Facebook Business Models

Roel Wieringa
Jaap Gordijn

1
5th June, 2020

Copyright © 2020 by The Value Engineers

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Table of Contents
1. Introduction ......................................................................................................................................................................4
2. The business of Facebook ........................................................................................................................................5
3. The Facebook ecosystem .........................................................................................................................................6
4. Facebook’s value network .......................................................................................................................................9
5. User services ................................................................................................................................................................. 10
5.1 Matching.......................................................................................................................................................................... 10
5.2 Value propositions for the user.......................................................................................................................... 11
6. Advertising services .................................................................................................................................................. 11
6.1 Facebook as a content publisher ...................................................................................................................... 11
6.2 Facebook as an ad network ................................................................................................................................. 13
6.3 Facebook as a game platform ............................................................................................................................ 15
6.4 Facebook as a news platform ............................................................................................................................. 16
7. The Facebook business model ........................................................................................................................... 19
7.1 Value proposition....................................................................................................................................................... 19
7.2 Value creation logic ................................................................................................................................................. 20
7.3 Value network .............................................................................................................................................................. 21
7.4 Profit model................................................................................................................................................................... 23
8. Discussion ....................................................................................................................................................................... 25

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1. Introduction
Facebook consists of Facebook social network, Facebook Messenger, Instagram, WhatsApp, and
some hardware companies such as Oculus and the Portal smart display. The business model as
discussed in this white paper is a model of the social network only.
The business model of the Facebook social network consists of two parts:

 Creating a social network for users free of charge.

 Targeted advertising for third parties against commercial rates.

Facebook uses several variants of the targeted advertising model, all with the same underlying
business ideas but different in details. We present these below.
The business models presented here show how Facebook’s value-adding activities align with the
structure of its external value network. We use e3value to represent the business models.
The models have been pieced together from public information found on the web. There is a lot
of information about the supporting software infrastructure but little or no information about
the commercial structure of Facebook’s value network. If you think we have misinterpreted the
information that we found, please contact us at info@thevalueengineers.nl.

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2. The business of Facebook

What kind of business is Facebook? According to its web pages, Facebook’s mission is
“to give people the power to build community and bring the world closer together.”1
This is what it would like people to do by using its services. Facebook’s services itself, regardless
of the goals that people achieve with these services, are
to allow its users to write, broadcast, receive, discover, store and organize content for free.
Facebook publishes content about many topics from many sources. Concretely, it publishes
posts by users, news, ads, offers, weather predictions, videos, event announcements and
notifications. It allows people to create and organize friends and groups and exchange
messages with them.2 It is a platform for gaming and for live video streaming. Facebook also
enables its users to organize content produced by others and allows other, non-Facebook users,
to discover published content.
In short, Facebook is in the business of making content produced by others available to the
public. By definition, this makes it a content publisher.3
Like other publishers, Facebook finances this by advertising. To advertiser and advertising
agencies they offer a second set of services, namely
to allow advertisers to target ads, attract visitors and enable sales against commercial rates.
To see how attractive Facebook’s social network is for advertisers, consider the size of the
network. At the time of writing it is estimated to consist of 2.6 billion (2600 000 000) users, and
this is not counting users added by acquiring Instagram and WhatsApp.4 To put this into
perspective: The population of China is 1.5 billion, India and the African continent each count 1.3
billion, and the USA, the European Union, the Middle East and South America count roughly 300-
400 million each.5
And the user base continues to grow. Facebook has invested in a consortium that will surround
the African continent with a subsea cable to serve both Africa and the Middle East.6 This will
improve access to markets of 1.3 billion (Africa) and 400 million (Middle East).

To understand the business of Facebook, we take a look at its ecosystem first.

1
http://panmore.com/facebook-inc-vision-statement-mission-statement
2
https://en.wikipedia.org/wiki/List_of_Facebook_features#Applications.
3
https://dictionary.cambridge.org/dictionary/english/publishing and
https://en.wikipedia.org/wiki/Publishing.
4
https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/
5
https://www.worldometers.info/world-population/.
6
https://techcrunch.com/2020/05/14/2africa-africa-middle-east-facebook-subsea-cable/.

5
3. The Facebook ecosystem
An ecosystem consists of legal or natural persons who depend on each other for their survival
and well-being. Since everything in the world depends for its survival and well-being on
everything else, we must make a choice where to put the boundary of an ecosystem model. For
our Facebook ecosystem model, we limit ourselves to actors who contribute to the overall
mission of Facebook. Figure 1 shows a model of its ecosystem.

Figure 1 Part of the Facebook ecosystem

We partition Facebook’s ecosystem in layers, where actors in each layer provide services to
actors in higher layers. In addition, we distinguish a subset of actors involved in ecosystem
governance at one or more of these layers. We explain the parts of the ecosystem from the top
down.
The users are both writers and readers of content. Anyone with an email address or a phone
number can become a Facebook user, so the user base includes people, organizations, and bots
of all kinds of tastes and purposes.
Content is additionally served by news publishers and game developers. Pages or apps that can
display content are often called the property of publishers. Property contains ad space, which is
interesting for and advertisers and their agencies. Ad space on this property is usually called

6
inventory, which is sold by publishers and bought by advertisers. If more than 50% of an ad is
visible to a user this is called an impression.
Facebook is a platform for publishing content and advertisements. Its competitors in this space
include Google (Youtube videos), Amazon (advertising), Apple (messaging), Tencent (WeChat
messaging, social media) and ByteDance (TikTok videos).
To enable online advertising, Facebook uses the services of an extensive ecosystem of actors
that mediate between advertisers and content publishers for targeted advertising. Content
publishers include anyone who publishes content on Facebook, including news agencies but
also publishers of information and entertainment.
Ad networks bundle access to publishers. If an advertiser places a targeted ad with an ad
network, it will be shown to viewers of content of these publishers if they fit the targeted
profile.7 Microsoft, Google and Facebook all operate their own ad networks.
Ad networks do not give advertisers complete insight into where the ad is shown, which may
lead to an ad being shown next to undesirable or improper content. Some networks may include
bogus pages with bots that generate fake views.
Advertisers have more control over ad placement when using an ad exchange, which is a
marketplace where they bid on impressions.8 When a user downloads a page or is about to see
new content in an app, advertisers may bid on inventory that is about to be viewed by the user.
Advertisers use demand-side platforms for this, which can create and manage ad campaigns
across multiple ad exchanges and supply-side platforms.9 Publishers use supply-side platform
for this, which can sell a publisher’s inventory across a set of ad exchanges and demand-side
platforms and optimizes the returns for the publisher.10 The line between ad exchanges and
supply-side platforms is blurring because they adopt each other’s functionality.11
Advertisers, publishers and mediators uses the services of 3rd-party data providers, who collect
consumer information, and data management platform, who provide analytics of this data.
The ecosystem includes an additional layer of technology providers, such including Linux,
Apache, Hadoop and PHP, and hardware providers, not shown in Figure 1.
Governance of the ecosystem consists of the set of decisions about the survival and well-being
of the ecosystem as a whole. Governance actors include Facebook itself, third parties that it
hires for this purpose, governments, content moderators, financial stakeholders, and many more.
Many actors participate in different parts of the ecosystem under different roles. For example,
almost all users are also content publishers. Governments, political parties, businesses,
celebrities, special interest groups and many others publish content on the Facebook network.
Furthermore, any mediator or even competitor of Facebook may present itself as a business on
Facebook, in other words as a user. Governments may have a Facebook pages, as a user, and be
involved in regulating Facebook as governance actors. Media may be reporting about Facebook

7
https://martechtoday.com/martech-landscape-what-is-an-ad-network-157618.
8
https://martechtoday.com/martech-landscape-what-is-an-ad-exchange-161947.
9
https://clearcode.cc/blog/demand-side-platform/.
10
https://clearcode.cc/blog/what-is-supply-side-platform/.
11
https://clearcode.cc/blog/what-is-an-ad-network-and-how-does-it-work/.

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(a governance task), provide news for Facebook’s newsfeed (a content publisher’s role) and
present themselves as a business on Facebook (a user role).
We now zoom in on its value network, which is the network of actors with whom it performs
commercial transactions.

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4. Facebook’s value network

Figure 2. The value network of Facebook

The ecosystem model of Figure 1 shows that Facebook provides services to users, advertisers,
game developers and publishers. In the next two sections, we will present a detailed value
network in e3value and summarize Facebook’s value proposition for its four markets Afterwards,
we will integrate this into an overall business model of Facebook.

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5. User services
5.1 Matching

Figure 3 Registration, posting, and viewing a post.

Figure 3 shows that users play two roles, that of readers and writers, which are treated by
Facebook as different market segments. These market consist of the same actors, but are
modelled as two distinct segments since the actors in their respective roles as users and writers
value objects differently.
The model in Figure 3 illustrates two frequently occurring business model patterns.

 Users acquire the right to a service by registering. In the Facebook business model they
pay for this by (a lot of) data about themselves. In other examples, such a subscribing to a
newspaper, users pay with a subscription fee in money.
 The Facebook platform brings together two needs. Writers desire an audience for their
posts, readers desire to be entertained by a post. This is characteristic for an interaction
platform.12
For the user responses Like, Comment and Share, there are similar value networks as the one
in Figure 3. Simply replace the value object produced by the reader by Like, Comment or
Share.

12
https://www.thevalueengineers.nl/what-is-a-platform/

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5.2 Value propositions for the user

Each participant in a value network has a value proposition to offer to other members of the
network. We use the TVE business model template for the structure of value propositions.
The value proposition of users for Facebook is as follows.

 Users offer:
o Writers offer entertaining content for readers, which makes readers stay in the
Facebook network.
o Readers offer attention to writers in the form of views, likes, comments, and
shares. This makes writers stay in the Facebook network.
o Anyone can search content on Facebook, which attracts potential new users to
the network.
o Readers and writers offer data to Facebook. For example, they store and organize
content they have sent or received, which gives interesting information to
Facebook.
 The USP of each user for Facebook is its identity. Writers and readers segment each other
according to social relationship, status, belief, etc. Facebook does so too, using its
profiling algorithms.

The value proposition of Facebook to its users is as follows.

 Facebook offer:
o Facebook enables the network by offering users to link to each other as friends.
o Facebook allows its writers to broadcast content to matching readers and
o Allows readers to store and organize content.
o It allows anyone with internet access to discover posts of any writer on Facebook.
 The USPs of the Facebook offer for users are the ability to broadcast content for free and
the size of its network.

6. Advertising services

6.1 Facebook as a content publisher

Facebook as a content publisher collects, organises and distributes content to users. In return for
that it collects usage data from users, when they write or respond to content. Advertisers pay
Facebook to get impressions (ad views) from users. Figure 4 shows the resulting value network.

11
 Figure 4 Facebook as a content publisher: selling impressions to advertisers.

The model has the characteristic platform structure where two actors have needs that are
matched by the platform.
Facebook offers a second service to advertiser, which is to enable sales. Users can click on an
advertisement and purchase stuff. This is the digital analog to entering a shop and buying
something. Figure 5 shows the value network.

Figure 5 Facebook as a content publisher: Enabling sales

The value-adding activities Targeted Ad Matching and Enabling Sales in these two value
networks are fully automated. They do not correspond to organizational units of Facebook.

12
Facebook’s organizational structure deals with managing existing products, developing new
products, finance, marketing, security, operations, etc.13
The two value networks are simplifications because Facebook and the advertisers may use ad
exchanges or ad networks as intermediaries. The two networks show the case where the
advertisers have direct contracts with Facebook.
The value proposition of Facebook as a content publisher is as follows.

 Facebook as a content publisher offers

o Targeted matching to advertisers
o A sales platform for advertisers
 The USP of the Facebook offer is the size of its user network and the quality of its
profiles.

6.2 Facebook as an ad network

Facebook operates an ad network called the Facebook Audience Network (FAN). Doing this, it
monetizes some of the activities it already does as a publisher. Advertisements shown by
Facebook can now also appear in the content of a publisher who participates in the Facebook
Audience Network.

13
https://research-methodology.net/facebook-organizational-structure-hybrid-of-hierarchical-and-
divisional-organizational-structures/ and https://www.vox.com/2018/5/8/17330226/facebook-reorg-mark-
zuckerberg-whatsapp-messenger-ceo-blockchain.

13
 Figure 6. Facebook’s Audience Network: Targeted matching

In the business model of Figure 6, publishers in the Audience network offer content and
Facebook pays them for it. Showing an ad impression to a user is now a 4-way interaction among
a user, advertiser, publisher, and Facebook.
The model for enabling sales is similar (Figure 7).

Figure 7: Enabling sales in the Audience Network.

In the model, Facebook operates as a mediator. However, in this model it is the only mediator,
which is a simplification. The model ignores matching activities by other ad networks and by ad
exchanges. For example, to find inventory that matches the target profile of an ad, a mediator
may contact other ad networks or ad exchanges.
The special feature of the Facebook Audience Network is that advertisements that appear on
Facebook may also appear on other publisher’s content. If the frequency of ad views per user is
kept within bounds (a service that mediators offer), then this may increase the performance of
the ad for the advertiser.
Facebook pays publishers on a CPM (cost per 1000 impressions) basis. Advertisers usually pay on
a CPM, CPC (Cost-per-click) or CPA (Cost-per-acquisition) basis.
The value proposition of Facebook as an ad network is as follows.

 Facebook as an ad network offers

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 o For publishers: optimal revenue from ads by targeted matching.
o For advertisers: Expanded inventory and sales platform.
 The USP of the Facebook Audience Network is the size of its user network and the quality
of the publishers in its ad network.

6.3 Facebook as a game platform

Facebook also is a platform for distributing games, free or paid, and for playing games. Games
may allow in-app purchases. Both for game sales and for in-app purchases, Facebook keeps 30%
of the transaction. The value network is shown in Figure 8.

Figure 8 Facebook as a game platform

Games also provide inventory in which to show ads. Game developers are treated as part of
Facebook’s Audience Network, and so participate in the value networks of Figure 6 and Figure 7.
The value proposition of Facebook as a game platform is as follows.

 Facebook offers:
o For game developers: a platform to sell and distribute games, perform in-ap
purchases., and get revenue from ads by targeted matching.

15
 o For users: a game-playing platform
o For advertisers: Expanded inventory and sales platform.
 The USP of the Facebook offer is the size of its user network.

6.4 Facebook as a news platform

Facebook offers a newsfeed with news from news publishers, such as newspapers and agencies.
To understand this business model, we should look at the traditional news business model first.
Figure 9 shows the traditional model. Journalists are paid for producing news, readers purchase
a subscription to read the newspaper periodically, and advertisers buy ad space to show their
ads to these readers.

Figure 9 The traditional commercial news publisher model

The online business model is the same except that publishers can sell impressions, clicks and
purchases instead of just ad space. They can measure how the users respond and create profiles
of readers. This makes the newspaper value network potentially similar to that of Facebook as a
content publisher.
Compare Figure 10 to Figure 4. In Figure 10, Newspapers still require readers to subscribe, but
they can also serve targeted advertisements and build user profiles. There is a similar model for
newspapers as sales platform, similar to Figure 5.

16
There is a tension between the two sources of income. At one extreme we have newspapers that
require no subscription and live off advertising income, and at the other extreme we have
newspapers that require subscription but make no user profiles. Which point on this spectrum is
chosen, depends on the contract with the user.

Figure 10 Online newspapers can sell targeted ads just as other online publishers. There is a
tension between a business model based on subscription and one based on advertising revenue
and newspapers will use one or the other as primary source of income.

Facebook offers a service called instant articles which speeds up the download of news articles
in the Facebook app or web pages fast. In the instant article value network, Facebook treats
news publishers as members of its Audience network. The resulting composite network is shown
in Figure 11.

17
 Figure 11 Instant articles

The bottom half of Figure 11 is identical to Figure 10 and the top half shows the news publishers
as members of Facebook’s Audience Network (Figure 6). There are a few important results:

 From delivering a targeted ad matching service to advertisers, news publishers have

become a client of Facebook’s targeted ad matching.
 Advertisers have a choice of using the newspaper’s targeting ad matching service or the
one of Facebook — with 2.6B users and a large Audience Network.
 Facebook users who encounter a news article on their journey through Facebook posts
have a choice of continuing their journey or jumping to the newspaper web site. Unlike
the readers of the news publisher, they have choice of continuing their journey that is not
necessarily beneficial for the news publisher.
For news publishers who already have a targeted advertising service, this did not create
sufficient additional revenue. Rather, they lost control over their advertising revenue.

18
Also, the instant articles service turned out to remove links and recommended content from the
publisher and to reduce the number of ads. The shift of advertising income from direct ad
acquisition to Facebook mediation brought no additional monetization.14
Facebook added the possibility for Facebook users to subscribe to the news publisher’s content15
and added a paywall.16 Still, publishers asked Facebook to pay for content.17
The Instant Articles business model did not change, but recently, Facebook added a News tab in
which news from selected news publishers will appear.18 It pays the publishers for this news. If
users click through a news story, they will have to pay.19 This is a new business model for
Facebook. There is as yet not enough information to make an e3value model of it.
The value proposition of Facebook’s instant articles is this.

 Facebook as a news platform offers

o For news publishers: a platform to distribute news and sell targeted ad space.
o For advertisers: Targeted inventory (ad space) in a network of publishers
including Facebook itself.
 The USP of the Facebook offer is the size of its user network.

7. The Facebook business model

Pulling all strands together we here present Facebook business model following the TVE
business model template.20
7.1 Value proposition

The value proposition of Facebook for the different market segments in its value network is as
follows.

 Facebook offer to users:

o Facebook enables the network by offering users to link to each other as friends.
o Facebook allows its writers to broadcast content to matching readers and

14
https://digiday.com/media/facebook-faces-increased-publisher-resistance-instant-articles/
15
https://www.theverge.com/2017/8/23/16191510/facebook-instant-articles-subscriptions-
confirmed
16
https://adage.com/article/digital/facebook-publishers-paywall-instant-articles/310961
17
https://www.digitaltrends.com/mobile/facebook-google-european-news-agencies-pay-for-
content/
18
https://www.cnbc.com/2019/10/25/facebook-news-new-product-will-pay-publishers-highlight-news-
stories.html
19
https://www.vox.com/recode/2019/10/24/20929919/facebook-zuckerberg-murdoch-news-publishers-
pay-content
20
https://www.thevalueengineers.nl/the-structure-of-business-models-an-update/.

19
 o Allows users to store and organize content.
o Offers a game-playing platform.
o It allows anyone with internet access to discover posts of any writer on Facebook.
o The USPs of the Facebook offer are ability to broadcast content for free and the
size of its network.
 Facebook offer for advertisers:
o Targeted matching to advertisers on Facebook only or on its Audience Network.
o A sales platform for advertisers on Facebook only or on its Audience Network.
o The USP of the Facebook offer for advertisers is the size of its user network, the
quality of its profiles and the quality of its audience network.
 Facebook offer for game developers:
o Facebook offers a platform to sell and distribute games and
o perform in-ap purchases.
o The USP of the Facebook offer for game developers is the size of its user network.
 Facebook offer for publishers (game developers, news developers, and other commercial
publishers of content):
o Facebook offers a platform to distribute content and
o monetize inventory by targeted advertising and
o selling (click-through and purchase).
o The USP of the Facebook offer for publishers is the size of its user network.

As we have seen, this offer for publishers is not convincing for the larger publishers who can
handle targeted advertising themselves.
All of the above is based on a value proposition of Facebook users for the network.

 User offers to Facebook:

o Writers offer entertaining content for readers, which makes readers stay in the
Facebook network.
o Readers offer attention to writers in the form of views, likes, comments, and
shares. This makes writers stay in the Facebook network.
o Anyone can search content on Facebook, which attracts potential new users to
the network.
o Readers and writers offer data to Facebook. For example, they store and organize
content they have sent or received, which gives interesting information to
Facebook to build user profiles.
 The USP of each user is its identity. Writers and readers segment each other according to
social relationship, status, belief, etc. Facebook does so too, using its profiling algorithms.

7.2 Value creation logic

There are three value creation logics: Value chain logic, service logic, and platform logic.21
Clearly, Facebook follows platform logic. The offers of Facebook to its customer segments can
be divided into interaction services and layer services.

21
https://www.thevalueengineers.nl/value-creation-logics/

20
A platform offers interaction services if it enables others to interact. For example, Uber brings
together riders and drivers and Amazon Marketplace brings together buyers and sellers. In
general, an interaction platform brings together two or more markets. Matched participants
then transact with each other directly.
Facebook acts as an interaction platform when it offers the following interaction services:

 Facebook offer for users:

o Targeted content matching: Facebook allows its writers to broadcast content to
matching readers and
o Content discovery: It allows anyone with internet access to discover posts of any
writer on Facebook.
 Facebook offer for advertisers:
o Targeted ad matching: Facebook offers targeted advertising to advertisers on
Facebook only or on its Audience Network.
o Sales platform: Users can click through and purchase advertised products on
Facebook only or on its Audience Network.
 Facebook offer for game developers:
o Sales platform: Facebook offers a platform to perform in-app purchases.
 Facebook offer for publishers (game developers, news developers, and other commercial
publishers of content):
o Distribution platform: Facebook offers a platform to distribute or sell content and
o Monetization platform: monetize inventory by targeted advertising and selling
(click-through and purchase).

A layer platform offers abstractions on top of a computing platform by which users can perform
some activities. For example, an operating system adds layers to a computer that makes it easier
to use and more useful for users. Facebook acts as a layer platform when it offers the following
layering services:

 For users:
o A platform to store and organize content.
o A platform to play games

Facebook’s platform services are part of a set of activities called platform logic:

 Platform maintenance & development

 Service provision
 Marketing and sales
 Ecosystem governance
In the value network discussed next, we will model these activities as value activities.

7.3 Value network

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Figure 12 shows all platform activities of Facebook as value activities.

Figure 12 Fragment of Facebook’s integrated business model

To avoid cluttering up the diagram, we only show the activities and the actors involved in
Facebook’s platform services. The value networks shown in sections 5 and 6 contain all the
relevant networks.
Value activities are activities that potentially result in a benefit for the actor. The platform
services are performed for other actors, who return the favor with some benefit for Facebook,
such as data, money or other resources. Platform development, marketing & sales and
ecosystem governance are basically expenses that buy the services of many external parties.

22
The model in Figure 12 has turned them into value activities too. This means that they are profit
centers because they are paid by platform services.
The model shows only a few actors whose services are bought by Facebook. Other expenses
include hardware, electricity, real estate, transaction costs, legal services, lobbying, payment
services bought from payment providers, the development conference, the development
conference organized by Facebook, etc. etc.
7.4 Profit model
Facebook monetizes the user network by selling user impressions, clicks, and purchases on its
web pages and app. When the user sees at least 50% of an ad then this is an impression. The
advertiser pays for this in CPM. The user may then click on the ad and even purchase the
advertised value object, for which the advertiser pays with a CPC or CPA scheme.
CPM could be around US$9, depending on geographic region and industry in which you are
advertising.22 CPC can range from US$1 to US$4 and CPA from US$8 to US$55, again depending
on region and industry.23 Here are two charts from Wordstream on these numbers.

Figure 13 CPC estimates from Wordstream.com

22
https://www.quora.com/What-is-the-average-CPM-on-Facebook?share=1
23
https://www.wordstream.com/blog/ws/2017/02/28/facebook-advertising-benchmarks

23
 Figure 14 CPA estimates from Wordstream.com

Facebook also takes a 30% cut of the fees for sales done on its platform.24
All in all, Facebook’s revenue in 2018 was US$56B, and its net income was US$22B, or a profit
margin of 40%.25 Its revenue in 2019 was US$71B, with a net income of US$18B, or a profit
margin of 25%.26 More than 98% of this income is generated by advertising.27 With 2.6B users, in
these two years Facebook made approximately US$ 10 resp. US$ 7 per user per year. Its market
value is today US$665B.28

The limits to growth have not come into sight. Global spending on digital advertising was
US$283B in 2018 and is expected to grow to US$517 in 2023.29

24
https://developers.facebook.com/policy/credits/
25
https://last10k.com/sec-filings/fb/0001326801-19-000009.htm
26
https://sec.report/Document/0001326801-20-000013/#s7EB344C14BD0595C9353C237C1785F54
27
https://www.investopedia.com/ask/answers/120114/how-does-facebook-fb-make-money.asp
28
https://ycharts.com/companies/FB/market_cap
29
https://www.statista.com/statistics/237974/online-advertising-spending-worldwide/

24
8. Discussion

The core resource that Facebook extracts from user activities is user profiles. The resource is
monetized in advertising. This business model is stable across different customer segments. A
unique selling point for any of its customer segments is the size of its user base.
The foundation of this size is the extreme ease with which anyone or anything can (1) become a
member and (2) broadcast posts. Anyone or anything with an email address or a telephone
number can become a member. Posts are moderated, but due to section 230 of the
Communications Decency Act, Facebook is not held responsible for the content of posts and so
has little incentive to eliminate fake news, political manipulation or hate speech unless public
outrage threatens to reduce the size of the user base.30
It turns out to be impossible for Facebook to define moderation rules that will not generate
disagreement or outrage among a subset of it 2.6 billion users. Facebook wants governments to
do it,31 but it is hard to see how the job would be possible for them if Facebook, with a budget of
billions of dollars, could not succeed.
Facebook’s mission is “to give people the power to build community and bring the world closer
together” but the services they offer to users do not achieve this. Facebook posts with fake news
have incited violence in India32 and Nigeria33 and have been linked to violence against Rohingya
in Myanmar.34 It has been an instrument of political manipulation.35 An activist in India has
called it a megaphone for hate.36
It is hard to see how these negative impacts can be avoided while maintaining the ease with
which anyone and anything can become a member of the Facebook social network and start
broadcasting messages without restraint. Since this ease is the foundation for the size of its user
base, and the size of its user base is the foundation for a net income of around US$20B per year,
another way of phrasing this is that it is hard to see how these negative impacts can be avoided
while maintaining a net income of around US$20B per year.
Legal solutions are not about eliminating misuse of Facebook’s services but about where to put
the blame for misuse: with Facebook, with governments, or with the writers. Other possible
solutions change the business model: gatekeeping new registrations, signing each post by the
sender, permitting only broadcasts to a defined set of friends, preventing public discoverability
of all posts, switching to a subscription model, or charging the sender a price for broadcasting,

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https://en.wikipedia.org/wiki/Section_230_of_the_Communications_Decency_Act
31
https://about.fb.com/news/2020/02/online-content-regulation/
32
https://www.reuters.com/article/us-facebook-india-content-idUSKBN1X929F
33
https://www.bbc.co.uk/news/resources/idt-sh/nigeria_fake_news
34
https://www.theguardian.com/world/2018/apr/03/revealed-facebook-hate-speech-exploded-in-
myanmar-during-rohingya-crisis
35
https://www.theatlantic.com/technology/archive/2017/10/what-facebook-did/542502/
36
https://www.reuters.com/article/us-facebook-india-content-idUSKBN1X929F

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similar to the price for sending a paper mail to the same audience. All these proposals would
destroy the very lucrative business model that Facebook enjoys now.

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