Insights report by Dave Chaffey, Facebook holds major market power in the social media industry as one of the most popular and fastest growing social network with the highest number of users, as compared to other social media platforms such as Twitter and Snapchat. It is also significant to note that Facebook is blocked in China and is also competing with major companies in China. Thus, Facebook competes with other major players in the social media and social networking industry including WeChat, Twitter, Snapchat, TikTok, Pinterest and LinkedIn. In the online advertising industry, Facebook competes with other dominant players such as Google and Amazon. Additionally, Facebook also competes with Youtube as video sharing platforms.
As noted in Amy Gesenhues’ Marketing Land report, Facebook works with multiple third-party marketing partners including Accenture, Analytic Edge, Analytic Partners and Annalect. In addition, according to a Shutter Stock report by Mindy Loverin, Facebook also work with image and video producing platforms such as VidMob, and advertising platforms such as Smartly.io and Pixability.
Facebook has been largely outsourcing content moderators for their platform. Apart from outsourced content moderators, according to the TechCrunch report by Devin Coldewey, Federal and state regulators in the US, and European regulators such as the General Data Protection Regulation (GDPR) also regulate Facebook in their own region.
Figure 1. Facebook’s ecosystem
Facebook’s influences on social and cultural aspects, and regulatory debates
Facebook plays a highly influential role in social and cultural aspects due its dominance in the social media industry and the internet culture. Firstly, Facebook is a major cause for concern when it comes to online privacy due to the lack of transparency (Roberts, 2010). Users in Australia were largely concerned with corporations violating privacy rights and a large majority of them were unsure of how social media companies handled their personal data (Goggins et al., 2017). They were also concerned about the lack of control they had over their privacy as privacy features on social media platforms such as Facebook do not always fully limit the access of information (Goggins et al., 2017). Users also have no control over the information provided to advertisers which highly suggests that there is a need for more transparency and accountability on Facebook’s part (Andreou et al., 2019).Furthermore, Facebook’s analysis of its users’ behaviours is controversial due to the effects it has on politics and voting patterns (Goggins et al., 2017). Although certain regions have strengthened their privacy laws and regulations such as the EU region with the GDPR, and the California Consumer Privacy Act (CCPA), users in other regions such as Australia lack privacy rights due to the weak implementation of privacy laws (Goggins et al., 2017).
In addition, Facebook’s collection of user data and automated system also creates the problem of gender and socioeconomic status discrimination through content biases (). Prices of products on advertisements were set according to the user’s gender and people living in lower socioeconomic areas were not shown certain types of advertisements (Goggins et al., 2017). Thus, Facebook’s collection of user data and their control over users’ privacy represents a form of unethical business practice.
The lack of regulation on Facebook is another cause for concern. Outsourcing content moderators is seen to be highly problematic as social media platforms, including Facebook marginalise content moderators. There is a lack of medical attention and care for content moderators who suffer from psychological side effects from exposure to offensive and highly disturbing online content (Barrett, 2020). The video below posted by BBC News shows the real-life effects of Facebook content moderators.
By outsourcing content moderators for its cost efficiency, Facebook pays inadequate attention to understand the abuse and issues that occurs on their social media platforms as they do not directly make decisions in the content that is allowed to be posted (Barrett, 2020).
Facebook has benefitted us in numerous ways from providing us with a platform to stay connected and maintain relationships with others in an online setting to helping businesses to thrive and grow. Through the exponential growth of its user data base, Facebook was successfully able to become a dominant player in the social media and online advertising industry. With strong global market power, it has been influential in the social and cultural aspects, creating both positive and negative effects on us. The lack of privacy rights and transparency that Facebook provide will continue to remain as a cause for concern for many users which also raises questions of the lack of privacy rights in different regions.
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