We had a discussion in the class about the valuation of Facebook, especially when it comes to platform companies and how valuable the winner take all type of business the company has become. The point brought up in class many times was how the Facebook brand suffered from privacy scandals and police contenting features, whereas prior to those blunders, the company had immense amounts of data for very targeted digital marketing and continued to drastically expand.
First big turning point made by Facebook was a decision to start policing and reviewing content, where today the company employs over 30,000 people to prevent abusive posts while also monitoring safety and security. The decision had drawbacks and created criticism of the company, where some argued that this step was a bit too late while others accused the company of only focusing on certain messaging and showed bias in its content policing, further driving a wedge for some of its users.
The business model is entirely based on the digital advertising, which in the hindsight was a brilliant decision versus the subscription model, where many paying users could have looked for alternative social media platforms if they had to fork out a monthly fee. But the advertising model is highly dependent on the trust of its users in the Facebook privacy policies and with a large number of scandals coming to forefront in a few years, it appears that the company lost its focus on main things - the users and their trust. The advertisers only come to the platform due to massive amounts of detailed user data and the company should drastically change its approach to ensure everything is tailored back to the user experience and increasing trust.
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