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The Facebook Historical Background Essay

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Updated: Feb 10th, 2022

First Steps

Mark Zuckerberg, the founder of Facebook, began to code at the age of 11, and a few years later, he created ZuckNet messenger. Still in school, he was invited to work in Microsoft and AOL. In 2002 Mark was admitted to Harvard; there, he first developed the Facemash, which allowed fellow students to evaluate each other’s attractiveness and create ratings (Boyd, 2019). In February 2004, Zuckerberg released TheFacebook platform, which did not differ much from the modern version. During the first month, 50% of Harvard students registered there.

In June 2004, Mark moved his office to Palo Alto and received a $500,000 investment from PayPal co-founder Peter Thiel (Boyd, 2019). By the end of the year, Zuckerberg opened membership for all students in the United States and Canada. In May 2005, the company gained $12.7 million from Accel and $1 million from Jim Breyer (Boyd, 2019). Mark decided to remove an article from the name, bought the facebook.com domain, and expanded the audience with high school students and employees of Microsoft and Apple (Boyd, 2019). Finally, Zuckerberg left Harvard, officially becoming the CEO of the company, and the Facebook take-off curve got a vertical slope.

Mind-Blowing Market Growth

In December 2005, Australian and New Zealand universities and high schools in the UK, Ireland, and Mexico gained access to the platform. Then, in September 2006, the platform became open to everyone. The number of participants was growing exponentially from 12 million users in December 2006 to 20 million in April 2007 and 30 million in July 2007 (Boyd, 2019). The company started to develop its strengths associated with technology.

In May 2007, Facebook released the Marketplace and Application Developer tools. After 100,000 companies registered on the site, Facebook launched Pages for Business, analyzing the possible increase in advertising revenue (Boyd, 2019). Facebook Chat was released in April 2008, and then appeared Facebook Wall, People You May Know, and Facebook Connect features.

The number of users was growing steadily until, in December 2009, Facebook became the most popular social platform in the world, with 350 million registered users and 132 million unique monthly users (Boyd, 2019). In 2010 additional features were developed, particularly ‘likes’ under the comments. The number of registered users reached 500 million, and Facebook was valued at $41 billion, becoming the third-largest web company in the United States after Google and Amazon (Boyd, 2019). In July 2011, the number of page views reached 1 trillion. Also, this year facebook.com became the second most visited website in the USA.

Fake News and Cheating Policy

In April 2012, Facebook acquired Instagram for $1 billion and then came up with an Initial public offering (IPO). The company was valued at $104 billion, $38 per share (Boyd, 2019). The IPO attracted $161 million in investments; however, after the process against underwriters, stocks lost 60% of the value in a month, and investors lost $40 billion (Boyd, 2019). The underwriters were accused of secretly lowering revenue estimates, and the company was charged with an IPO pump and dump circuit. Nonetheless, in October 2012, the number of users exceeded 1 billion.

Thus, Facebook became the whale of the world market and started to influence processes in politics and society. From 2014 to 2018, Facebook has several times been at the center of serious scandals. The first was associated with the accounts promoting violence; then, Russia’s interference in US elections in 2016 was recognized (Boyd, 2019). In March 2018, the Cambridge Analytics scandal erupted – “This Is Your Digital Life” application stole data from 87 million Facebook users to support the political campaigns of Ted Cruise, Donald Trump, and Brexit (Boyd, 2019). Zuckerberg made a move and blocked 1.3 billion fake accounts.

In December 2018, Facebook was accused of illegally transferring user data to Netflix and Spotify for advertising purposes. Zuckerberg spoke to Congress twice – in September 2017 and May 2018. He promised to strengthen the data privacy policy and take control of the illegal use of the platform by third parties, but Congress recognized these measures as insufficient (Sraders, 2020). The scandals haunted Zuckerberg, but it looks like Mark assumes he does not have to influence the social processes.

Economics, Technology and New Opportunities

Meanwhile, the company continued to grow in economic performance and technology development. In the first three months of 2014, 1 billion users entered the platform from a smartphone. In February 2014, Facebook bought WhatsApp for $19 billion to gain access to younger and foreign users of the application, and in March – acquired Oculus VR (Boyd, 2019). By September, Facebook had a market capitalization of $200 billion, and profit in the fourth quarter of 2014 was $701 million, 34% more than the previous year (Boyd, 2019).

In January 2015, Facebook launched a feature that allowed users to report fake news. Also, Facebook’s reactions feature ‘love’, ‘hate’, ‘haha’, ‘disgust’, ‘sad’, or ‘wow’ was released. In July, the number of users reached 1.49 billion, or half the world’s Internet users. Also, it turned out that 63% of Americans prefer to read the news on Facebook (Boyd, 2019). Instant Articles, Calls in Messenger, Facebook Live, and 360-video were released.

In 2016, Facebook announced 1.5 billion daily users, 3 million advertisers. The company also changed priority in the news feed in favor of friends and relatives and launched the Workplace. It gained $10 billion in revenue and 1.86 billion monthly users (Boyd, 2019). In 2017, the Facebook Journalism Project was launched, and new features appeared to allow access to food and shelter in emergency situations, messenger reactions were added, and new tools to prevent suicides were developed. Facebook Spaces for VR and tools to combat online harassment were also released this year. The company received $15.9 billion in profit, 56% more than in 2016 (Boyd, 2019). In January 2018, news from friends and relatives received an even higher priority to stimulate companies and organizations to buy advertising.

In June, a report was published according to which only 51% of teens used Facebook, preferring Snapchat, Instagram, and YouTube. The Facebook Watch video-service and Facebook.gg game streaming arena was launched. The 2018 second-quarter earnings report scared the market, but the balance was quickly restored. In December 2019, revenue amounted to $21 billion, showing an increase of 24% compared to 2018 (“Financials Facebook Inc.”, 2019). Also, the Facebook Spaces was closed to give a path for the new Horizon tool.

Threats to Business

Nothing could bring down the focus of Zuckerberg, who always perceived his company as a business project, not the social one. Filling out the “Form 10-K”, the company listed the actual threats to the business (US Securities and Exchange Commission, 2019). The most significant are risks associated with failure to retain existing users or add new, generating revenue from advertising, the dependence of advertising revenue on signals from external websites (US Securities and Exchange Commission, 2019).

Reliance on mobile operating systems, competition-related threats, and government restrictions were mentioned as well (US Securities and Exchange Commission, 2019). According to official data, as of December 31, 2019, the company has 44,942 employees in 70 cities around the world (US Securities and Exchange Commission, 2019). Thus, Facebook’s success contributes to the well-being of many people.

References

Boyd, J. (2019). . Brandwatch. Web.

Financials Facebook Inc. (2019). Web.

Sraders, A. (2020). . TheStreet. Web.

US Securities and Exchange Commission. (2019). Facebook Inc.: Annual report pursuant to Section 13 or 15(d) of the securities exchange act of 1934 for the fiscal year ended 2019. Washington, DC 20549.

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