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Author: Jarice Hanson
Date: 2016
Document Type: Product/service evaluation
Pages: 4
Content Level: (Level 4)

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At the end of 2014, Facebook was one of the world’s most heavily consulted social networks with almost 1.3 billion users worldwide. On an average day, more than 800 million users around the world access the site. While Facebook can be accessed by computer or mobile phone, data provided by a research company reports that the average Facebook user accessing information on a mobile phone spends more time on Facebook than they spend on looking for all other information on the web ( Madrigal 2014 , 34). The ability of Facebook to distribute information among members of the network has resulted in what one journalist has referred to as Facebook’s role as the “social spine” of the Internet ( Madrigal 2014 , 35).

The precursor of what we now know as Facebook was a Harvard-based site designed by Mark Zuckerberg that started functioning in October 2003, with the name Facemash. By February 2004, Zuckerberg and his Harvard friends, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes called the project “ Thefacebook.com .” Originally developed to link Harvard students on campus, the project was soon expanded to other Boston area college campuses and, later, to most universities in North America (both Canada and the United States). By the end of his sophomore year in 2004, Zuckerberg left Harvard to establish Facebook’s headquarters in Palo Alto, California. The company began to grow nationally and expanded services to corporations and to younger users aged 13 or older with a valid e-mail address to sign up for the service.

The popularity of Facebook has been nothing short of phenomenal, based in part on its primary demographic—young people, who not only were acquiring personal digital technologies at an unprecedented rate in the 2000s, but who also found the ease of using social networks an effective way to shift all other forms of electronic communications to one way of distributing messages. One reason that Facebook has continued to grow, while so many other social networks have peaked and declined, is that Facebook has continued to change business practices Page 166  |  Top of Articleand acquire apps that appeal to users. Facebook also was an early social network to migrate to a mobile platform and that, too, contributed to its success. Facebook’s motto is “move fast and break things”—a philosophy that has served the company well.

Any start-up needs to have financial backing, and Facebook was no exception. At first, Zuckerberg and his friend Eduardo Saverin tried to raise money from venture capitalists but few thought there was much potential for this type of social network. The first major investor, Peter Thiel, provided $500,000, in 2004. By 2006, Facebook’s financial picture was so grim that there was talk of its sale, but an initial offer of $750 million was turned down, with Zuckerberg hoping to reap at least $2 billion. Potential buyers included Viacom and MySpace. In 2007, Microsoft invested $240 million in Facebook, with the arrangement that it would be a third-party ad partner, but the two companies were never completely compatible. One of the problems was the competition in search strategies that Microsoft hoped to develop with its own search engine, Bing, but Bing was never as successful as Google. In 2012, Microsoft sold some of its stock in Facebook, and a year later, Facebook bought Microsoft’s ad platform, Atlas. When Facebook made its entry into the stock market in 2012, it raised $16 billion, making it the biggest Internet stock offering in history. Since that time, other stock surges have propelled Facebook into a very profitable company.

Facebook now operates around the world and has offices in 34 different cities. In 2008, Sheryl Sandberg became Facebook’s chief operating officer (COO) after several years as an executive at Google. The company continues to operate as a social network but has interests in developing apps, wearable technology, and exploring the mobile market. Already, the apps necessary to allow Facebook to be used on smartphones have increased Facebook’s share of profits from mobile advertising.

While Facebook makes most of its revenue through advertising and is the second digital company in terms of ad revenue (Google is the first), the company has been acquiring apps and has been developing different search strategies. In 2013, Zuckerberg paid $85 million to acquire Parse, a start-up company that works to provide deep linking of apps, which would provide Facebook with an enormous amount of personal information about what users choose to add in the way of apps. In 2014, Facebook acquired a number of other web-based companies, like WhatsApp for which it paid $21.8 billion. This service already had 500 million users per month. Instagram was also acquired at the cost of $715 million, with 200 million users per month ( Madrigal 2014 , 35), and, the virtual reality wearable technology company, Oculus Virtual Reality, was purchased for $2 billion.

Facebook may be one of the most successful social networks when measured against others, but it has also had its share of criticism, not only for its privacy Page 167  |  Top of Articlepolicy and the way it shares personal information, but for contributing to making a person who spends an inordinate amount of time online, lonely. In a 2012 article in the Atlantic Monthly, “Is Facebook Making Us Lonely?” Stephen Marche raised the question of social networks that connect us to others online, instead of face-to-face. Though not specifically critical of Facebook as a contributor to loneliness, Marche reminds us that at the same time Facebook (and other social networks) began to appear in American society, there was also a spurt in the “quantity and intensity of human loneliness” ( Marche 2012 ). It may be impossible to accurately chart a positive correlation between social networks and the rise of loneliness, but the growth of an understanding of how society is changing related to our substitution of face-to-face communication with social networking leads many to believe that we should address the healthy use and socialization aspects of living in a more electronically connected environment, where it becomes easier to communicate online than in geographic spaces.

There are several predictions for Facebook’s future. The Pew Internet and American Life report “Teens, Social Media and Privacy” reported that teens had a “waning enthusiasm” for Facebook. The authors write that between 2013 and 2014, Facebook’s share of young users remained stable while other social networks saw dramatic increases in young users. But Facebook has become more popular with older adults. For the first time in Pew Research findings, more than half (56%) of Internet users aged 65 and older use Facebook. Overall, 71 percent of Internet users are on Facebook, a proportion that represents no change from August 2013 ( Duggan et al. 2014 ).

Another prediction is that by 2019, Facebook will resemble Google more than it does today, because of its plan to deliver multifunctionality and a wide range of apps to users ( Carr and Wilson 2014 ). Another scenario is that Facebook may not be able to compete with emerging social networks that guarantee much greater levels of privacy for users. Whether Facebook continues to develop services that capture the public’s attention or not, it deserves to be considered one of the leading social networks, and one that has already made its impact on society known.

Further Reading

Carlson, Nicholas. 2010. “At Last—The Full Story of How Facebook Was Founded.” Business Insider. Accessed December 1, 2014: http://www.businessinsider.com/how-facebook-was-founded-2010-3?op=1 .

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Carr, Austin, and Mark Wilson. 2014. “Facebook’s Plan to Own Your Phone.” Fast Company Magazine. Accessed February 11, 2015: http://www.fastcompany.com/3031237/facebook-everywhere .

Duggan, Maeve, Nicole B. Ellison, Cliff Lampe, Amanda Lenhart, and Mary Madden. 2014. “Social Media Update 2014.” Pew Internet and American Life Project. Accessed January 22, 2015: http://www.pewinternet.org/2015/01/09/social-media-update-2014/ .

Madden, Mary. 2013. “Teens Haven’t Abandoned Facebook (Yet).” Pew Internet and American Life Project. Accessed January 22, 2015: http://www.pewinternet.org/2013/08/15/teens-havent-abandoned-facebook-yet/ .

Marche, Stephen. 2012. “Is Facebook Making Us Lonely?” Atlantic Monthly. Accessed September 3, 2014: http://www.theatlantic.com/magazine/archive/2012/05/is-facebook-making-us-lonely/308930/ .

Rosoff, Matt. 2014. “Facebook Dumps Microsoft.” Business Insider. Accessed January 22, 2015: http://www.businessinsider.com/facebook-and-microsoft-seem-to-be-parting-ways-2014-12#ixzz3PZ8rNU2A .

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Excerpts from the “Social Media Update 2014,” Pew Research Center, January 9, 2015, Maeve Duggan, Nicole B. Ellison, Cliff Lampe, Amanda Lenhart, and Mary Madden

Facebook continues to be the most popular social media site, but its membership saw little change from 2013. The one notable exception is older adults: For the first time in Pew Research findings, more than half (56%) of internet users ages 65 and older use Facebook.

Facebook’s large base of users continues to be very active. Fully 70% engage with the site daily (and 45% do so several times a day), a significant increase from the 63% who did so in 2013.

52% of online adults use multiple social media sites. Facebook acts as “home base”—it remains the most popular site for those who only use one, and has significant overlap with other platforms.

Source: Duggan, Maeve; Ellison, Nicole B.; Lampe, Cliff; Lenhart, Amanda; and Madden, Mary. “Social Media Update 2014.” Pew Research Center, January 9, 2015. http://www.pewinternet.org/2015/01/09/social-media-update-2014/ . Reprinted with permission from Pew Research Center.

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Gale Document Number: GALE|CX6485200084