Facebook is the most successful social networking site in the Internet. The website was launched in 2004 by a group of Harvard students led by Mark Zuckerberg and today it has 400 million registered with an average of 130 friends . Facebook has been very successful in getting users to put personal data online and of linking their data with those of other people (friends and acquaintances) – all of this voluntarily! However, its growth into a global leader of social networks has also created a number of challenges for Facebook that are likely to become critical to its success in the future.
Two important ones are:
• The challenge of successfully managing users privacy: a lot of the success of Facebook is because users freely put and share their personal information and data online with other users. In the last months Facebook has been criticised for not been clear about how the information and data we give to it is used to develop Facebook and for not providing a more easy way to change users privacy settings. If Facebook wants to continue being successful it will probably have to explain better how it works to protect the information we give it and also give it users more control and power over the information and data.
• The challenge of “making money”: Facebook has direct access to its 400 million registered users. This is an enormous potential market which, interestingly, is the result of users freely registering their information and preferences with this company. Moreover, by linking individual users who are friends or acquaintances, users have helped Facebook identify potential sub-markets (communities) of people interested in the same things. However, Facebook is estimated to make ‘only’ $300 million . If Facebook wants to be a money-making business it will have to find ways of successfully using its access to all these users as a platform to sell products and services. Maybe in the coming years Facebook will create its own branded online services (like Internet telephony, more developed social networking, etc) or it may let other companies exploit the information it has to market their products to Facebook users.
The way that Facebook deals with these challenges is likely to be critical for its future success.
On the one hand, if Facebook can find a way of guaranteeing that the information we give it is used responsibly and allows us to protect it in an easy way, then users will continue providing the data Facebook needs to further develop the social network. If, however, it does not take action then users will lose trust in Facebook with the result that users will not give it correct information or simply unregister from the website, undermining the very reason of the success of Facebook.
On the other hand, if Facebook can find ways of “monetising” the information it has of its users to generate income it can probably become a powerful player in the online services market because of the quantity and quality of the information users have given it. If, however, it is not capable of doing this, then in a few years time Facebook might not be able to continue financing the development of its successful social networking site and be overtaken by other new start-ups with a more clear business strategy.
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