Facebook controversies and where the company stands today

There are nearly 3 billion people using Facebook monthly, i.e., 37% of the world’s population. These stats arguably make Facebook the largest social media platform across the globe. Owned by META Platforms, this juggernaut of networks primarily makes money by selling advertising space, social media products, and services. Facebook users consist of individuals, small businesses, large corporations and most notably, political organisations.

Some Facebook history

Facebook was originally founded by four Harvard university students in 2004, one of whom was Mark Zuckerberg who continues as the company’s CEO today. By 2012, the company had a reported 1 billion users and in February of that year, filed for an IPO with a company valuation of US$102.4 billion. Its main competitors are said to include Alphabet Inc’s Google (GOOGL) and YouTube, X (formerly known as Twitter), Amazon and Apple Inc. Facebook changed its name to META Inc in October 2021 and began trading under the ticker META in June 2022.

More on META

In addition to Facebook, META also owns and operates Instagram, WhatsApp, and Threads. META is said to be one of the ten largest publicly traded corporations in the United States, with a March 2023 market value in the region of US$529 billion.

META share structure

META has a dual class share structure, namely class A common stock (representing one vote per share) and class B common stock (representing 10 votes per share).

• Class A common stock trades under the ticker “META” on the Nasdaq Global Select Market. As of 2 October 2022, META had 2,248,672,204 shares of class A common stock outstanding.

• Class B stock is owned by Zuckerberg, management, and directors, essentially giving them company control. There were also 402,876,470 META shares of class B common stock outstanding as of 21 October 2022.

META does not pay a dividend on its shares.

META financials

In the 2022 fiscal year that concluded on December 31, 2022, META disclosed a net income of $23.2 billion derived from revenue of $116.61 billion. About 98% of the total revenue for that quarter stemmed from advertising revenue, with the remaining sources of revenue originating from META’s Reality Labs division and other channels. META’s revenue experienced a 1% decline in comparison to the previous year. The company’s overall operating income, used as a profitability measure for its business segments, stood at $28.94 billion, marking a decrease of 38% compared to the preceding fiscal year.

META/Facebook controversies

META has been at the centre of several controversies over the years, in particular for its Facebook platform.  Let’s dive a little deeper into some of the more popular scandals that have plagued the company over the last decade or so.

2020 American presidential elections  

A widely covered controversy that received global attention was the impact of Facebook and Instagram on the 2020 US presidential elections. Significant research was conducted on the polarisation and misinformation that was purported to have occurred on the social media platforms during this time, and the sway that this held over users’ political beliefs.  Four studies were in fact recently released in Science and Nature that explored the impact of Facebook’s recommendation algorithm during these elections. The results were an important insight into the type of information served to particular demographic groups based on on-platform behaviours, and the level at which disinformation appealed to specific politically minded users. 

META closes nearly 9k Facebook and Instagram accounts linked to Chinese ‘Spamouflage’ campaign

Another recent controversy saw the shutting down of approximately 9k Facebook and Instagram accounts, groups and pages associated with a Chinese political spam network. It was reported that the network which allegedly originated in China targeted countries worldwide including Taiwan, the United States, Australia, the United Kingdom, Japan, and global Chinese-speaking audiences.

According to an August 2023 Guardian article, META said the Chinese network “posted positive commentary about China and Xinjiang province and criticisms of the US, western foreign policies and critics of the Chinese government, including journalists and researchers.” The article further reported that “while the Spamouflage network was running across China, META was able to determine a large number of accounts appeared to be running from a shared location such as an office, with shift patterns such as bursts of activity in the morning and afternoon, Beijing time, with breaks for lunch and supper.” META is said to have identified and blocked the campaign in 2019 after which it is said to have moved on to other smaller sites.

Cambridge Analytica data scandal

Probably one of the most publicised scandals in the world at the time, in 2010 it was reported that the personal data of millions of Facebook users was collected without their consent by British consulting firm Cambridge Analytica. The data was reportedly to be used predominantly for political advertising. Via an app called “This is Your Digital Life”, data of up to 87 million Facebook users was apparently harvested and later deployed in political campaigns. The app consisted of a quiz developed by Russian psychology professor at Cambridge, Aleksandr Kogan, who shared the information with a commercial partnership with Strategic Communication Laboratories, which later created Cambridge Analytica.

A 2019 Business Insider article reported that, “Trump’s campaign hired Cambridge Analytica in June 2016 to help target ads using voter data gathered from millions of adults in the US. Cambridge Analytica also assisted Brexit Leave campaigners in the run-up to the EU referendum.” Facebook CEO Mark Zuckerberg eventually appeared before US Congress to answer questions, and the FTC went on to impose Facebook with a fine of US$5 billion.

Facebook and newspaper publications

The company company’s use of news publishers’ content has given rise to new legislation in Australia, that effectively requires META to pay the publishers for using their content on the social media platform. The Australian decision was passed in February 2021, prompting European news publishers to lobby the European Union to pass similar legislation.

Despite the scandals, whistleblowing, electoral impacts and other antitrust suits for anticompetitive behaviour, Facebook continues to dominate in terms of number of users. Its global audience reach is unprecedented, with annual ad revenues forecasted to hit US$153 billion in 2023. In fact, according to 2023 Oberlo statistics:

• Experts predict that the social network’s global revenues will exceed $200 billion by 226.
• From 2017 to 2026, Facebook’s annual advertising revenues are forecast to rise by more than five times—from $39.94 billion to $202.94 billion, representing a 20.2% average annual growth rate.

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