Facebook, the social network that wants to dominate the Internet | INA Global

Facebook, the social network that wants to dominate the Internet

Article  by  Erwan LE GAL  •  Published 17.11.2010  •  Updated 19.11.2010
Facebook, which strives to “make the world more open and connected,” is now the largest global social network.

Summary

INTRODUCTION

At the intersection of platform and social network, Facebook allows users to create a personal profile and connect to others users by adding them as “friends” in order to share content and interact with them. Founded in February 2004 by Mark Zuckerberg, Facebook, whose ambition is to “make the world more open and connected,” is today the largest social network in the world with more than 500 million active users as of July 2010.
 

Facebook’s ambition is immense and can be summarized in one sentence: to make the web more social, more personalized and better-defined, while becoming a new operating system. In just a few years, Facebook has become the top social network in the world. We can see the Facebook effect[+] NoteDavid Kirkpatrick, The Facebook Effect: The Inside Story of the Company that is Connecting the World. Simon & Schuster, 2010X [1] in many domains, such as referencing, advertising, the broadcasting of news, and political activism. The Palo Alto social network now threatens the biggest web players like Google. But Facebook is also the target of much criticism, especially over the privacy rights of its members and the commercial use that can be made of their personal information. Despite a constantly-increasing membership, Facebook, which, in 2009, finally turned a profit for the first time, is still a fragile business with an uncertain economic model.
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"THE SOCIAL NETWORK"

“The Facebook” was created under controversial circumstances by Mark Zuckerberg on February 4, 2004 with three other Harvard students, Dustin Moskovitz, Eduardo Saverin and Chris Hughes. The site took its inspiration from the student directory issued each year to help students get to know one another better. Membership to the website was initially restricted to Harvard students, before being progressively expanded to other American universities, employees at Silicon Valley companies like Microsoft and Apple, then, on September 11, 2006, to all Internet users over the age of 13.
 
Facebook is a social network: it allows Internet users to interact and share information and content. On Facebook, amongst other features, each user can update his or her status, publish photos and videos, share links, organize an event, write a comment on the “wall” of one of his or her friends, tag someone in a photo, etc. It’s also possible to send messages to other users and, once they’ve been added as friends, to communicate by chat. The flux of these interactions is published on the wall of the user, who can see, in his “newsfeed,” Facebook’s nerve center, news of his friends and the social network. How has a site that allows people to “spy on their exes, remember work colleagues, annoy their friends and play scrabble,” as Entertainment Weekly ironically summarized, been able to become one of the main players on the web in just a few short years?
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FROM SOCIAL NETWORK TO PLATFORM

The main reason for Facebook’s success is its openness. Instead of limiting itself to one enclosed territory (which it was in the beginning: a website, facebook.com, entirely closed and reserved for “friends”), the social network rapidly evolved toward an open platform on the web, a public-private hybrid. Facebook Platform, launched in 2007, on one hand allows developers to create third-party applications (APIs), and on the other, for them to offer to incorporate the social functions like Facebook Connect or “like” buttons onto their websites. In other words, Facebook has built into its platform the best of the web and extended it to all other sites to become the central element of the Internet. In August 2010, more than 550,000 applications were active on the platform and more than one million websites had integrated its services.
 
Facebook has thus allowed developers to have free access to its users (and to create a very profitable ecosystem), and the users, in turn, to benefit from thousands of applications that make the social network more fun, intelligent and addictive. The Photos application, for example, is today more popular that Flickr, the main site for hosting and sharing photos online. The most-used application, Farmville, a farming simulation game developed by the company Zynga, today counts nearly 80 million active players.
 
But Facebook has also carved out a place for itself on the Web thanks to a strategy of “dissemination.” Amongst the many social plug-ins freely given to webmasters, Facebook Connect allows users to identify themselves on a site without signing in, thanks to their Facebook account; buttons such as “like” allow them to note a link, an article or a web page, and to make it a part of Facebook users’ newsfeeds; a comment widget allows users to participate under their real identity. Each month, there are more than 150 million users who, in this manner, “use Facebook outside Facebook.”
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MAPPING THE WEB

In this way, Facebook is building a giant database of what its users do and like online. Each time a member of the social network adds a friend, shares a link, or “likes” something, she or he is helping to hone his “social graph” (renamed “open graph” since the opening of the social network to the entire web). The social graph is the map of the total amount of actions online – the relationships and connections made by Internet users. Facebook says that the millions of bits of information that it accumulates about users will allow it to better sort and filter the information, thus making the web more intelligent and personalized. That’s what the semantic web, also known as Web 3.0, promises. But some think that this gigantesque data-mining will be exploited to offer advertisers hyper-targeted ads. 
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GLOBAL FACEBOOK

 Initially available only to American university students, today Facebook is a mass social network, translated into 70 languages, reaching all populations.
 
However, in the early days of the site, the qualitative different between its number of users and that, for example, of its then-rival MySpace, was very significant. Danah Boyd, the sociologist specializing in social networks, explained in 2007 in her article “Viewing American class divisions through Facebook and MySpace,” that the population of Facebook, mainly students, was generally more educated than that of MySpace, which was more populated, younger and more “alternative.” This analysis bears out in the esthetic of the two sites: one, MySpace, cultivates a “cool” and artistic image around the music universe and allows its members to personalize the style of their pages in a very flexible manner; the other, Facebook, offers a more minimalist esthetic and an unchanging interface filled with content generated by users.
 
Since then, Facebook has grown massively and its audience has become standardized. The average Facebook user is 38 years old, and those older than 45 today represent more than 20% of the total number of users of the site in the U.S.

 
 


Facebook passed the symbolic bar of 500 million members in July 2010. Today there are 2.5 times as many members as there were a year ago, for a growth of 150%. In April 2010, 57% of French users went on Facebook and spent four hours and 33 minutes there on average in a month, according to Nielsen.
 
Facebook Reach and Usage by Country / Apr 2010 (Home & Work)
Country
% Reach of Active Users
Time per Person (hh:mm:ss)
Italy
66%
7:00:21
Australia
63%
7:45:28
United States
62%
6:43:22
United Kingdom
62%
6:19:59
Spain
57%
4:04:53
France
57%
4:33:05
Switzerland
45%
4:18:47
Germany
27%
3:42:50
Brazil
26%
1:46:50
Japan
3%
0:31:38
Source: The Nielsen Company
 
There are, however, countries where Facebook is not the leader, where it competes with popular local social networks like CV Kontakte and Odnoklassniki in Russia, Orkut (launched by Google) in Brazil and Maktoob in the Middle East. More protectionist countries like South Korea, where the Cyworld site dominates, and Japan, with Mixi, continue to resist Facebook. Censorship prevents Facebook from being available in Vietnam (where the social network Zing dominates) and in China (QQ).
 
 
 
 
But in all other countries, Facebook has established itself and is exceeding all other social networks. In the United Kingdom, for example, the success of Facebook, to the detriment of Bebo, led AOL to sell the latter site for a paltry sum after buying it for $850 million two years earlier. In Germany, Facebook has surpassed StudiVZ, which was until February the most used social network in the country. Finally, MySpace, its former rival, purchased in July 2005 by Rupert Murdoch when its popularity was at its peak, saw its audience drop progressively to Facebook’s benefit, whose 2010 number of users was three times greater, according to Nielsen.



 
This rapid expansion can be explained by Facebook’s desire to go global. Thanks to crowdsourcing, more than 300,000 users took part in translating the website for free, which is now available in 70 languages, with 70% of its users living outside the U.S.
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THE BATTLE FOR THE WEB

Despite its social network hegemony, Facebook has yet to win the battle for the web. Its rivals are Apple, Microsoft, and, on the top perch, Google. Beyond user statistics, the companies have two competing visions of the Internet, though with the same objective: control of the web, with each company wanting to be at its epicenter. On one hand, Google built its success through its search engine and its “page rank” algorithm. On the other, Facebook has slowly developed a “social” vision of the Internet founded on relationships and recommendations between users, for which the possibility of using the “like” button on any external website is a new step.
 
The sharing of the gigantic online ad market, dominated by Google, constitutes the primary stake in the rivalry with Facebook. Though the contextual Adword advertisements allowed Google to become the leader in the advertising market, the next step for Facebook is exploiting the social graph of its users, which threatens the Mountain View, California company.
 
The other stake is control of the search market. Tomorrow, the model of social recommendations could replace search engines. According to statistics published by Hitwise, Facebook is already one of the top providers of traffic to news sites along with Google, Yahoo and MSN.
 
As for the social network Twitter, it is essentially different from Facebook. The latter began with a closed system, based on friends, and today has evolved into a hybrid public-private model. Conversely, most Twitter users use it to make their voices heard in a public space, to “follow” or be followed by people who are not necessarily their friends, and using it is more in keeping with the principle of broadcasting information.
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A FUTURE GIANT?

However, the capacity of Facebook to monetize its success and find a viable and sustainable economic model is still an issue.
 
The more than 500 million users of the social network generate operating fees that are always growing, and Facebook employs more than 1,700 people. Data Center Knowledge estimates at more than 60,000 the number of servers used by Facebook to support the activity of its members, who share more than 6 billion pieces of content with their friends each week, and upload more than 3 billion photos each month.

 

 
 
At the same time, revenue generated by the social network is still precarious. “The web 2.0 sites still offer free access to their services,” writes Jean-Samuel Beuscart, Christophe Dacheux and Kevin Mellet, researchers at the Sense laboratory of Orange Labs, in an article on web 2.0 business models. “Their economic model is based on the capacity to promote activities and exchanges that develop on the site in a way that can generate revenue around a free service.” Facebook is just now starting to find it, finally making money and turning a profit of $500 million in 2009 alone.

Today, Facebook’s profits are mainly from ads and “Credits” (virtual money allowing people to buy non-existing goods or play games like Farmville; ten credits equal one dollar) from which it takes a commission. Though the company does not share revenue statistics, the magazine Business Insider, speaking with several sources, estimated that Facebook’s revenue had reached some $550 million in 2009, broken down as follows:
 



 
Facebook is relying less on “classic” and display advertising and more on the growth of “social” advertising and its virtual currency, Credits.
 
Social and behavioral advertising, as well as the possibility for advertisers to exploit the social graph of users to better target them, appears to be the most promising solution. On Facebook, advertisers already had the possibility of targeting their potential customers through keywords, age, place of residence, interests, etc. Tomorrow, with an open graph, fed by billions of “likes,” advertisers will be able to know very precisely and specifically their tastes and actions online, even if this evolution risks aggravating the debate over respecting the privacy of users even further.
 
Awaiting a possible public offering in 2011 or 2012, Facebook is capitalizing on very optimistic revenue promises (some estimate that it will earn between 1 and 2 billion dollars in 2010), its popularity and large audience: the social network is today valued at more than $23 billion. The latest investor to date, U2 singer Bono, purchased a 1% stake for $90 million. A year ago, the Russian company Digital Sky Technology acquired 2%. As for Microsoft, it invested $240 million in 2007 to obtain 1.6%.
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“THE FACEBOOK EFFECT” – PUBLIC AND PRIVATE LIFE

But Facebook is not only a social network with a potentially enormous business. It is also a site that could revolutionize many aspects of life both online and off, explains David Kirkpatrick, of which we can already see the first effects.
 
Facebook could, for example, transform political activism and action. As much as the revolution led by Iranians in 2009 was not “born” on Facebook, we can at least say that the social network amplified it, facilitated contacts and simplified the sharing of information.  In a recent New Yorker article, “Small Change: Why the revolution won’t be tweeted”, journalist Malcolm Gladwell started a debate by asserting that Facebook had no major political impact in real life. Gladwell cites the example of the Facebook Cause “Save Darfur Coalition” which as of October 2010, enlisted 1,286,000 supporters whose average financial contribution does not reach even 20 cents per person.  He takes the opposite position of figures like Clay Shirky, author of the essay Here Comes Everybody, who think that online activism on social networks is a real force for social transformation.
 
But if there is one subject that has been profoundly affected by Facebook, it is our relationship to privacy. The social network has been the object of much criticism over its regard for privacy and its control of the personal data of its users.
 
In an editorial published in Le Monde, sociologist Guilhem Fouetillou notes that “the fact that individuals come together around a subject of common interest is obviously not news; for a long time sociology has described this phenomenon and even given it a name: ‘homophily’. What is new, however, is that on Facebook, the homophilic relationships are recorded and archived. It then becomes possible to measure and analyze these relationships over the totality of the network and understand with precision the profiles of individuals who nonetheless put their cursors for privacy to the maximum in their Facebook settings (…) we easily can see how this type of information has a priceless value for brands looking to deploy “behavioral marketing” strategies but also for organizations looking to find and observe as closely as possible groups of individuals considered ‘structurally’ at risk”.
 
One has to acknowledge that since the creation of this social network, privacy on Facebook has seen a spectacular erosion. The privacy policy has continued to evolve toward more transparency and sharing of data.
 
In 2005, Facebook’s privacy policy declared that “no user of the site who doesn’t belong to at least one group you’ve specified in your privacy parameters will have access to personal information that you’ve submitted to The Facebook”.
 
In 2010, a large amount of personal information is now considered by Facebook as public: “when you connect with an application or website, it will have access to General Information about you. The term General information includes your and your friends’ names, profile picture, gender, user IDs, connections and any content shared using the Everyone privacy setting. We may also make information about the location of your computer or access device and your age available to applications and websites in order to help them implement appropriate security measures and control the distribution of age-appropriate content. If the application or website wants to access any other data, it will have to ask for your permission.”
  
The Gaydar project, an experiment by MIT students, proved that it was possible, simply from a list of friends, to reveal the sexual orientation of a Facebook user. Their program, by analyzing the gender and sexuality of a member’s friends, could predict if he or she was gay, even if that information was not in his or her profile.
 
For some people, Facebook has destroyed privacy. But what bothers most users is the lack of transparency by Facebook of the use – commercially, in particular – of their personal data.
 
For all issues relating to privacy and personal data, Facebook, after having changed its rules, has often had to retreat in the face of the anger of its users. Project Beacon, for example (an advertising system that made user activity public online), was quickly abandoned after a Moveon.org petition received 50,000 signatures in a few days.
 
For Mark Zuckerberg, the parameters of user privacy have shrunk inexorably and evolved toward a radical transparency. Interviewed by David Kirkpatrick, Facebook’s founder confirmed in 2009 that “we only have one identity… the days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end pretty quickly”. The question, for users, is to know wheteher they want to live in “the more open and connected world” that Zuckerberg dreams of.
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FACEBOOK: THE KILLER APP OF THE SOCIAL WEB

Ten years ago, hundreds of Silicon Valley startups went bankrupt, victims of the “Internet bubble” that burst. It was a bubble born of incredible, irrational growth and exaggerated promises of profits. Today, Facebook is valued at more than $23 billion but has not yet been able to explain exactly how it plans to monetize its base of 500 million users. The debates around privacy are frequent, and the first alternatives to Facebook are sprouting up. Without even mention signs of fatigue that young people are demonstrating, those first people to have adopted the network will perhaps be the first to leave it (just as their parents are beginning to sign up).
 
Still, Facebook is no longer the little start-up created in a Harvard dorm room, but the top social network in the world, constantly innovating, and demonstrating immense ambition. Mark Zuckerberg has always been convinced that Facebook was the “killer app” of the social web. In an extensive profile of him published in the New Yorker, we learn that his ultimate goal is to create and dominate another kind of Internet, a second web, more powerful than Google. “Google and other search engines may index the Web,” says Zuckerberg, “but most of the information that we care about is things that are in our heads, right? And that’s not out there to be indexed, right?”
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BIBLIOGRAPHY

David KIRKPATRICK, The Facebook Effect: The Inside Story of the Company That Is Connecting the World, Simon & Schuster, 2010
 
Ben MEZRICH, The Accidental Billionaires: The Founding of Facebook A Tale of Sex, Money, Genius and Betrayal, Doubleday, 2009
 
Malcolm GLADWELL, "Small Change. Why the revolution will not be tweeted", The New Yorker, October 4, 2010
 
Jose Antonio Vargas, "The Face of Facebook Mark Zuckerberg opens up", The New Yorker, September 20, 2010
 
Charles Petersen, "In the World of Facebook", The New York Review of Books, February 25, 2010
 
 
William Deresiewicz, "Faux-friendship", The Chronicle of Higher Education, December 6, 2009
 
"Comprendre Facebook et l'Internet social", nonfiction.fr, July 4, 2008
 
Facebook news
 
 
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  • 1. David Kirkpatrick, The Facebook Effect: The Inside Story of the Company that is Connecting the World. Simon & Schuster, 2010
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