Ebusiness in Global Perspective Facebook: A Global Phenomenon Mark Zuckerberg created Facebook when he was a There have been extensive concerns about privacy 19-year-old student at Harvard University. Initially, he and Facebook has been forced to modify its practices called it Facemash, and he used it to post the pictures of meet those concerns by such authorities as the Priv students and ask users to rate them as "hot or not." He Commissioner of Canada. One of the features it imple had hacked into Harvard records to obtain the informa- mented was to enable users to choose their own privacy tion. The university administration quickly shut down Settings, giving the users the ability to control who can see Facemash, and Zuckerberg faced charges for breach them and what they can see. of privacy and stealing data. Eventually, however, the Facebook was incorporated in the summer of 2004 charges were dropped. Sean Parker, who had been advising Zuckerberg, berg, became Zuckerberg was undaunted, however, and soon launched the company's president, and Facebook moved its on its opera- a new website called The Facebook, (they dropped the tions to Palo Alto, California. Facebook launched a high "The" later on) based on the concept behind the booklets school version in September 2005 and later expandon published by many universities with pictures of students membership eligibility to employees of several companies. and some basic information about them in order for the including Apple and Microsoft. On September 26, 2006, students to get to know each other better. At the time, Facebook was opened to anyone ages 13 and older with Harvard did not publish a facebook. a valid email address. The new Facebook site took off quickly, with many On October 24, 2007, Microsoft announced that it had thousands of views within a few days. Other universities purchased a 1.6% share of Facebook for $240 million, thus and schools were invited to join it, and the site quickly giving Facebook an implied value of about $15 billion. In grew. On Facebook, users can create profiles with photos, October 2008, Facebook announced that its international lists of personal interests, contact information, and other headquarters would be in Dublin, Ireland. In November personal information. They can communicate with friends 2010, based on an exchange for shares of privately held and other users through private or public messages and companies, Facebook's value was imputed at $41 billion, a chat feature, and they can post items of interest and making it the third-largest U.S. web-based company, after status updates to their Wall. They can also create and join Google and Amazon. interest groups, some of which are maintained by organi- During the time it has been in operation, Facebook has zations as a means of advertising. grown from a social introduction network for young people 4 Part 1 Ebusiness Models and Strategiesto a social networking site for people of all ages. The vast At last count, Zuckerman owned 24% of Facebook, numbers of people regularly using the site have attracted making his personal stake worth about $12 billion. companies to the site for the advertising opportunities. Procter & Gamble recently announced that it would be mov- Facebook ing its advertising budget from TV to Facebook. The site has www.facebook.com become a major commercial site, with growing importance Questions in the business world. The website is free to users, and it 1. What challenges will Facebook face as it moves more generates revenue from advertising, such as banner ads, completely into the world of business? although Facebook users click on advertisements less often than do users of other sites. Some speculate that this may 2. Are there other user groups that Facebook should be be because Facebook users tend to be technologically aware moving to include? and also tend to be young and rather immune to advertis- 3. What features could Facebook add to enhance its ing. But this area has not been extensively studied yet. appeal to users? A study conducted by compete.com in January 2009 found Facebook to be the most used social networking site Sources: www.buzzle.com/articles/history-of-facebook.html; in the world. Another study determined the monthly visitors www.webhostingreport.com; www.facebook.com/History; Wikipedia article in the United States alone to be around 135 million! on Facebook