12: Facebook
-banned in China -daily traffic 12x larger than superbowl -5th most valuable public company on earth. -sends 100 Billion messages per day Founding Ethos: to make the world more open and connected The U.S. Federal Trade Commission leveled a $5 billion fine on the firm for mishandling users' personal information
content adjacency
Concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading their products or brands. Content Adj and User Attention are the 2 key challenged that firms face with advertising and social ads.
FB pt 3
Facebook has created a set of services and a platform for hosting and integrating with other services, helping the firm foster its stated mission to "make the world more open and connected." Facebook's platform allows the firm to further leverage the network effect. Developers creating applications create complementary benefits that have the potential to add value to Facebook beyond what the firm itself provides to its users. Most Facebook applications are focused on entertainment, and although Zynga's initial success has waned, several have built million-dollar-plus businesses. Running a platform can be challenging. Copyright, security, appropriateness, free speech tensions, efforts that tarnish platform operator brands, privacy, and the potential for competition with partners can all make platform management more complex than simply creating a set of standards and releasing this to the public. The Cambridge Analytica scandal shows what can happen when a firm builds a business from access to user data, violates user expectations, and fails to recognize and deal with unscrupulous partners. The fallout from users leaving Facebook is likely less severe than the impact on employee morale, potential hires, partners growing leery of associating with a firm with a tarnished reputation, and potentially increasing government regulation. Several major global messaging apps, including WeChat and Line, have evolved into platforms that host other apps and services, creating substantial revenue opportunities along the way. Facebook Messenger is evolving into a platform. Messenger now supports payments, while developers can create apps linked to Messenger and offered via the Messenger app store. Corporate communications via Messenger are especially attractive when e-mail may be segregated from a main inbox and quarantined in a "Promotions and Offers" folder. Facebook has extended its reach by allowing other websites to leverage the site. Using the firm's Open Graph tools, Facebook partners can add the "Like" button to encourage viral sharing of content, leverage Facebook user IDs for log-in, and tap a user's friend and feed data to personalize and customize a user's experience. Stories, now open to third parties, has the potential to involve into a similarly strong platform. These efforts come with risks, including enabling free riders that might exploit the firm's content without compensation and the potential for privacy and security risks. While Facebook's website is easy to update and push out to all users, or to test on a subset of users on a smaller scale, the firm does not have this kind of control over mobile apps. Some fear that Facebook may be an all-too-powerful walled garden that may stifle innovation, limit competition, and restrict the free flow of information. Facebook bumped up against Apple's walled garden when its gaming app was repeatedly rejected by iOS and only approved after the firm severely limited its capabilities. Microsoft and Google have also had gaming apps limited or blocked by iOS, showing how important platform dominance can be for a firm's strategic plans.
5.1 Takeaways
Facebook was founded by a nineteen-year-old college sophomore and eventual dropout. It is currently the largest social network in the world with usage rates that would be the envy of most media companies. Despite the firm's rapid growth and initially high stock market valuation, Facebook faces several challenges, including generating more revenue from its customer base, growing advertising, monetizing mobile, transitioning to a mobile-centric world where competitive conditions differ, protecting user privacy, potential for abuse, and competing with a slew of new competitors, some challenging Facebook's openness edict—all amid rising personnel and infrastructure costs. The firm's rapid growth and high user engagement allowed Facebook's founder to demand and receive an exceptionally high degree of control over the firm—even as the firm went public.
Intro to Facebook
Facebook was started by Mark Zuckerberg, a harvard drop out. -1 of 5 people have a fb account -Fb is largest share of the most popular activity (social networking) on the most widely used computing devices (smartphones) -fb apps account for 30% of US mobile internet use. -85% of FB users come from abroad.
Facebook Vocab
Facebook's controversial 2012 public offering valued the firm at over $100 billion, and the $16 billion raised in the offering made it (at the time) the biggest tech IPO Initial public stock offering, the first time a firm makes shares available via a public stock exchange, also known as "going public." in history and the third biggest IPO ever. Zuckerberg's net worth topped $19 billion. acqui-hire: Referring to "acquiring" a firm as a way to "hire" talent.
Is FB too Big?
Facebook's increasing dominance, long reach, and widening ambition have a lot of people worried, including the creator of the World Wide Web. Sir Tim Berners-Lee has warned that the Web may be endangered by Facebook's colossal walled garden A closed network or single set of services controlled by one dominant firm.. The fear is that if increasingly large parts of the Web reside inside a single (and, for the most part, closed) service, innovation, competition, and exchange may suffer. In the wake of the Cambridge Analytica scandal, some have even called for Facebook to be broken up.
Facebook's Copilot
Sheryl Sanberg (Facebook's COO) depicted as the person who runs the place. Fortunes "Most powerful women in business" Came to FB from google. IN just 3 years, helped FB -increase users 10x -devise an advertising platform that has attracted the world's largest brands -develop a sales org to serve a customer base ranging from Fortune 100s to mom and pop bus.
Short
Short selling is an attempt to profit from a falling stock price. Short sellers sell shares they don't own with an obligation of later repayment. They do so in the hope that the price of sold shares will fall. They then repay share debt with shares purchased at a lower price and pocket the difference (spread) between initial share price and repayment price.
Facebook Apps
Snapchat, Instagram, Whatsapp, Occulus VR,
5.2
Social Graph: At the heart of Facebook's appeal is a concept Zuckerberg calls the social graphThe global mapping of users and organizations and how they are connected., which refers to Facebook's ability to collect, express, and leverage the connections between the site's users, or as some describe it, "the global mapping of everyone and how they're related." "friending" is the link btw nodes in the social graph.
What it takes to run FB
The Facebook cloud: A collection of resources available for access over the Internet. (the big group of connected servers that power the site) is scattered across multiple facilities. Much of what powers the site is open source software (OSS)Software that is free and whose code can be accessed and potentially modified by anyone.. The service runs on the Linux operating system and Apache Web server software. Facebook also developed its own media-serving solution, called Haystack. Haystack coughs up photos 50 percent faster than more expensive, proprietary solutions, and since it's done in house, it saves Facebook costs that other online outlets spend on third-party content delivery networks (CDN)Systems distributed throughout the Internet (or other network) that help to improve the delivery (and hence loading) speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users. Akamai is the largest CDN, helping firms like CNN and MTV quickly deliver photos, video, and other media worldwide. like Akamai.
CPM (cost per thousand)
The media cost of exposing 1,000 readers to an ad.
FB Network Effects
There is also a strong network effect to Facebook(Also known as Metcalfe's Law, or network externalities. When the value of a product or service increases as its number of users expand). People are attracted to the service because others they care about are more likely to be on Facebook than anywhere else online. And that large user base has also attracted all sorts of firms and organizations looking to connect with Facebook's masses. Without the network effect, Facebook wouldn't exist
free rider problem
Too much data portability presents a free rider problemWhen others take advantage of a user or service without providing any sort of reciprocal benefit. in which firms mooch off of Facebook's infrastructure without offering much in return.
Zuckerburg Rules
Venture Capitalists (VC) are investor groups that provide funding in exchange for a stake in the firm and a degree of managerial control. The earlier a firm accepts VC's money, the more control investors can exert. - Facebook's growth left VC eager to back the firm. -Early backers ceded control. Zuckerberg maintains a majority of voting rights in the public company, virtually guaranteeing his control over the firm.
FB Switching Costs
Very strong: A move to another service means recreating your entire social graph. The more time you spend on the service, the more you've invested in your graph and the less likely you are to move to a rival.
Key Takeaways pt. 2
Facebook's primary competitive advantages are grounded in network effects and switching costs. The social graph expresses the connections between individuals and organizations. Trust created through user verification and friend approval requiring both parties to consent encouraged Facebook users to share more and helped the firm establish a stronger social graph than other social networking rivals. Feeds catalyze virality and promote information sharing. Facebook's position as the digital center of its members' online social lives has allowed the firm to envelop related businesses such as photo and video sharing, messaging, bookmarking, and link sharing. Facebook has opportunities to expand into other areas as well. Facebook's dominance on the desktop has allowed the firm to encroach in new markets by essentially turning on features that, in many cases, allowed the firm to dominate categories pioneered by other firms. The mobile market differs from the desktop in many key ways that alter competition. Access to address books, media libraries, the cloud, push notifications, home screen icons, and limited screen real estate are enforcing a new competitive reality on Facebook and rivals. Many of the dynamics above caused Facebook to lose the lead in mobile photo sharing and messaging, but the firm's deep pockets have allowed it to acquire leading firms, removing threatening rivals and strengthening the firm's competitive assets. Facebook has also invested in Oculus VR, an unproven but promising startup that may transform computing by making high-quality virtual reality accessible at a reasonable cost. Much of the site's content is in the deep Web, unable to be indexed by Google or other search engines. Some suggest this may create an opportunity for Facebook to challenge Google in search. Partnerships with Bing and Facebook's own Graph Search attempt to harness the firm's deep Web asset to answer questions. Facebook's growth requires a continued and massive infrastructure investment. The site is powered largely on commodity hardware, open source software, and proprietary code tailored to the specific needs of the service.
The Rise of Facebook and Growing Concerns
Facebook/Meta valued at 100+ Billion in 2012. FB Concerns: -competing for user time with services that promote private sharing -Balancing user privacy with the potential for delivering products that are lucrative -whether FB can remain one of the internet's most successful and influential forms.
Mark Zuckerberg
Founder of Facebook -dropped out of Harvard college
Localization
Gacebook's crowdsourcing localization: Adapting products and services for different languages and regional differences. effort, where users were asked to look at Facebook phrases and offer translation suggestions for their local language, helped the firm rapidly deploy versions in dozens of markets, blasting the firm past one-time rivals in global reach.
