Facebook: Social Networking Service Founded by Harvard Students in 2004 - Essay Sample

Introduction

Facebook is a US company which offers social networking services. Facebook was founded in the year 2004 by Mark Zuckerberg, Dustin Moskovitz, Eduardo Saverin, and Chris Hughes, who were all schooling at Harvard University at the time (Hall, 2004). It is free to access Facebook since the company earns money from advertisement. New users create profiles, upload their photos and even start or join pre-existing groups. Facebook contains many components such as timeline, status, a news feed, Likelike button and messenger and other features that helped the company to dominate social networking industry. In order to clearly understand about Facebook growth and development, this paper will focus on bringing to light the economy of Facebook by clearly giving the history of the company, its sources of income and revenue and also the company's economic growth since its inception.

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History

Mark Zuckerberg took his firsts steps when he was very young, where he understood the importance of coding due to the support of his father, Edward Zuckerberg. The latter taught Zuckerberg Atari BASIC computer programming (Boyd, 2019). When Mark Zuckerberg was 11 years, his parents hired a software developer named David Newman to tutor him. In a couple of years, Zuckerberg created and developed an amazingly practical programme known as ZuckNet for his father since he ran a dentist out of the house and needed a modest way for the receptionists to contact him without necessarily shouting (Boyd, 2019). In short, ZuckNet worked as an internal instant messenger. While studying at Phillips Exeter Academy, Microsoft and AOL developed interest for synapse hardware by Mark Zuckerberg. They wanted to buy synapse hardware that learned user's music taste through artificial intelligence and listening habits. Zuckerberg turned down Microsoft's and AOL offers and set his site at Harvard University where Facebook origins can be found (Boyd, 2019). When Zuckerberg joined Harvard school in the year 2002, he had bigger plans and majored in Psychology, while he took plenty of computer science classes along with his course (Boyd, 2019). In the year 2003, Mark Zuckerberg created and published a website by the name Facemash, which lets the students in Harvard judge the attractiveness of each other and perform rankings. It did not go well with the students since Zuckerberg had not requested for permission to use their photos. The site had attracted 22k images in a few hours, but sadly it was shut down in a few days. He even risked getting expelled from the school after facing the Harvard administration board, where he publicly apologized (Boyd, 2019).

Surprisingly, one year after the shutdown of Face Mash, Mark Zuckerberg launched Facebook with a slightly different name where one could upload a photo, share interests, and connect with people while offering network visualization of one's connections (Boyd, 2019). He started by opening the site for Harvard students who had Harvard email address, and within the first one month, 50% of the Harvard students had signed up the app (Boyd, 2019). However, things did not go well after his fellow students Tyler Winklevoss, Cameron Winklevoss, and Divya Narendra sued him claiming that they had previously worked with Zuckerberg on a similar project and he stole their idea. After the court cases the three won 1.2 million shares of the Facebook company worth $300 million (Sraders, 2020).

Facebook became a hotcake, and by the end of 2004, membership was not open to only Harvard students but also to nearly all Universities in Canada and the United States with people baying to sign up (Boyd, 2019). Zuckerberg moved Facebook's operations to California in 2004 and secured investments where Peter Thiel of PayPal joined The Facebook board and brought with him $500,000 (Boyd, 2019). In May 2005, Facebook acquired investments worth $12.7 million Accel and $1 million from personal fortune capitalist Jim Breyer (Boyd, 2019). Zuckerberg finally dropped the "the", and the company officially was named Facebook, which cost $200,000 million to develop its new domain name. Facebook continued to admit students to the website, and in November that year, Zuckerberg entirely left Harvard to become Chief Executive officer of Facebook rather than just a programmer and hired more employees (Boyd, 2019).

Around December, the company continued to expand and signed up New Zealand Universities, Australian Universities, high schools from Mexico, Ireland, and the United Kingdom, making it a total of 25,000 high schools and 2500 colleges (Boyd, 2019). In September 2006, the Facebook platform became open for everyone with a valid email address and 13 years and above. It made the company global with its membership growth being remarkable. In December 2006, Facebook's membership was 12 million, while in April 2007, it rose to 20 million (Boyd, 2019). in July the same year, and October 2007, the membership had hit 50 million (Boyd, 2019).

Facebook opened its marketplace in the year 2007, which lets the users post their classified services and products for trading. Also, Facebook Application Developer platform was created, which assisted the developers to design and develop their applications, that were to be integrated with Facebook. By the end of the year 2007, the company signed up over 100,000 companies and launched Facebook for businesses. The user count continued to soar and by August 2008, the membership had hit 100 million while by January 2000 the membership was at 150 million (Boyd, 2019). February 2009 also had 175 million, and in September 2009, the membership was at 300 million (Boyd, 2019). The company also developed Facebook games, such as Farmville, which was released in June 2009, which attracted at least 10 million daily active users.

Facebook Company hit a significant breakthrough in December 2009, where it had 350 million registered users and 132 million unique monthly subscribers, making it the most popular social networking platform globally (Boyd, 2019). In the year 2010, a lot of improvements were seen with the ability to like comments. Also, photo tagging was improved, making the number of registered users to keep going up to 500 million. With the company being valued at $41 billion, which made it the third-largest web company in the US after Google and Amazon (Boyd, 2019). By the end of August 2011, the company had already reached one trillion-page view, making it the second most viewed site in the US and also acquired Beluga. This group messaging service saw the birth of Facebook Messenger as a standalone application.

By the year 2012, Facebook acquired Instagram at $1 billion, and in the same year, the company had pone of its big event- IPO, which raised a considerable amount of 161 million (Boyd, 2019). As a result, the event got valued at $104 billion with a $ 38 worth share for the Winklevoss twins and Narendra. (Boyd, 2019).

In the year 2013, Facebook joined Fortune 500 at number 462 as its global reach increased rapidly and substantially. However, at some point, the company admitted to failing to moderate people who were abusing it for hate speech. Therefore, it came up with measures, such as increasing accountability for creators, enhance communications with groups already working against hate speech, and also updated training for teams responsible for such evaluations. In the year 2013, Facebook announced a new feature to flag fake news due to the problems with the fake news the company had to deal with. Further release of Facebook reactions, such as 'haha', 'love', 'wow' was done, which was a very positive one. At the same time, in June the same year, Facebook registered that half of the world's population was using the platform for social networking, which translated to about 1.49 billion users (Boyd, 2019). video calling messenger, Facebook lives to verified public figures, and also 360 videos were released which saw 1.5 billion daily users, 3 million advertisers, and $3,69 billion profit in the year 2015. Despite the fake news, harassment, and privacy issues raised against the company, Facebook was still up with more benefits, and new users increased, wherein 2017 they registered a whopping $15.9 earnings with a 56 increase from the previous year (Boyd, 2019). However, in 2018 things hit rock bottom after Facebook faced the Cambridge analytical scandal, where the company was accused of influencing Donald Trump elections through reaping of people's data which was used in the campaigns. Due to the Cambridge scandal, Facebook lost $70 billion off their share price with the advertisers getting cautious and nervous. Already on the ropes to data and privacy scandals, in 2018 the company saw the most significant loss in terms of its value by losing $119 billion inbillion in value while Zuckerberg lost $1.5bn (Boyd, 2019). However, Zuckerberg apologized for the saga and immediately suspended Cambridge Analytica. The scandal continued as Zuckerberg was called to testify in front of congress, and later a fine of $663,000 was imposed by the information commissioner's office in the United Kingdom (Boyd, 2019). In an attempt to reassure its users on their data privacy concerns, the social networking program announced that it had disabled all fake accounts that stood at 1.3 billion for the six months after the scandal. Facebook also created a lot of awareness on topics such as the data Facebook collected and also the data advertisers held on users through its blogposts and newsroom. The company continued to face data privacy concerns, especially after it made 14 million people's private posts public and that it was sharing people's data with a Chinese company to inform application designs. Amid all this, Facebook announced that the company would be funding shows from networks, such as CNN and ABC news, which would be published by the Facebook watch. The company also joined the game streaming arena after the company launched Facebook gaming which is a similar service to Twitch. In the same year, 2018, the company developed Facebook portal with video communication devices that allowed people to perform video calls. The video communication device was designed in a way that Amazon's Alexa voice assistant was incorporated, allowing hands-free video calls. He company admitted that the user data collected through the portal would be used to target adverts ad, of course, people were skeptical about it due to the previous sagas on user's data privacy. During the F8 2019 conference, Facebook announced about the company's social network plans to push out a redesign called 'The new Facebook' which would place a big emphasis on groups and events (Tillman, 2020). The same year 2019, the company came up with dark mode redesign for desktop users.

Economic Income and Income Sources of Facebook

Advertising

The social networking platform business model is majorly based on advertisement which has made it to unlock so much business value from its operations (Gunnars,2020). For an organization like Facebook, 98% of its income generates from advertising andadvertising and therefore the time people spend on the news feed is vital to help in increasing the profitability metrics of Facebook (Gunnars, 2020). The company primarily makes money by selling advertising space from its various social platforms such as Instagram, WhatsApp, Facebook messenger, and Oculus Virtual reality products, and Instagram. The company competes with other giants that sell advertising space to marketers and also companies that provide platforms for communicating and content sharing among users' social network. These competitors include Google and YouTube, Apple Inc, Amazon and Tencent Music entertainment group. Facebook has 2.89 billi...