The Bright and Dark Sides of Facebook Joining the '1 Trillion Dollar Market Cap' Club

Bloomberg: "The Growth Today Is Driven by Any Means Necessary"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] "Critics of Facebook target the company's algorithms and data collection activities, accusing it of allowing the spread of misinformation, but investors don't seem to think so."

As the market capitalization of Facebook, the world's largest social networking service (SNS), recently surpassed $1 trillion, Bloomberg News evaluated Facebook's rapid growth in this way.

Facebook's market cap crossing the $1 trillion mark coincided with its victory in an antitrust lawsuit filed by the U.S. government on the 28th of last month.

The U.S. District Court for the District of Columbia dismissed the antitrust lawsuit filed by the Federal Trade Commission (FTC) and the attorneys general of 46 states against Facebook.

The court pointed out that the lawsuit filed by the FTC was "legally deficient," stating that there was insufficient evidence to support the claim that Facebook exercised monopoly power in the social media industry.

This lawsuit was a key part of the U.S. antitrust authorities' efforts to regulate IT giants accused of illegally monopolizing the market. However, before these antitrust lawsuits against these companies could fully proceed, the court dealt a blow to the government's pressure.

Following the court's decision, Facebook's stock price rose 4.2%, pushing its market capitalization past the $1 trillion mark for the first time. This made Facebook the fifth U.S. company, after Apple, Microsoft, Amazon, and Alphabet, to reach the $1 trillion market cap milestone.

On the 1st, in front of the U.S. Capitol in Washington, House members gathered to hold a press conference criticizing Facebook CEO Mark Zuckerberg for making political donations to a nonprofit organization during last year's presidential election process.
[Image source=Reuters Yonhap News]

As a result, there are expectations that Facebook, having achieved its first success against antitrust regulatory pressure, will continue its existing business practices.

Bloomberg News reported, "Investors are cheering, and Facebook now has even less reason to listen to its critics' concerns."

The media emphasized that Facebook's growth stems not from users' trust in Facebook's services but from Facebook's one-sided business practices.

It means that the main factor is a method that spares no means or methods solely for growth.

[Image source=AP Yonhap News]

Foreign media reported that even when employees raised demands that would improve Facebook's service quality but potentially reduce profits, the company ignored them.

A representative example of this was confirmed in a whistleblower case from a former Facebook employee. BuzzFeed cited testimony from a former Facebook employee last September, stating, "Employees raised concerns about algorithms recommending posts containing extremist and inflammatory content," and "Although employees demanded adjustments to the algorithms, Facebook did not even look into it."

The employee, who worked as a data researcher at Facebook, said, "We confirmed that countries such as Ukraine, India, and Ecuador were abusing the Facebook platform to spread fake news about opposition politicians and engage in political agitation," adding, "The company had virtually no will to stop this."

It is believed that the reason he left the company was due to his discomfort with such business practices.

Facebook's reluctance to respond to such criticism stems from the fact that algorithms are directly linked to revenue. Given Facebook's business model of generating revenue through targeted advertising to users, there is an incentive to provide services that attract users' attention and maximize their time spent on the platform.

What Facebook uses in this context is an algorithm tailored to users' preferences. The more users see posts they want to see and connect with other related users, the more the number of visitors and their time spent naturally increase, resulting in more advertising revenue.

Bloomberg News analyzed, "The biggest regulatory pressure Facebook faces lies in providing personalized services to users," adding, "The greatest risk is that while increasing dependence on the platform, it has not put in place mechanisms to prevent wrongdoing."

[Image source=Reuters Yonhap News]

Ultimately, there must be a dual evaluation surrounding Facebook's achievements so far. It is true that Facebook deserves credit for acquiring Instagram and WhatsApp and growing them into the world's largest photo-sharing SNS and messenger, respectively. Joining the $1 trillion market cap club as the first SNS company in history and having 2.8 billion users, accounting for 35% of the global population, is also commendable.

However, the platform dominance naturally gained by securing such an enormous number of users inevitably led to pressure from regulatory authorities. In the big data era, where users' data equates to power, the ability to see what 3 billion people like, their political tendencies, and where they visit has itself become a form of power.

[Image source=AP Yonhap News]

How Facebook will address the side effects of power arising from its platform market dominance while maximizing user numbers and advertising revenue is expected to be the key factor determining Facebook's next 10, even 100 years.

This content was produced with the assistance of AI translation services.