By Amelia Norris
Social media platforms have had transformative societal and cultural impacts worldwide by creating a vast interconnected cyberspace that crosses geographical boundaries. This has significantly changed the way communication occurs, how companies advertise, tactics employed during political campaigns and has led to debates regarding human rights within the digital world. Facebook is the largest social media site (Lua, 2019) and consequently, it has played a revolutionary role in transforming the internet into what it is today.
This critical analysis of Facebook will firstly explore its historical development and ownership and how its strong business model led to its innovative successes. Then, an examination of Facebook’s significant political and regulatory debates and internet ecology will occur. A discussion of how Facebook has drastically transformed economic, political, social and cultural relations will conclude the analysis.
What is Facebook?
Facebook is a popular and well-known social networking service and social media, and with over 2.2 billion monthly active users worldwide (Lua, 2019), it has become a “global communications platform” (Bowles, 2014). Social networking services allow users to “gather together as an online community”, and network connections and relationships with friends, family, strangers, business or more (Kim, Shim & Ahn, 2011). Facebook allows for communication through instant messaging, photo and video sharing, status and profile updates, group and community creation, and business and website pages (Schwartz, 2009). Facebook has played a major role in the digital transformation towards an internetworked world, and claims their mission is to “give people the power to build community and bring the world closer together” (Facebook, 2008).
Facebook’s Historical Development
Facebook was first created with the plan of connecting university students together. It is believed the idea was conceptualised by Mark Zuckerberg and a group of friends at Harvard University in late 2003. Zuckerberg first created an online program, known as “Facemash”, which objectified and judged students based on who is more attractive, and while this didn’t take off, it acted as the framework for Facebook (Barr, 2018).
The new social platform, initially referred to as “thefacebook.com” was launched in 2004 and instantly became popular throughout many universities in the USA (Carlson, 2010). In 2006, Facebook allowed anyone over the age of 13 to create an account, the concept of a ‘news feed’ was implemented and advertisers began taking advantage of the ability to have direct consumer engagement on the site for marketing and advertising (Hall, 2012). At this time, there were no other sites that allowed for this direct marketing approach, or this immense level of connectivity between users, which made it one of the most revolutionary, extremely influential social networks (Carslon, 2010). Independent developers began utilising Facebook to advertise their new apps, and link their website with their Facebook page, which drove more users to Facebook, ultimately assisting in its rapid development. Facebook overtook Myspace as the most popular social media service in 2008, and then became a major competitor with Twitter after the introduction of a live feed, with constant updates (Hall, 2012).
The Facebook Business Model
Facebook has a strong advertising business model that is very attention-based (Cuofano, 2019). This supports an attention-based digital economy, which Kessous (2015) explains how in a time of informational abundance, attention is regarded as a commodity. Facebook is significantly focused on digital advertising, and Facebook advertising revenues currently account for almost $32 billion or or 98.66% of its total revenues (Cuofano, 2019). Facebook’s online advertising allows very precise targeting by utilising algorithms that examine what pages a user is looking at and their interests to suggest relevant advertisements to them specifically (Zuckerberg, 2019). This successful business model has led to “high scale and high growth and high profit margins unmatched by any other high technology company” (Sherman, 2018). Facebook’s strong and bold business model has also meant it has the ability to purchase or creates other acquisitions, such as Instagram, Messenger, WhatsApp, and Oculus, which further contributes to its success.
Who owns Facebook?
Facebook’s founder and CEO, Mark Zuckerberg, currently owns majority shares, with 11.92 million Class A Facebook shares and 392.71 million Class B shares, which gives him over 53% of the voting rights in the company, and makes his net worth over 71 billion dollars (Maverick, 2019).
Facebook, co-founder, Dustin Moskovitz owns 48.9 million Class B shares, with a 7.6% stake of the company. Initially a major part of Facebook’s founding and Zuckerberg’s best friend, Eduardo Saverin, after a falling out, still owns 5% of company shares. Disputes over idea creation and rightful ownership have caused multiple court cases with his previous Harvard friends and partners. Other major shareholders includes Jim Breyer & Accel partners and Yuri Milner & Digital Sky Technologies (Maverick, 2019).
Debates regarding Facebook
Facebook has been involved in several privacy debates since its beginnings. The site has been criticised for many years for allowing third parties to use the site for “data mining, phishing, and other malicious purposes” (Debatin, Lovejoy, Horn & Hughes, 2009). However, it was 2018 when this issue was brought to significant public attention when a major Facebook privacy scandal was revealed.
Facebook were under investigation by the US Congress after the British Political consulting firm, Cambridge Analytica used Facebook to harvest users’ private data to target market advertise for the 2016 US Presidential election. They utilised the Facebook application ‘This is your Digital Life’, acquiring the personal data of approximately 87 million Facebook users, the majority of which did not permit this data harvesting (Hern, 2018). Facebook was aware of this data breach and yet they didn’t alert users, because at the time, the method utilised to obtain the data was valid under Facebook terms of usage. In 2018, this breach was reported by a previous Cambridge researcher whistle-blower, and a #deletefacebook campaign began, which meant several high profile companies deactivated their personal and business Facebook pages.
As a result, Facebook identified areas of improvement and addressed issues raised in court hearings, aiming to increase privacy, accountability and transparency on its platform by implementing new privacy measures (Jenkins, 2018). Facebook aimed to increase users’ digital rights, as “free and private communication are essential in order for all human rights to be protected and realised” (Clarke, 2018). However, even after adding new privacy measures, another breach occurred in late 2018, which became one of the largest breaches in Facebook history. The breach broke the key privacy principle of users’ not having “control over one’s personal data, or have it misused or stolen” (Clarke, 2018).
by crystallinelamp is licensed under CC PDM 1.0
Facebook’s Internet Ecology
The Internet Ecology refers to a digital ecosystem comprising an interconnected “global network and service infrastructure” where different agents interact, influence and rely on each other (Mazhelis, Luoma & Warma H, 2012). For social media sites, this involves a communicative ecology approach, where these agents are interconnected with each other, but also focused on user engagement (Wilken, 2015). Facebook has significant influence on the ecology of the Internet as it is a central and dominating agent online. This infographic shows its connections between users, competitors, partners, owners, regulators and suppliers, and how they are all dependent on and influenced by each other in the digital ecosystem.
What transformations have occurred because of Facebook?
Facebook has led to significant social and cultural change, has majorly impacted the digital economy and the strategies employed by business models and has caused many political issues regarding data use and digital rights.
Facebook has become a powerful influencer for political movements. This began with the 2008 U.S. presidential election of 2008, when thousands of Facebook groups were created to support Democratic or Republican candidates. Furthermore, it serves as a platform to raise awareness and organise political movements, such as the 2011 uprising in Egypt where activists protested against the government (Hall, 2012).
Additionally, although controversial, Facebook users’ data was utilised to target voters in the USA with personalised political advertisements for Donald Trump’s digital political campaigns, which potentially had significant influence on the 2016 presidential election (Hern, 2018).
Facebook can also become a political echo-chamber due to how Facebook’s algorithms work, as it only shows user’s what they are likely to be interested in and not disagree with. This means users might not receive the diversity of political news or opinions on controversial topics, but rather just have their current views affirmed, for example, Brexit or Trump (Knight, 2018).
Facebook is also a major site where the spreading of fake news occurs and this can influence users and impact their political views and understanding with misinformation, however Facebook is taking action to reduce this (Hern, 2018).
Facebook has had significant impacts on how the digital economy has transformed over time. Unlike traditional media sources, social media encourages users to immediately and directly communicate and discuss with friends, which has changed the way advertising is received. Facebook provides a platform for businesses to directly engage with end consumers and build rapport and bonds with customers through direct and consistent communication (Dao, Le & Chen, 2014). As the most popular social media website, Facebook is the clear market leader in social media advertising and has transformed the way businesses promote. This is highlighted by the 65 million business Facebook pages and more than six million advertisers promoting their businesses on Facebook (Lua, 2019).
Targeted advertising is a major reason Facebook earns over 98% of its revenue through advertising. This is because targeted advertising shows users advertisements based on what they’re searching, looking at or interested in, which makes them influential and more relevant to what a user might actually purchase (Cuofano, 2019).
Furthermore, the introduction of Facebook marketplace allows users to buy, sell and trade items with people in their area through a digital marketplace, which is challenging major internet marketplaces such as Gumtree and eBay.
Facebook has such a strong economic influence online that they are introducing their own cryptocurrency – Libra. With the backing of major companies such as Uber, it is expected to be highly successful, and could potentially become the default service for web based transactions, which could eventually impact online bank services (Reiff, 2019).
Social and Cultural Transformations
Facebook has played an extremely influential role in transformation social and cultural relations both online and offline. It has revolutionised global connectivity, as communication is no longer bound by geography, so people and companies can always communicate and stay updated and in contact.
Facebook has also become a major new sharing site, so the sharing of large world events has increased users’ global and cultural awareness, which is positive for society. The vocal reach of this social media site also means it is a platform where anyone can voice their opinions or meet people with similar ideas. This means voices that aren’t usually heard have the opportunity to communicate and meet other people online, for examples, Facebook groups for people with a disability or mental health issues. However, this can also be seen as a negative, as some hate groups have the ability to voice their opinions publicly and potentially influence a large number of people.
Facebook has become extremely normalised in Australian society, whereby it is now standard for most people to have an account, which assists in university and workplace discussion, and allows people to be in groups based on their interests (Cuofano, 2019).
However, Facebook can be a distraction in the workplace and at university and many people have become addicted to social media sites, and potentially socially isolate themselves. Additionally, Facebook’s photo-sharing and ‘like’ count encourages constant comparisons and judgement, which has caused many people to be extremely conscious of their self-image offline and online. Finally, Facebook has also had negative social impacts including cyberbullying, hacking and online scams.
Facebook has undeniably had significant impacts on how the digital world has transformed to what it is today and will continue to influence the cyberspace in the future, politically, economically and culturally.
Barr, S. (2018). When did Facebook start? The story behind a company that took over the world. The Independent. Retrieved from: https://www.independent.co.uk/life-style/gadgets-and-tech/facebook-when-started-how-mark-zuckerberg-history-harvard-eduardo-saverin-a8505151.html
Carlson, N. (2010). At Last — The Full Story Of How Facebook Was Founded. Business Insider Australia. Retrieved from: https://www.businessinsider.com.au/how-facebook-was-founded-2010-3?r=US&IR=T#we-can-talk-about-that-after-i-get-all-the-basic-functionality-up-tomorrow-night-1
Cuofano, G. (2019). How Does Facebook Make Money? Facebook Business Model In A Nutshell. FourWeekMBA. Retrieved from: https://fourweekmba.com/how-does-facebook-make-money/
Debatin, B., Lovejoy, J., Horn, A., & Hughes, B. (2009). Facebook and Online Privacy: Attitudes, Behaviors, and Unintended Consequences. Journal of Computer-Mediated Communication, 15(1), 83-108.
Facebook, 2008. About Page. Retrieved from: https://www.facebook.com/pg/FacebookAU/about/?ref=page_internal
Hall, M. (2012). Facebook: American Company. Encyclopaedia Britannica. Retrieved from: https://www.britannica.com/topic/Facebook
Helmond, A., Nieborg, D., & van Der Vlist, F. (2019). Facebook’s evolution: development of a platform-as-infrastructure. Internet Histories, 3(2), 123–146. https://doi.org/10.1080/24701475.2019.1593667
Hern, A. (2018, April 7). New Facebook controls aim to regulate political ads and fight fake news. The Guardian. Retrieved: https://www.theguardian.com/technology/2018/apr/06/facebook-launches-controls-regulate-ads-publishers
Jenkins, A. (2018, March 28). Facebook Just Revealed 3 Major Changes to Its Privacy Settings. TIME. Retrieved: http://time.com/5218395/facebook-privacy-settings-changes-cambridge-analytica/
Kessous, E. (2015). The Attention Economy Between Market Capturing and Commitment in the Polity, Œconomia, 5-1, 77-101.
Kim, J., Shim, J., & Ahn, K. (2011). Social Networking Service: Motivation, Pleasure, and Behavioral Intention to Use. Journal of Computer Information Systems, 51(4), 92–101. https://doi.org/10.1080/08874417.2011.11645505
Knight, M. (2018). Explainer: how Facebook has become the world’s largest echo chamber. The Conversation. Retrieved from: https://theconversation.com/explainer-how-facebook-has-become-the-worlds-largest-echo-chamber-91024
Lua, A. (2019). 21 Top Social Media Sites to Consider for Your Brand. Buffer. Retrieved from: https://buffer.com/library/social-media-sites
MacKinnon, R. (2012). Facebookistan and Googledom. In Consent of the networked: the world-wide struggle for Internet freedom (pp. 149–165). New York : Basic Books.
Maverick, J.B. (2019). The Top 6 Shareholders of Facebook. Investopedia. Retrieved from: https://www.investopedia.com/articles/insights/082216/top-9-shareholders-facebook-fb.asp
Mazhelis O., Luoma E., Warma H. (2012) Defining an Internet-of-Things Ecosystem. In: Andreev S., Balandin S., Koucheryavy Y. (eds) Internet of Things, Smart Spaces, and Next Generation Networking. ruSMART 2012, NEW2AN 2012. Lecture Notes in Computer Science, vol 7469. Springer, Berlin, Heidelberg https://doi.org/10.1007/978-3-642-32686-8_1
Reiff, N. (2019). Facebook Gathers Companies to Back Cryptocurrency Launch. Investopedia. Retrieved from: https://www.investopedia.com/facebook-gathers-companies-to-back-cryptocurrency-launch-4690619
Schwartz, H. (2009). Facebook: The New Classroom Commons? Chronicle of Higher Education. Retrieved from: http://majarrett.people.ua.edu/uploads/1/3/8/0/13807995/facebook_the_new_classroom_commons.pdf
Sherman, L. (2018). Why Facebook Will Never Change Its Business Model. Retrieved from: https://www.forbes.com/sites/lensherman/2018/04/16/why-facebook-will-never-change-its-business-model/#5a613b1c64a7
Wilken, R. (2015). Mobile media and ecologies of location. Communication Research and Practice, 1(1), 42–57. https://doi.org/10.1080/22041451.2015.1042423
Zuckerberg, M. (2019). Understanding Facebook’s Business Model. Facebook Newsroom. Retrieved from: https://newsroom.fb.com/news/2019/01/understanding-facebooks-business-model/