Even by Facebook’s standards, the past 12 months have been remarkable. The site cemented its position as the world’s favourite social network, reached the verge of profitability and even exerted its influence over the race for the Christmas number one.
After an extraordinary year, experts say the site now faces a series of challenges — not least the problem of how to keep getting bigger in the face of government interventions and its own internal strife.
With the astonishing landmark of 500-million users now in sight, internet insiders suggest that the pressure may bring more headaches to Facebook’s 25-year-old founder, Mark Zuckerberg, and his team.
“It’s definitely an interesting time,” said Justin Smith, whose Inside Facebook website has tracked the network’s ups and downs for nearly four years. “While 2009 was a year in which Facebook saw really incredible growth … we’ll see how they manage that growth.”
There is little doubt that 2009 was the moment that the site truly exploded. In January, Zuckerberg announced the “milestone” of 150-million users worldwide. Less than a year later, the social network has more than doubled and now boasts that more than 350-million people log on each month.
The biggest difficulty is how to manage the privacy of users while growing so fast. With so much personal information kept on Facebook’s servers, it is coming under increasing scrutiny from governments and campaign groups. Earlier this year it spent $9,5-million settling a lawsuit over an intrusive advertising system launched in 2007, and last month it made a series of changes that exposed millions of people’s information to the world.
The changes angered privacy advocates — who called them “flawed” and “ugly” — and led to an official complaint to the US regulator. To combat such threats to its future, Facebook has spent the past year hiring a team of lobbyists in Washington and Brussels to push its cause with politicians.
With no more than 1,5-billion people online worldwide, the company is already close to saturation point in many countries and is now looking further afield. Earlier this year Moscow internet group Digital Sky Technologies invested more than $200-million in Facebook, with the explicit intention of making it the top social network in Russia and eastern Europe. And in August, Facebook’s international manager, Javier Oliván, told the Guardian that the company was putting more effort into places like Brazil, India and Indonesia.
“We’re trying to do things in countries where we start seeing traction,” he said. “We want to make sure people understand what Facebook’s all about.”
Such growth is crucially important to its business ambitions, and it has started cashing in on its popularity thanks to lucrative advertising programmes, brand campaigns developed with major TV, music and film franchises, and sales of virtual goods.
Those have not always proven a runaway success — last month’s live world premiere of a new music video from the Colombian singer Shakira, for example, took place exclusively on Facebook but drew less than 100 000 viewers — less than one in 3 000 users tuning in. But with advertising picking up, the company says it is in good financial health and on the verge of profitability.
Rapid expansion into emerging markets is a double-edged sword, however, since the money to be made is smaller and harder to come by.
“There are challenges with making a profit in many places around the world where there’s not as big an advertising market, or people have less disposable income,” said Smith.
And amid all of its other struggles, the site has to worry about how to handle its staff while coping with such rapid expansion. Like any company growing quickly, Facebook appears to be suffering from its fair share of friction.
Testimonials on the employment website Glassdoor.com, where workers anonymously share their experiences from inside thousands of companies, suggest that some tempers are fraying.
“Burnout is more common, even as the company grows,” said one comment.
“People are often not treated fairly, as egos get big fast when a company grows so quickly,” said another. “You give up your life and soul with little career growth or monetary incentives.”
However unassailable Facebook’s position may appear today, history suggests that even the largest websites can fall spectacularly from grace in just a few years. A decade ago AOL was one of the most powerful companies in the world, worth so much money that it was able to force a $162-billion merger with media giant Time Warner — the biggest ever seen.
After 10 years of struggling to make the deal work, the company is now an internet also-ran valued at less than $3-billion.
“Any time you get to the point where you’re talking about 300, 400, 500-million users, you’re starting to touch on some of the larger, global institutions — you’re starting to become relevant to governments and to politicians and to a variety of interests around the world,” said Smith.
“I do think that will be a big challenge, and Facebook will need to navigate those questions.”
– guardian.co.uk