Facebook: The superior Platform Business

Question: Do a case study of a platform business. When did the business commence, what are its primary fields of operation, and has it been successful? How does it make money from its activities, and have any concerns been raised about the company?

Platform business are becoming more popular with the rise of social media and the inclusive nature of the business style. A platform business can be defined by Moazed “a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers” therefore producing a system in which many businesses are successfully follow. A popular example is Facebook. The social media platform, was initially started as a communication method between students to create collaborative learning environments. The ideas surrounding Facebook, is to connect with friends and building an online persona through sharing interests, games and hobbies. The exponential growth of the app, allowed it to become a multibillion-dollar company capitalising on spreading and engaging in information.  Facebook, is one of the most famous platform business as it provides an avenue to direct producers to consumers and vice versa. Facebooks acts as a supply link for companies to advertainment their brands, along with connecting people socially through the world. Facebook created the pathway into creating social media apps for economic gain, with many other sources of social media putting different twist, creating different platform businesses.


Platform business are thriving due to the new developments in social interactions, the high demand of importance social media processes and the current needs for new and creative economic strategies.  The main ideas of these types of companies links to participants and trusting and participants in the supply and demand chains therefore creating an independent section (Laudien, Täuscher 2018).  The entire business models act as a link within a chain, creating a meeting point for the supplier and to meet the clientele. Companies that are producing needed niches I the markets, are able to produce a company that as a form of communication. These companies have grown to become popular due to the rise of digital media, creating an online space, not needing the create the physical environment cutting out any geographic or physical boundaries (Laudien, Täuscher 2018).


Socially, platform business has become a norm, in which many forms are heavily involved in our everyday life. A common example is Airbnb and Uber, in which both services connect people to services for limited times for uses. Both systems run similarly, as it issues techniques of renting out spaces, in order to gain an economic benefit from services at lower prices (Laudien, Täuscher 2018). Using Uber as an example, the app creates a pathway, in which people can be picked up and dropped at location, prices tend to be lower than Taxi’s, information about drivers are given for safety reasons and moving form location is more time efficient than public transport. Platform business thrive of the social helpfulness and increased economic gain, in order for people to connect with clientele.


Facebook is one of the biggest social media platforms in current day. While Facebook is a multibillion-dollar company, it started off as a way for college student to interacts about upcoming assignment or classwork. However, after the initial public offering, Facebook stocks crashed as the introduction of mobile phones (mostly the iPhone) were introduced and Facebook did not take the transitions well in the first few months (Frier 2016). However, once the feed transferred across, the uses for Facebook evolved into too many different avenues predominantly advertisements; in which most of Facebook revenue is produced today.


Facebook’s primary fields of operation are consistent of showing advertisements- making up approximately 98% of Facebook total revenue- and selling portal devices and payment fees from developers- approximately 2%- therefore creating essentially one primary filed of revenue (Franek 2021). Facebook also own a large percentage of the total market share, with 23% of all advertisements being used through Facebook making it he second largest only to Google (Franek 2021). It is thought that collectively Facebook user spend 700 billion minutes on the sit each month generating high volumes of clientele (Richardson 2016, pp. 6).


On the other hand, the rise of social media platforms, produces risk for political claims, are both positive and negative effects of social media can be seen. Positively, social media forums like Facebook have been used via politicians and communicate the audiences on a larger scale. Politicians can engage with other to find and produces common perspectives and effective filtering people into sub groups, target audiences to their specific needs (Richardson 2016, pp. 3).


In order to create different money-making avenues, Facebook bought other media media apps including Instagram and WhatsApp to encourage growth in different areas, also creating its own app Messenger as a form of chat service (Frier 2016). Instagram looks at the daily lives of other bringing is the revues from post a following. These social media accounts have changed marketing, with companies paying popular ‘influencers’ to market their product instead of using other methods. Instagram is being used as a linking tool between producers and consumers becoming a different attachment of a platform business. Advertisements are commonly used of Instagram and business can pay for their products to appear on people feed in order to track popularities to potential customers. The uses of AI system also target certain groups in order to type cast the advertisements to better the chances of success.


Facebook capitalizes by knowing their market and being able to find a cheaper solution to many essential uses through digital platforms. For example, Facebook Messenger and WhatsApp are used as chat chains, similar to iMessage on the iPhone. However, they both are free to download and to use- in Wi-Fi- therefore becoming a better option then to its competition which requires a sim card and money to text. Both provides many different avenues for people to uses, socially to talk and connect, having videos conferences and the ability to linked it to other social media avenues creating a wider range of uses. Facebook have allowed for different apps and independent platforms businesses to capture different aspect of the digital market in order to gain further control and profitability within their business.


Facebook have had many scandals in the last decade, however, a major issue surrounding consent of information, within Facebook created a scandal. In 2016, approximately 87 million Facebook profiles were collected without their consent by British consulting firm Cambridge Analytica for political gain. It was found out and leaked to the time New York in later years and ended in Facebook being sued (more can be found here). The idea of consent online became a larger issue as many people were agreeing to consent issues they would not normally agree to (Fuller 2019, pp. 16). While consent online is a major issue, many term and conditions are extensively long and normally lead to people not reading them putting them in a legal crossroad (Fuller 2019, pp. 17). However, Facebook scandal rose from selling private un-consent information breaking the trust within the site. With this the site was fined 5-billion-dollar penalty however many people thought his was too little compared to what it spent to buy Instagram (one billion dollars in 2012) and WhatsApp (19 billion dollars in 2014).  The scandal also produces a lot of negative publicity for Zuckerberg and the entire Facebook business. While Facebook is a platform business, it still deals with the legal cases and must abide by the same rules. Many platform businesses have the power to transfer and store data; through the use of big data (Fuller 2019, pp. 18). Big data, allows for the saved data to entered the system and not be lost therefore allowing data to be contained in the site computer software (Fuller 2019, pp. 18).


Overall, Facebook, is an excellent study which demonstrates the importance and the variety of a platform business. Platform business are growing in popularity due to the ever-changing demands of the digital world. Facebook, mangers to endure as many markets as possible through the uses of other apps and clear-cut advertisement. However, that does lead to reasonability and many scandals that lead to a mistrust within the company’s representation.


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Franek. https://www.kamilfranek.com/how-facebook-makes-money-business-model-explained/

Frier, S. (2016). A two-minute history of Facebook since its IPO . Bloomberg.

Fuller, M. (2019). Big data and the Facebook scandal: Issues and responses. Theology

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Täuscher, K., & Laudien, S. M. (2018). Understanding platform business models: A mixed

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