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Case Study Facebook

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Facebook: It's About the Money - Case study

The birth of Facebook was in 2004 by Mark Zuckerberg, a Harvard student, who started Facebook as a means of allowing students to communicate with one another. It gained its popularity quickly through the university and education system and became a worldwide phenomenon(Ahmed et al., 2013). In just over ten years, Facebook expanded from a small networking site to a publically traded organization worth an estimated $50 billion. Part of its success is based on the fact that it is free to join and Facebook boasts it always will be. The estimated number of users/subscribers of Facebook at the time of this publication was stated to be over 1 billion (Laudon & Laudon, 2014). In 2011, the vast majority, eighty-five percent, of Facebook's revenue was derived solely from advertising sales with the remaining attributed to sale of Zynga games (Laudon & Laudon, 2014).Importantly, the revenue stream associated with Facebook’s success is leveraged on the collection of information provided by the users. Users of Facebook create on-line profiles and upload their photos, videos, communicate with one another, and join a variety of different groups on a myriad of different issues, using the “like” button to identify their likes (Ahmed et al., 2013). Without question, social media plays a large role in our lives every day, and Facebook is at the center of that movement.
While Facebook provides a means to communicate with one another and a means for which we share their lives via social media, it comes at a cost of revealing our background personal details and the use of that information coming without the users’ truly informed consent. A general assumption is that Facebook’s goal is to get its users to share as much data as possible. Why? The more Facebook knows about you, the more accurately it can serve cater to the needs and wishes of advertisements (Laudon & Laudon, 2014, p. 188).

Most Important Facts Surrounding the Case
Perform an ethical analysis of Facebook. What is the ethical dilemma presented by this case?
Prior to answering the question regarding ethics, it is important that ethics be defined. According to Brigham Young University School of Business, there are twelve categories of Ethical Dilemmas that range from truth to honesty to conflicts. The twelve categories are defined below:
1. “Taking things that don’t belong to you
2. Saying things you know are not true
3. Giving or allowing false impressions
4. Buying influence or engaging in conflict of interest
5. Hiding or divulging information
6. Taking unfair advantage
7. Commenting acts of personal decadence (a right to privacy)
8. Perpetrating interpersonal abuse
9. Permitting organizational abuse
10. Violating rules
11. Condoning unethical actions
12. Balancing ethical dilemmas (Jennings, 2015, p.31)”

The Key Issue regards ethical questions raised that come from the growth and popularity of Facebook and their use of personal information provided by Facebook users. One can literally put a check mark next to all twelve of the ethical categories above. Thus, the question becomes, “is the revenue gained by Facebook based upon the use of data collection on users without consent and mostly without knowledge of those users?”Assuming that Facebook’s business model is based on the collection of data from users and the sales of it, the question is then placed on the users of Facebook. A driving factor that this is primarily focused upon users within the United States is based on the lack of laws in existence that give the consumers the right to know what Facebook has collected as personal factors about them (Laudon & Laudon, 2014). The story is different abroad. In response to this concern, there is an allure of increase “privacy settings” in an effort to make Facebook appear to have a security regarding personal information. Concerning the number of users, it is important to note that at least 13 million users have never adjusted their privacy settings (Laudon & Laudon, 2014). Thus, the issue of privacy and profit are a primary issue to be considered when looking at the future of Facebook.

What is the relationship of privacy to Facebook’s business model?
It would appear that Facebook is willing to jeopardize its users for financial gain; if so, it would appear that they have been successful thus far. As stated previously, 85% of all revenues associated with the company are due to the sales of the information gathered from its users and therefore their business model. The business model hedges on the availability of infringing on the users’ privacy. This socially accepted normal been supported by Facebook Founder Mark Zuckerberg, who was quoted as stating that:
“Privacy is no longer a "social norm…People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. … That social norm is just something that has evolved over time” (Manafy, 2010, p. 5).

Describe the weaknesses of Facebook’s privacy policies and features. What management, organization and technology factors have contributed to those weaknesses?
Criticism of Facebook’s changes to their privacy settings has been widespread. The cover of Time magazine in 2010 was "Face-book Is Connecting Us in New (And Scary) Ways (Shields, 2010)."When Facebook issued its first publicly traded shares (initial primary opening/IPO) in May 2012, they were required to disclose to the Securities Exchange Commission a prospectus the risk that the company has as well as future risks. There were thirty-eight risks identified. The future growth was identified as limited future growth in some countries, which could very easily be diminished due to the privacy laws that exist in other countries (Jennings, 2015).
Facebook Principles are identified and addressed by ten different categories. Those are identified as:
“1. Freedom to Share and Connect
2. Ownership and Control of Information
3. Free Flow of Information
4. Fundamental Equality
5. Social Value
6. Open Platforms and Standards
7. Fundamental Service
8. Common Welfare
9. Transparent Process,
10. One World” (Facebook, n.d.)
Facebook puts the onus back on the user by stating that “people should own their information (Facebook, n.d.).”

Will Facebook be able to have a successful business model without invading privacy? Explain your answer. Are there any measures Facebook could take to make this possible?
In this author’s opinion, financial stability is questionable if privacy of personal information becomes a driving consumer direction. Facebook is aware of this challenge. In fact, international concerns are mounting, specifically, growth in their international market due to the more stringent privacy laws than those currently in the United States. Facebook has cornered the market on social networking, and its name recognition alone will likely sustain them and propel them to the future. The use of Instagram has become an app to accompany Facebook and has not remotely replaced it. Facebook is considered to be the largest social networking site in the world (Jennings, 2015).

Alternative courses of action

Individuals need to be more engaged in decision-making when it comes to protecting their privacy information, including informed knowledge of how the information they contribute to Facebook may be used against them or on their behalf. The true alternative for Facebook users is to accept the risk which the vast majorities are doing now. Facebook could also charge a fee for users who want to “opt-out” in order to protect their information as a source of income.

Evaluate each course of action

In practical terms, consumer engagement is the key principle that needs to be considered. Facebook states that they are completely transparent regarding privacy. My research suggests that this is questionable. More specifically, I question if Facebook has executed all of the possible solutions to ensure user privacy. It takes eight steps to ensure that all privacy settings are activated, and the nomenclature is cryptic to the laymen user.

Recommend the best course of action

Engagement in the social media phenomenon of Facebook may come at some risk. Those risks are largely associated with loss of privacy of that information that the user chooses to disclose. Thus, in the frequently used term, buyer beware. Actually, in this case it is “user” beware because Facebook is free to the “user” while selling user information for financial gain. References

Ahmed, O., Claydon, L., Riberiro, D., Arumugam, A., Higgs, C., & Baxter, G. (2013). Social media for physiotherapy clinics: considerations in creating a Facebook page. Physical Therapy Reviews, 18(1), 43-48.
Burdick, H. J. (2013, March/April 2013). Deadlines for payments or penalties. West Virginia Medical Journal, 109, 4-5.
Facebook. (n.d.).
Jennings, M. M. (2015). Ethical Theory, Philosophical Foundations, Our Reasoning Flaws, and Types of Ethical Dilemmas. In Business Ethics (Eighth ed. (pp. 2-32). Stamford, CT: Cengage Learning.
Laudon, K., & Laudon, J. (2014). Management Information Systems (Thirteenth ed.). Boston:
Manafy, M. (2010). Social web etiquette. Econtent, 33(3), 5. Retrieved from
Shields, M. (2010, May 24). Sharing Not Scaring. Mediaweek, 20(21). Retrieved from
Smith, L. (2014, October 9). Medicare fines record number of hospitals under the ACA’s hospital readmissions reduction program. Managed Healthcare Executive. Retrieved from

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