Platform Businesses: Facebook’s True Identity

When did Facebook 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 Facebook?

The global evolution of social sharing online, was a direct result of scarcity of platforms and information, this was the motivation in creating these social platforms. It has fundamentally transformed many aspects in modern society, and it has hugely changed the way contemporary businesses operate. Licklider and Taylor state that ‘life will be happier for the online individual because the people with whom one interacts most strongly will be selected more by commonality of interests and goals than by accidents of proximity’ (Lilider & Taylor as cited in Dufva et al., 2020). This statement strongly addresses the fact that social interactions through the internet break national boundaries.  Quentin Jones (1997) shares the idea of virtual settlements, which includes the interactivity between members, variety of communications, shared meetings and sustained membership overtime (Flew, 2021), mirroring the concept of Facebook.

In 2003, Mark Zuckerberg wrote the software for a website called Facemash. Later in 2004, this website became 2.89 billion user platform, Facebook (Statista, 2021). Facebook is a free of charge platform business on social media that initially started as primarily a way to contact others online, in recent years it has transformed into a private messaging, marketplace to sell your own belongings and create events. Facebook’s domination in the social media industry and quick rise to success has to led privacy and data questions by the general public.

As previously stated, the largest social networking site, Facebook, was founded in 2004. Since then, the company has grown into a ‘global giant with 2.8 billion users and a market cap of 926.8 billion dollars’ (Johnston, 2021). Additionally, the company reported a net income of 29.1 billion dollars on 84.1 billion dollars in revenue, which nearly all of that came from advertising (Reiff, 2021). In 2012, Facebook acquired Instagram for 1 billion dollars. While it acquired Instagram, Facebook chose to build and grow the app independently from the Facebook app. Some estimate that Instagram generates more advertising revenue than Facebook (Reiff, 2021). Facebook and their acquisitions primarily make their money by selling advertising space on its various social media platforms. These ads are displayed across the media sites, as you scroll through Instagram you may see a small business promoting their own products. Business or ‘Page’ owners on Facebook can ‘boost’ their posts on the platform for a minimal cost. In additional, Facebook is experiencing an increasing demand for advertising space due to the shift to e-commerce as a result of the COVID-19 pandemic. Charline Li’s key takeaway from her case study research is that ‘marketing on Facebook requires communication, not advertising’ (Treadaway & Smith, 2012, pp.65). A challenge Facebook faced was that when they first introduced ads, the platform had a relatively low response rate from users.

Web 2.0 saw the focus of internet business shift towards online social communication platforms. This shift saw that rather investing in your own content, it became the go-to place for users to interact and engage with the content of others. Furthermore, Web 2.0 saw a positive interest in e-commerce, transactions being made on sites were leaving an information trail of personal data. Internet users express significant concern about the use of personal information or data being used online and for business benefit (Govani & Pashley, 2005 as cited in Young & Quan-Haase, 2013). Contrastingly, users actively construct their own personal identity online through such social platforms. Barnes (2006) and Norberg et al. (2007) have identified a privacy paradox (Young & Quan-Haase, 2013), this finding expresses that although individual’s have growing concern about internet privacy, people often do not do anything to help themselves. This growing concern made its way over to Facebook users, which unfortunately lead to a data and privacy breach. The number of US citizens sharing this concern has increased from 58% in 1998 to 91% in 2018 (Flew, 2021), many users had also decreased their Facebook usage. The FTC’s Bureau of Consumer Protection began investigating Facebook in March 2018, they revealed that personal data was illegally gathered from an online personality quiz and the data was sold to Cambridge Analytica (BBC, 2019). BBC stated that ‘although only 270,000 people took the quiz, Christopher Wylie alleges that the data of some 50 million users, mainly in the US, was harvested without their explicit consent via their friend networks’ (BBC, 2019). As a result of this issue, Facebook will pay a record five billion dollar fine to settle this privacy breach.

Furthermore, Facebook owns the top four most downloaded apps of the decade which include Facebook, Facebook Messenger, WhatsApp and Instagram. The BBC point out just how much power and control does Facebook CEO Mark Zuckerberg have. Taha Yasseri (Shead, 2019) has explained that ‘one company owning four of the most popular social networking and communication apps, at best, can be described as a data monopoly’, furthering their privacy breach issue and fine. Another issue to face Facebook is that in 2019 three former Facebook employees agreed to break their nondisclosure agreement to reveal the company’s atrocious working conditions. Workers stated they often found pubic hair and bodily waste around their dirty office environment. Another worker explained she kept a bin next to her desk to throw up in while was since she already used all her bathroom breaks (Feiner, 2019). The Occupational Safety and Health Act of 1970 (OSH Act) was passed to obtain a level of mandatory working conditions for all workers, in which Facebook breached this Act.

Overall, the importance of Facebook relies on how it contributes positively to society and the economy. ‘Facebook’s 100 billion dollar initial public offering on Wall Street’ makes the company a significant economic factor (Mercer, n.d.). Facebook’s design allows users to have a complete business profile and an advertising system that will allow any marketer to directly market their product or service to their targeted market segment. These advertising posts not only create revenue for Facebook, but it also generates exposure for these small businesses which can open up new opportunities and a wider audience. Additionally, over the years Facebook has created a community, these members may not know each other personally, however, they recognise each other as part of the community and whom may share commonalities. The communities that run across Facebook include interest, intention or casual, location, practice, circumstance and support. These communities can range from groups to events to marketplace. This kind of popularity among users ‘represents a capacity to shape language and communication methods among users’ (Mercer, n.d.).

To summarise the analysis upon Facebook, the company’s impact on the economy, communities and its workers has had an undeniable impact. This tool of communication has pathed the way for other popular social media platforms including Instagram and TikTok. The development of these social networking sites has led to a number of successes in the creation of communities. Facebook’s interface design allows small businesses to gain the exposure they need to lead to marketing and purchase successes. Although they have breached the Occupational Health and Safety Act of 1970 as well as harvest personal information illegally have led to 14 public apologies in 14 years. Individuals have a right to concern over their use of personal data when it is confirmed by Facebook that these privacy breaches occur.