Case analysis

On

Facebook

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History of Facebook

Facebook, a long range informal communication webpage that creates it simple for
anybody to interface and offer with loved ones on the online. Initially intended for undergrads,
Facebook was made in 2004 by Mark Zuckerberg while he was selected at Harvard University.
Harvard understudies who pursued the administration could post photos of themselves and
individual data about their lives, for instance, their class timetables and clubs that they had an
area with. Its prevalence expanded, and shortly understudies from different lofty schools, for
instance, Yale and Stanford colleges, were permitted to hitch. By June 2004 in more than
250,000 understudies from 34 schools had joined, which equivalent year significant companies,
for instance, the MasterCard organization MasterCard began paying for presentation on the
location. By 2006, anybody beyond 13 a years old a considerable email address could join
Facebook. Facebook became the most important informal organization on the earth, with quite
one billion clients starting at 2012, and a few large portion of that number was utilizing
Facebook consistently. The organization's central station is in Menlo Park, California.

In February 2012 Facebook documented to show into an open organization. Its first sale
of stock (IPO) in May raised $16 billion, giving it a market estimation of $102.4 billion. On the
opposite hand, the most important IPO of an online organization so far was that of the online
crawler organization Google Inc., which had raised $1.9 billion when it opened to the planet in
2004. Before the finish of the most day of the stock's exchanging, Zuckerberg's possessions
were evaluated at quite $19 billion.

How Facebook works

Access to Facebook is freed from charge, and therefore the company earns most of its
money from advertisements on the online site. New users can create profiles, upload photos,
join a preexisting group, and begin new groups. The location has many components, including
Timeline, an area on each user’s profile page where users can post their content and friends
can post messages; Status, which enables users to alert friends to their current location or
situation; and News Feed, which informs users of changes to their friends’ profiles and

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standing. Users can chat with one another and send one another private messages. Users can
signal their approval of content on Facebook with the likes of button, a feature that also
appears on many other internet sites.

The attractiveness of Facebook stems partially from cofounder Zuckerberg’s insistence

from the very beginning that members be transparent about who they are; users are forbidden
from adopting false identities. The company’s management argued that transparency is
important for forming personal relationships, sharing ideas and knowledge , and build up
society as an entire . It also noted that the bottom-up, peer-to-peer connectivity among
Facebook users makes it easier for businesses to attach their products with consumers.

Importance of Facebook

Communication: In 2009, Facebook's chat program surpassed the one billion messages per day
milestone, but a year after the platform was launched. These figures don't take other
communication methods on Facebook -- like messages, wall posts, comments and pokes --
under consideration , but do demonstrate the large and growing importance of the location as
how for contacts to exchange information.

Customer Interaction: Facebook pages provide a forum for dialogue between customers and
therefore the brand, giving companies the chance to create better relationships with target
audiences and current customers.

Reputation Management: Facebook allows a corporation to realize a deeper understanding of

how the brand is perceived online – through direct feedback and also by monitoring what users
are saying about the brand.

New Customer Acquisition: whenever a Facebook user becomes a lover of a Facebook page, a
notice is posted as item for all of that user’s friends to ascertain. This creates a chance for a
Facebook page to travel viral and reaches new viewers.

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Feedback Mechanism: during a service-based sector like hospitality, customer feedback is
significant. Facebook allows users to speak their experiences directly and provides the
corporate the chance to reply.

Branding: Facebook are often used as a medium for creating brand awareness additionally to a
company’s corporate website. It provides brand exposure to a potentially new audience and
provides organizations the chance to position themselves in new and unique ways.

Drive Web Traffic: As a Facebook page grows its fan base, traffic to the corporate website will
increase. Facebook pages also appear in Universal Search Results.

Revenue model of Facebook

Facebook Inc. (FB) primarily makes money by selling advertising space on its various
social media platforms. Those platforms include websites and mobile applications that allow
users the power to attach and communicate with family and friends. The company's sites and
apps include social networking site Facebook, photo- and video-sharing app Instagram, and
messaging apps Messenger and WhatsApp. Facebook also provides an ecosystem that permits
users to attach through its Oculus computer game products.

Facebook competes with other companies that sell advertising to marketers, also as
companies that provide platforms for communicating and sharing content among users’ various
social networks. Major competitors include Apple Inc. (AAPL), Alphabet Inc.’s (GOOGL) Google
and YouTube, Tencent Music Entertainment Group (TME), and Amazon.com (AMZN).

SWOT analysis of Facebook

Strength:

 Strong brand image

 Large consumer base with externalities
 High revenues
 Innovative workforce

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Weakness:

 Imitable products and services

 Negative impacts of online advertising on user experience
 Low diversification of business

Opportunity

 Business diversification
 Product innovation
 Market penetration and development

Threat

 Imitation
 Cybercrime like loss of privacy and spread of fake news
 Market saturation

Facebook and the PESTEL analysis

Political

 China continued blockade on Facebook

 Political fake news during US Presidential election in 2016
 The impact of the US and China trade tensions on Facebook
 Paying Attention to the Political Environment

Economic

 Losses of $100 million USD

 Boosting the economy
 A business platform and model
 Plummeting stocks
 Paying Attention to the Economic Environment

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Social

 Rise of smartphones
 A lost core value
 Loss of quality
 Paying Attention to the Social Environment

Technological

 More than just a website

 More data safety needed
 Recent technological developments by Facebook, Inc. competitors
 Technology's impact on product offering
 Impact on cost structure in Internet Information Providers industry
 Impact on value chain structure in Technology sector

Environmental

 Data center and emissions

 A small carbon footprint
 Environmental factors

Legal

 Improving patent laws worldwide

 Increasing regulatory support for data privacy and fake news
 Internet regulation in China
 Increasing regulation on online data

Major issues of Facebook

The authenticity of data has become a longstanding issue affecting businesses and
society, both for printed and digital media like Facebook. On social networks, the reach and
effects of data spread occur at such a quick pace then amplified that distorted, inaccurate or

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false information acquires an incredible potential to cause world impacts, within minutes, for
many users. Recently, several public concerns arose regarding the spread of faux news through
Facebook and a few approaches to mitigate the matter were expressed.

What is fake news?

Fake news also referred to as junk news, pseudo-news, or hoax news may be a sort of
news consisting of deliberate disinformation or hoaxes spread via traditional journalism (print
and broadcast) or online social media like Facebook. Fake news is produced to either generate
clicks and advertising revenue, or to reinforce, discredit or boost a politician; policy or
organization. Digital news has brought back and increased the usage of faux news, or tabloid.
The news is then often reverberated as misinformation in social media but occasionally finds its
thanks to the mainstream media also.

Fake news is written and published usually with the intent to mislead so as to wreck
workplace, entity, or person, and/or gain financially or politically, often using sensationalist,
dishonest, or outright fabricated headlines to extend readership. Fake news can take many
forms, including:

Disinformation: False information which is meant to mislead the audience, instead of

explain the complete story

Propaganda or spin: One-sided information, which frequently omits key facts or

evidence which contradicts it

Subjective news: The presentation of 1 side of an argument more positively than the
opposite

Facebook and the fake news

In the past spreading fake news was relatively difficult. Neither printing presses nor
paper were cheap or easily available until comparatively recently. They were often large and
hard to conceal – government censors could find dissident printers and destroy their presses.

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The stage-by-stage technological developments, from commonly available computers to
publication to webpages to Facebook pages has made this progressively easier – mostly in ways
distinctly beneficial to freedom of speech, but also enabling the assembly of fake news. With
Facebook, this has reached a specific extreme: two Facebook pages look very similar to each
other, regardless of whether they are made by a major news provider or a Macedonian
teenager. Making your ‘fake’ news appear as if the important thing has never been easier.
Moreover, the prices involved are negligible – the technology is universal, Facebook is ‘free’ to
those using it to make pages, and distribution costs are minimal. Facebook also makes the
crafting of the content of faux news easier – and this begins the juncture about its business
model. Facebook’s systems for data analysis and for profiling create means for the advertisers
(and fake news providers) to discover what people are curious about – both in general terms,
following large groups, and in specific terms, profiling individuals. Given the mass of individuals
on Facebook and therefore the mass of knowledge provided by them, the opportunities for
analysis are of an unprecedented level and therefore the quality of the profiling is improving all
the time.

Delivering fake news via Facebook

Facebook doesn't just help with identifying the potential audience but also provides the
mechanisms to target them – from the tools for advertisers to the various groups, pages then
forth where they will be found. Paid political advertisements are only little part of this – the
spreading of data in other ways may be a critical part of the way that fake news works.
Critically, much of this happens without those behind the fake news needing to take any action:
Facebook’s whole ‘sharing’ system does much of this automatically. it's not just that the
creators of fake news are able to find an audience, using tools provided by Facebook, but that
the consumers of fake news – willing and aware or unwilling and unaware that what they're
consuming is fake – are ready to find that fake news, also using tools provided by Facebook.
‘News’ tailored to individuals, checking out news on particular subjects (using terms that the
providers of fake news will know are likely to be searched for) then forth all add an equivalent
direction: to make sure that what people are looking for is available to them, and that they can

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find it. Once people have found the things of fake news, they're going to share them – and
Facebook’s social network will make sure that it's spread without the creators of the fake news
having to try to any more about it: an electronic grapevine more effective than anything
previously imaginable, and one particularly suited to fake news, for a series of reasons.

Facebook aids and abets the spread of faux news through its basic principles – data-
mining and analysis, profiling, personalizing, targeting and therefore the reform the
encouragement of sharing are all direct supporters of the spread of faux news and the
bolstering of faux narratives. It’s through Facebook’s basic systems that fake news has become
a qualitatively different and quantitatively more significant problem – not just through the
actions of rogue actors who are often hunted down and removed. Those that spread fake news
on Facebook are the standard users, and for a good sort of reasons. Many, and maybe most, of
these reasons are nothing to try to with conspiracies or an effort to undermine the reality or
the political system: people are simply sharing stories that interest them or that they think are
important. They’ll share them maliciously – but they'll also share them simply because they
need to stay their ‘friends’ and other connections informed. they'll want to assist people to
ascertain what they consider the reality – or to assist them in their arguments with their
‘opponents’ – conservatives arming other conservatives for his or her battles with liberals; and
liberals arming other liberals for their battles with conservatives. It is part of depolarization
process – and the social media, and Facebook in particular, is perfectly designed to assist it to
happen.

Fake news and the political impact

Social media gives politicians a chance to succeed in and influence their supporters and
potential voters – and increasingly as an analytical tool to know and target those potential
voters. The social media companies see it as a chance to form money. What’s abundantly clear
is that Facebook, Twitter and other sorts of social media are now a part of the political arena.
Politics does happen on the social media – and this is often not a genie which will be easily
coaxed back to its bottle. Meaning that each one those that want to be involved in political
activities will check out the chances – including those that wish to use fake news for these

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purposes. Campaigning groups of varied kinds all use the social media – and Facebook
especially – in similar ways to direct and official political campaigns. Tools developed for the
‘real’ politicians can easily be used by the various shades of grey between them and the worst
of the political manipulators. There is a financial incentive to the social media companies not
only to develop those tools but to develop the markets for those tools. this is often only one of
the ways in which they create money from fake news and related sorts of misinformation: it's
an incentive that's not getting to easily disappear.

For example, within the final three months of the US presidential campaign, the highest
-performing fake election news stories on Facebook generated more engagement than the top
stories from major news outlets like the ny Times, Washington Post, Huffington Post, NBC
News, et al. . During these critical months of the campaign, 20 top-performing false election
stories from hoax sites and hyper partisan blogs generated 8,711,000 shares, reactions, and
comments on Facebook. Up until those last three months of the campaign, the highest election
content from major outlets had easily outpaced that of faux election news on Facebook. Then,
because the election drew closer, engagement for fake content on Facebook skyrocketed and
surpassed that of the content from major news outlets. The social media giant was massively
influential—not because it had been tipping the scales with fake news, but because it helped
generate the majority of the campaign's $250 million in online fundraising and help to win US
president Donald Trump consistent with the experts.

Fake news and impact on financial market

The development of social media platforms, also as many other technological

advancements within the news world, has made the planet far more interconnected and has
significantly changed the way financial information is accessed and used. The improved speed
and quantity of stories available has changed the climate for news within the financial world
and has caused all people, including professionals, to regulate their methods of operation in
financial markets. There are many benefits stem from the event of stories and media platforms
like lower information costs and fewer information asymmetries, but drawbacks and risks have
also been added to the combination. These negatives mainly derive from the increased

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prevalence of faux news on Facebook which now features a better chance of gaining traction
and spreading before it's proven to be inaccurate. Fake news is at more of an obstacle than
real, accurate news, when it involves the likelihood it's widely spread because anyone can
publish false or misleading reports using Facebook. The financial markets as an entire are often
greatly altered if a fake news article gains enough traction and is widely spread and believed,
which causes the potential for an excellent threat. The most concerns that start to become
clear for the financial industry are how susceptible the markets are often to fake news then
asking why the present environment has become an area where fake news is so prevalent.
Starting with the primary concern, experts and professionals must consider how significant
impact fake news can potentially wear the financial world to know the dimensions of the threat
they're facing.

Fake news and the impact on marketing & business

Websites that propagate misinformation often attempt to add credibility to articles by

placing mainstream ads next to them. The tactic is feasible because many large brands
advertise through third-party or automated platforms. As a result, marketers lose control over
ad placement, and brand ads can appear next to fraudulent content that doesn't reflect, or that
even conflicts with, a firm’s values. It’s thus crucial for firms to know how the proliferation of
faux news might harm their marketing efforts. Fake news had a decidedly negative effect on the
readers’ attitudes — notwithstanding whether it seemed to get on a “trustworthy” or
“untrustworthy” site. People’s perceptions of a news article’s low credibility transferred to their
opinions about the brand, and that they said they might be less likely to shop for the brand’s
products, visit a store, or speak positively about it. Interestingly, this was true no matter the
opinion participants held of the website’s integrity before encountering the news story —
meaning that one story was enough to sway their opinion and have it spill over to the brand. It
also didn’t matter whether the brand in question was renowned or less well-known,
demonstrating that the negative drag of faux news applies to companies on both ends of the
popularity spectrum.

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The relation between Facebook and traditional media

The relationship between the normal media and therefore the social media is similarly
not simple: the 2 aren't separate and offering alternatives, but intrinsically and inextricably
interlinked. The normal media uses the social media as how to succeed in its audience, with
pages on Facebook not only for the media operations themselves but for the individual
programs and journalists. Traffic is driven to the websites of the relevant news sources,
potentially providing advertising revenue for the media. The social media similarly benefits
through traffic and advertising revenues, also as through the data gathered and profiling made
possible through the users’ access to news sources. Hence a fake news from traditional media
and spread through social media is more dangerous and with more impact. Narratives created
by the normal media are often fed and fostered in the social media – and form the idea for fake
news that uses both the stories in the traditional media and purely invented material, further
feeding the narratives. In its turn, the normal media feeds off the social media, using it as
sources and attempting to harness its power.

Fake news and the Facebook stock price

According to ny Times in November 2018, stock price of Facebook INC. continued to fall
after the corporate did not to reply to such problems as fake news, malicious content and
Russian interference in U.S. elections via social media. FB dropped $4.32 to $139.53 after earlier
hitting a replacement 52-week intraday low of $137.77. The stock was down nearly 36% since
July, when it reported heavier spending on security and fraud issues. Shares had mostly fallen
as Facebook's top management, including CEO Mark Zuckerberg and COO Sheryl Sandberg,
ignored numerous warning signs of abuse and sought to stay the problems covert .

Facebook’s step to reduce fake news

The Facebook executives outlined a variety of the company’s tactics, including making
political advertising more transparent, targeting reduced distribution of false news, detecting
and taking down coordinated campaigns by “bad actors”, preventing spam and faux accounts,
and launching “rapid response” efforts when election misinformation escalates. Beforehand of

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the midterms, Facebook has also adopted new practices banning misinformation specific to
voting, like fake stories about long lines or voting requirements that would cause voter
suppression. Facebook has been partnering with third-party professional fact-checkers but
notes that its partners "face challenges of scale." One idea the corporate is exploring has users
identify journalistic sources that either "corroborate or contradict" claims. this technique has
clear potential to be abused, which Facebook says it'll attempt to combat with safeguards that
it's not detailed yet.

Solution to tackle fake news on Facebook

Facebook has been slow to admit it's a drag with misinformation on its news feed, which
is seen by 1.18 billion people a day. It’s had several false starts on systems, both automated and
using human editors that inform how news appears on its feed.

Verified journalism pages

Similar to Twitter’s “blue tick” system, verification would mean that a news agency
would need to apply to be verified and be proved to be a reputable news source in order that
stories would be published with a “verified” flag. Verification could also mean higher priority in
newsfeed algorithms, while repeatedly posting fake news would mean losing verified status.

Add a ‘fake news’ flag

Labelling problematic articles during this way would show Facebook users that there's
some question over the veracity of a piece of writing. It might be structured an equivalent way
as abuse reports currently are; users can “flag” a story as fake, and if enough users do so then
readers would see a warning box that “multiple users have marked this story as fake” before
they might click through.

Add a time-delay on re-shares

Articles on Facebook and Twitter might be subject to a time-delay once they reach a
particular threshold of shares, while “white-labeled” sites just like the NY Times would be
exempt from this.
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Partnership with fact-checking sites, like Snopes

Fake news could automatically be tagged with a link to a piece of writing debugging it on
Snopes, though inevitably which will leave Facebook hospitable criticism if the debunking site is
attacked as having a political bias.

Headline and content analysis

An algorithm could analyze the content and headline of stories to flag signs that it
contains fake news. The content of the article might be checked for legitimate sourcing –
hyperlinks to the Associated Press or other whitelisted media organizations.

Cross-partisan indexing

This system would algorithmically promote non-partisan news, by checking stories

against a heat-map of political opinion or sharing nodes, then promoting those stories that are
shared more widely than by only one a part of the political spectrum. It might be augmented
with a keyword search against a database of language presumably to be employed by people
on the left or the proper.

Sharer reputation ranking

This would promote or hide articles supported the reputation of the sharer. Everyone on
a social network would have a score (public or private) supported feedback from the news they
share.

Visible design cues for fake news

Fake news would come up within the news feed as red, real news as green, satire as
orange.

Punish accounts that post fake news

If publishing fake news was punishable with bans on Facebook then it might
disincentives organizations from doing so.

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Conclusion

Many of the legal and regulatory solutions offered to the fake news problems within the
new environment are direct descendants of ideas that existed within the old environment: fact-
checking; complaints mechanisms; obligations on ‘platforms’ to see and take away fake news.
The people that share fake news aren't a part of a secret conspiracy; they're just using social
media because it is meant to be used: sharing links and stories, engaging in political debate
then forth. Addressing fake news at its source is therefore, though useful in some ways, unlikely
to try to quite scratch at the surface of the matter – and is probably going to possess
unforeseen consequences that may cause more problems than they solve. Governments can –
and already seem to be – use handling fake news as how to introduce censorship and to silence
dissent or opposition. At every age, technological developments have brought advances in
freedom of speech – and at an equivalent time allowed or supported damaging uses of that
freedom of speech. It had been true for the pamphleteers, the newspapers, for radio and tv –
and it's true for Facebook and other social media now. Whilst there's money to be made –both
by the fake news providers and by Facebook – and whilst there’s political gain to be made by
those that desire it, there is no reason to believe that the problems caused by fake news will
lessen, and lots of reasons to believe that they will continue. Facebook’s business model
ensures that the primary will remain true, whilst human and political nature means the latter
will never get away. It’s impossible to seek out a ‘clean’ solution. Instead, messy, imperfect
ways ahead could also be the simplest way forward. This is often not a drag that's getting to get
away any time soon.

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Bibliography

 https://edu.gcfglobal.org/en/facebook101/what-is-facebook/1/

 https://en.wikipedia.org/wiki/History_of_Facebook
 https://smallbusiness.chron.com/importance-facebook-56887.html

 http://panmore.com/facebook-inc-swot-analysis-recommendations
 https://www.nytimes.com/2018/10/15/opinion/facebook-fake-news-philosophy.html

 https://www.thestreet.com/technology/facebook-stock-slides-another-3-percent-in-
wake-of-new-york-times-story-14784665
 https://www.buzzfeednews.com/article/craigsilverman/viral-fake-election-news-
outperformed-real-news-on-facebook
 https://www.cardrates.com/news/how-to-stay-vigilant-in-the-fight-against-fake-news/
 https://businessesgrow.com/2019/06/13/fake-news/

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