In just over a decade, Facebook has become a household name around the world for revolutionizing communication. Its services have forever changed how people interact with each other and businesses. However, events in the last year have raised questions about its dominance and influence over its 1.86 billion users. Its mere size raises the question of its ability to maintain growth, especially in the ultra-dynamic digital world.
Here are three arguments for Facebook being a company so successful that its status can’t really be jeopardized, and three it has already passed its high point.
Facebook is in a league of its own that can’t be challenged.
The true unicorn
In Silicon Valley terms, a unicorn is a tech startup company valued at over $1 billion. Facebook has become the model of this success, launching in 2004 and now worth around $350 billion and growing. Facebook has sustained its growth by building an all-in-one information empire providing services that are hard to match. Its monthly users (1.9 billion) dwarfs other social media giants including Youtube (1 billion), Instagram (700 million), which Facebook bought in 2012, and Twitter (328 million).
Facebook built a platform users don’t want to leave
Facebook’s real power over users is evident in its ability to keep them on its platform for longer times and for a greater variety of needs. By knowing its users and showing them what they want, Facebook has developed a habit-forming product that keeps users online every time there is a moment of boredom or an urge to check what’s new.
The company’s endless tweaks to its algorithm aim to maintain that goal. Last June, for example, the company changed the algorithms running its news feed so that “things posted by friends you care about are higher up” in the feed.
A testimony of its power can be found in the fact that more people are turning to Facebook as their medium for news consumption. Pew research shows that 44 percent of the US population consumed news from Facebook in 2016, compared to Youtube at 10 percent among online sources.
The amount of personal information Facebook has is insane
Facebook is collecting information its users willingly give to use its services, from age, location and gender to long-distance relationships and expectant parents. This is how Facebook makes its money, generating $26.9 billion of its $27.6 billion of revenue in 2016 from selling this information to advertisers targeting users based on what they’re likely to buy. The Federal Trade Commission reports that Acxiom, one of Facebook’s largest advertising partners, has 3,000 data segments for almost every US consumer. It sounds like the old adage: “if you’re not paying for the service, you’re the product.”
The amount of Facebook’s users has allowed the company, along with Google, to put a stranglehold on online advertising, accounting for 64 percent of total market revenue in the US and 71 percent in the UK. With such targeting abilities over a massive user base, it’s easy to see why advertisers are pouring in money to get results that are harder to get from other platforms.
Nothing lasts forever
Facebook can’t control its content
Over the past year, several instances have eroded users trust in Facebook. The launch of Facebook’s live-streaming service last year has resulted in unintended consequences as people have begun using it to broadcast killings, rapes and suicides. Facebook has also come under scrutiny for its inability to control a proliferation of fake news on its site. An Ipsos Public Affairs poll in January shows that 18 percent of respondents trust news on Facebook most of the time, compared to 44 percent who said almost never.
Facebook faces competing influence
Facebook is unquestionably the most popular social network in the world, but there are a number of other services competing for people’s attention. This Pew Research survey shows that Facebook is comfortably on top as American’s most used social media, but Twitter at 24 percent, Pinterest at 31 percent and LinkedIn at 29 percent have their own footing in the market.
Considering today’s teens view Facebook as an “uncool” social media option, though still using it in large numbers, means it’s not inconceivable something new could one day take its place. Technology research company Forrester released a poll showing teenagers aged 12 to 17 ranked Facebook third behind Snapchat and Instagram as the most important tools to keep in touch with friends.
And competition from other online advertisers
Other tech giants are looking to advertisements for growth, and Facebook’s biggest competition could be Amazon. Morgan Stanley predicted the online retailer’s share of advertising will grow to 4 percent of the market by 2020. That still dwarfs Facebook at 32 percent, but the head of WPP, the largest ad agency in the world, said Amazon poses a significant threat.
Another factor is that investors are turning away from Facebook in search of the next unicorn. Instead of paying $150 per Facebook share, young users were the demographic most attracted to Snapchat parent company Snap’s initial public offering in March, valuing the company at around $24 billion.
Facebook’s F8 Developer Conference
The bottom line is that Facebook controls an enormous amount of personal and public information, giving it an advantage in the market that is very hard to match. But maintaining that level of dominance is almost impossible, and Facebook is facing mass criticism for privacy issues and influence that gets out of the company’s control.
