SWOT Analysis of Facebook

Introduction

Facebook Incorporated is a globally used online social media platform created in 2004 by Mark Zuckerberg that allows people to connect, discover, share, and learn through their personalized profiles. Facebook can be used on any form of devices such as mobile phones and computers, which is convenient to keep in touch with anyone like family members.  The variety of ways to communicate with people enables them to communicate to friends, reach out to businesses, and even play interactive video games within Facebook. Facebook has purchased and incorporated other applications into their website, such as Messenger, WhatsApp, Instagram, and Oculus, which appealed to a wider range of audience to continue using this platform.

Due to Facebook being a huge platform with many users, marketers and companies began to take advantage of advertising their businesses and services on the site in the form of automated posts and sidebar ads. Although Facebook is and has become more successful through their user growth and engagement, there has been a rise of discontent users over privacy issues and other competitive social medias and networks that already has high popularity such as Twitter and Google.

Problem

Implication

Two main problems for Facebook that almost everyone knows about are their issues with privacy and competition in the social media market. Recently, it seems that Facebook has not had a good reputation with keeping their users’ privacy. That in itself is a huge issue with having around 2.3 billion users on all of its platforms, when news broke out in the beginning of the year that Facebook private messages were indeed not private and possibly being sold to others as “data” that was incredibly shocking to many people. According to an army mom from the NYTimes article, hearing that was terrifying. She had messaged her family about her son’s location that was meant to be kept under wraps, but now Facebook had the access to share these personal messages between users to strangers. While technology is growing day by day and is helpful in more ways than not, people should still be allowed to keep their privacy through private messages and personal information sharing to only specific users.

Apple’s chief executive, Tim Cook, is also getting involved on this issue confronting Facebook on their improper use of “side-loading”. At the end of January 2019, Apple was made aware that Facebook had created an app that allowed them “the ability to track app use, the websites users visited, the Amazon purchases they made and other intimate data.” According to another NYTimes article, it was stated that Apple was not happy to hear about what was going on and decided to “cut off Facebook’s enterprise developer access for all of its apps, not just the offending research app”. The article also mentioned that if Tim Cook is serious about protecting Apple users from privacy violating apps, then he wouldn’t be shy to remove all of Facebook’s apps from the app store until they prove that they no longer are violating the fundamental human right of privacy. If that were to happen, Facebook would definitely see a decline in usage which would lead to a loss of profit. It was wisely stated that instead of users switching away from Apple that Facebook would almost certainly blink first, and make the necessary changes to get back into Apple’s good graces.”

Now with Facebook not making all of its users happy, it’s no coincidence that other social media that Facebook does not own, are building their way up in their percentage of market share. Stat Counter is a website that shows social media statistics of any region you specify. So looking at only the United States within the past year, Facebook has dropped significantly. Last February, it was at an all-time high of 80% and currently it is at 53% market share. Comparing that side by side to a new popular app, Pinterest, and an old favorite, Twitter, it does not look very nice. Pinterest went from 13% to now 31% and Twitter which still has a primarily young user base still had an increase from 3% to now 6%. As we can see from this data, Facebook's latest news and what it has been doing has definitely shown in its numbers of users and percentage that it has of its market share. Will Facebook learn from their downfall and find a way to make up for it to gain back their share?

Analysis

According to Statista, by the end of 2012, it took Facebook eight years to grow from one million users to one billion users on their site across the globe. The social media company became the fastest growing tech company ever till this date. The main reason behind its tremendous growth is Facebook had never been lounging around enjoying its success. By utilizing the SWOT analysis, the company has always been on the lookout for changes in technology trends, market demand, and competition to stay on top of their game as the biggest social media provider. One of their most successful strategies on growth is acquisition. As of February 2019, the company has acquired 76 companies including hardware companies, software companies, and even competitors.

Thanks to the company’s great use of the SWOT analysis, it made some of the most controversial, yet successful acquisitions in the history of technology consumer. According to Time Magazine, in 2012 Facebook paid a whopping $1 billion for a startup social media called Instagram, which did not produce any revenue yet, and only had 13 full-time employees. Six years later, in 2018 only Instagram had brought in, according to Statista, $6.84 billion in advertising revenue for Facebook. Instagram is still going to be one of the most important revenue streams for the company for years to come. If that was not impressive enough of how good Facebook top office is, in 2014 according to CNN, the company broke the bank to purchase Whatsapp with a $19 billion price tag that shook the ground of Silicon Valley. It was considered the biggest acquisition in the internet era. The question that was asked across news headlines at the time was, “Why Whatsapp?”. According to Investopedia, the greatest answer for that would be that by February 2018, Whatsapp would have more than 1.5 billion users.

The value of these acquisitions do not only stop there; some of these companies have brought in great success for Facebook Incorporation. The purchase of Face.com, a facial recognition software company back in 2012, resulted Facebook’s signature of tagging option for photos that is applied on both Instagram and Facebook interface. To further gain competitive advantage over their competitors, it also acquired Oculus which develops virtual reality platforms and products for $2 billion. This shows that Facebook has diversified its portfolio as variety as any other big tech competitors and kept on creating new value for consumers with new product sector and new technology.

According to Statista, by the end of 2018, Facebook has more than 2.3 billion users across all three platforms. Knowing its own massive amount of usage, Facebook has taken the initiative in utilizing the data collected from users to its advantage on creating new revenue streams such as advertising, app performance tracking for other app company, and sharing data through data generation. The question has been put out recently towards the company’s business is that whether it is ethical to utilize its users’ information for monetizing purposes without the users’ knowledge. The issue officially broke out when the Facebook data privacy scandal surfaced last year of 2018. According to Techrepublic, the scandal centers around the collection of personal information of up to 87 million people by Cambridge Analytica, a political consulting and strategic communication. The information was used toward the advantage of the United States presidential election of 2016. Moreover, a conflict between Facebook and Apple in data privacy agreements between the two companies broke out in February 2019. As a result, a lot of consumers are starting to question if Facebook’s corporate identity is shifting in their perception of the company.

The company recently experienced an outage that users could not log in both Instagram and Facebook interface. This resulted in a 3 million users gain in 24 hours of outage towards its competitor, Telegram, a social media company that claims to have a more competent privacy policy and unlimited for everyone. Moreover, according to Marketwatch, a Facebook insider recently just sold approximately 5,300 of his stocks. These events showed that consumers dropping Facebook products due to its change in value yet. The newest report on Facebook growth came at the end of January this year, according to the Verge, still showed that monthly daily users were up 9% year over year despite of the data privacy scandal. This once again grew the question, is the value that Facebook is creating is still worth it for their consumers?

Conclusion

To summarize, Facebook has grown into a social platform with an estimated 2.3 billion users. People’s ability to communicate with their friends, reach out to businesses, and play a game or two, have led to executives taking advantage of their large audience to collect data on them, a practice that worked to their favor at first. To Facebook’s disadvantage, on the other hand, is the rise of other social media platforms such as Instagram and Twitter, that have strayed their users away from the platform.

To further complicate matters, Facebook’s scandal of breach of user data has only added to their consumers leaning away towards other social media platforms. While Instagram provides a huge advertising revenue for Facebook, its main site will not appeal to users the same way, deeming it inferior compared to its successors. Its continuous issues over their questionable ethical methods for advertising, performance tracking, and data sharing, have led us to believe that this is an issue Facebook will face in the future.

Works Cited

Blumenthal, Eli. "Facebook's Latest Privacy Scandal: What We Know About The Company's Handling Of User Data". Usatoday.com, 2018, https://www.usatoday.com/story/tech/2018/12/19/facebooks-latest-privacy-scandal-what-we-know-now/2361257002/. Accessed 27 Mar 2019.

"Facebook Inc (FB.O)". Reuters, 2019, https://www.reuters.com/finance/stocks/company-profile/FB.O. Accessed 28 Mar 2019.

Giridharadas, Anand. “Deleting Facebook Won't Fix the Problem.” The New York Times, The New York Times, 10 Jan. 2019, www.nytimes.com/2019/01/10/opinion/delete-facebook.html. Accessed 27 Mar 2019.

Roose, Kevin. “Maybe Only Tim Cook Can Fix Facebook's Privacy Problem.” The New York Times, The New York Times, 31 Jan. 2019, www.nytimes.com/2019/01/30/technology/facebook-privacy-apple-tim-cook.html. Accessed 28 Mar 2019.

“Social Media Stats United States Of America.” StatCounter Global Stats, Feb. 2019, gs.statcounter.com/social-media-stats/all/united-states-of-america. Accessed 28 Mar 2019.

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