Over the years Facebook has become the focal point of the social media sector and is now one of the largest companies in the world. This multibillion-dollar operation started out as a soft social media project but has now become a giant with access to millions of homes around the world. The share price has performed phenomenally of late and the company is now valued at around $500 billion but is Facebook becoming too influential?
Privacy issues
One of the bugbears that Facebook users have is the way in which their personal information and images can be used by Facebook unless they effectively “opt out”. These subtle changes were brought in with minimal fuss but, once word got out, there was a significant backlash from Facebook users. While this particular issue has calmed down of late, gradually the privacy of your information on Facebook is being eroded.
Attacking the competition
The world of social media is cutthroat, fast-moving and only the toughest and most agile of companies will survive. Over the years we have seen the likes of MySpace and Bebo fall by the wayside, Twitter fail to capture the imagination of investors which has left Facebook head and shoulders above anybody else in the sector. The recent launch of Snapchat on the US stock market was a roaring success with the shares rising from $17 to nearly $30, but they now languish around $12 a share.
The Snapchat business model centers around one imaginative and very popular service, the ability to take short videos/ images and share them with friends. This core service has been expanded and improved of late but since Facebook failed to acquire the business just a couple of years ago Mark Zuckerberg has made a point of creating a similar service for Facebook users. To all intents and purposes Facebook is determined to wipe out Snapchat.
How to influence people and….
The normal phrase is “how to win friends and influence people” but in all honesty Facebook’s brutal business strategies have won few friends. The company is influencing more and more people because it is the only all singing all dancing social media platform available today. You could argue that the company has grown to such a size that the days of entrepreneurship in the social media sector are long gone. Any company showing any sign of pinching customers from the likes of Facebook, Twitter, etc will eventually be snapped up or squeezed out of the market.
Recent figures from Snapchat suggest it is getting harder for the company to increase activity and eventually increase ad revenue. The shares have plummeted from an almost $30 high, analysts are concerned about the short to medium term outlook and the lock down on employees selling shares ends on Monday. If Facebook is looking to crush Snapchat it has certainly made a good start!
Conclusion
If you look at Facebook from a pure investment point of view the company has significantly increased advertising revenue, particularly from mobile platforms, and continues to go from strength to strength. There is certainly an argument that the company is too influential, not exactly a custodian of privacy and constantly attacks other social media platforms in an attempt to crush the competition. It is amazing that Facebook remains so popular after all these years, many other social media giants have come and gone, and it does look as though the company is here for the long term.
Where will Mark Zuckerberg take his business in the future? Will the regulators take more interest in the influence of the company on the sector, competitors and customers? Could Facebook be the social media equivalent of Microsoft which dominated the computing industry until the regulators began legal action to break up the company?