Throughout these few weeks, I’ve looked at the current status (haha) of Facebook and how developments affect the company’s potential. Now, I’m going to take a look at the future of the company as a whole. Let’s start with an investigation of its inclusion in the NASDAQ-100. The NASDAQ-100 is a stock market index of the top hundred non-financial companies listed on the NASDAQ stock exchange. Stock market indexes are used by financial companies to gauge markets and various companies, so joining the ranks of companies like Google, Yahoo, Apple, and Microsoft definitely will help draw in more investors. This also helps because people who trade large volumes of money called exchange-traded funds have benchmarks they must meet, and that tends to make them buy stock from all companies (now Facebook included) in an index to match the index’s performance.

Why isn’t this huge news and why haven’t Facebook popped the champagne? First of all, this has been long expected. Also, Facebook only joined the index now because Infosys (the company it replaced) moved to the New York Stock Exchange, making it ineligible for inclusion in NASDAQ’s NASDAQ-100. Otherwise, the inclusion would’ve been postponed until the next reassessment of NASDAQ companies. A big next step would be to be included in the S&P 500, a more influential index that draws more interest, attention, and cash flow in the form of stock buyers. Still, joining the S&P is difficult as it requires several quarters of profits, and Facebook has gone positive only two quarters so far. A single slip would render Facebook ineligible. Overall, even though the addition to NASDAQ-100 isn’t the most shocking news in the financial world, it does give Facebook the potential to add a nice boost in terms of long-term safety and to regain some value ever since its stock went sub $20 a few months ago.

Still, this places pressure on Facebook. If Facebook underperforms consistently or has a major slip, investors will flee. Facebook stock is tentatively climbing up, but investors are just waiting for any signs of long-term problems for a hefty jumping of ship. Major issues such as privacy and mobile expansion are topics that investors pay much attention to while considering Facebook, and at the moment, Facebook has placated doubts. Unfortunately, if Facebook is unable to continue to draw advertisers for its mobile ads or if it has one major privacy slip (such as leakage of account info, a large-scale hack, or a security breach), the future of social networks as a whole (financially, at least) is jeopardized, and the decline of the Facebook stock would make the Dow Jones fall of 2008 look like nothing.

Less than a week ago, Facebook renegotiated a contract with Zynga. This new agreement allows for increased independence for both companies, lessening the reliance on the other. With this, Facebook is now allowed to make its own games (although the company strongly ensures that it will remain a platform for games/apps rather than a designer of games/apps). On the other hand, Zynga will no longer be forced to rely on Facebook as its only social platform for gaming, allowing expansion onto other websites. This renegotiation reveals more if the stock prices are examined, too. After becoming publicized, Zynga’s stock immediately took a 8% plunge while Facebook shares managed to close up a few percentage points. Clearly, Zynga’s asymmetric dependence on Facebook is incredibly defined.

This revisits the question, why didn’t Facebook buy Zynga, and why won’t it buy Zynga? Of course, games have been a cornerstone of social interactions with Monopoly and other board games dominating the pre-internet era. Why didn’t Facebook buy the social gaming giant? First of all, Facebook doesn’t make many acquisitions, especially at the scale of Zynga’s value a few years ago. Zynga’s value soared to over $15 billion at one point after a dramatic climb toward its IPO. Not only would that be a massive, expensive investment, but it is also a poor decision. Social gaming has a large amount of competition on Facebook’s platform, as developers are definitely plentiful. Next, as for skeptics that support an acquisition of Zynga now while it’s priced inexpensively (its stock value dropped over 70% just this year), Facebook has no use for Zynga. Zynga is a dying company; the games that once dominated Facebook simply do not command the large crowds anymore. Even on other platforms, i.e. the App Store for iOS devices, Zynga only makes one of the top 50 grossing games. This kind of performance reveals a company that is running out of ideas and the talent backing the company isn’t going to last. Clearly, if Facebook wanted to advance into the gaming scene, it would’ve handled it much earlier by setting aside a development team for games.

Then why did Facebook make the acquisition of Instagram? By buying Instagram, Facebook nearly bought out the entire photo-sharing market on all mobile devices. Although Twitpics are fine and dandy, no photo editing/sharing program dominated the mobile realm like Instagram did. By shelling out a hefty sum, Facebook competes nicely with Twitter in the immediate photo sharing scene with the pseudo-hipster appeal of the Instagram edits. If Facebook bought Zynga, they would not have a monopolistic control over game development, as dozens upon dozens of companies exist in that department. By acquiring Instagram, though, they now dominate the market for photos and have a team of development experts in their team.

Ever wonder why spammers have to use phony applications in order to spam from profiles? Why don’t they just make profiles and send friend requests to a crowd of people and post spam onto timelines and statuses? Why don’t spammers have greater success on Facebook? Facebook algorithms make it difficult for spammers to thrive on its platform with several strategies.

First of all, spammers have difficulty making profiles that both seem legitimate to Facebook and are good enough to attract friends. If spammers try to take the route of making profiles and then getting friends, the easiest strategy would be posing as celebrities. However, Facebook blocks against that. As a result, the only way to implement this method would be to use scripts to make profiles and include profile pictures and related information to make the account seem interesting enough for other people to want to friend.

If they get past that first barrier, spammers run into the difficulty of expanding from the initial wave of friend acceptances. As we’ve seen from Tiger Compliments (formerly Pton Compliments), if a profile sends a large number of requests within a short period of time, Facebook algorithms restrict the friending to only allow the profile to accept requests. By cutting off a spammer’s ability to explicitly solicit friend requests, this severely limits the spammer’s potential to gain more views.

Next, spammers run into difficulties while posting spam. If algorithms detect frequent posting by a profile, Facebook will force the user to solve captcha in order to continue posting. By requiring a user to solve these, Facebook significantly reduces the posting frequency by potential spammers, making the spammer’s scripts or copy/pasting more difficult. Of course, natural language processing software could help bypass this, but this is going a little far.

Let’s assume spammer profiles do end up capable of bypassing captchas. These posts generate such low like, share, and comment rates that algorithms don’t place these posts at the top of news feeds. If the spammer posts on people’s walls, then deleting would be prompt. Also, the “Report story or spam” option can be easily used.

As for spammers that use fake applications or videos to take control of accounts, Facebook and common sense both make success difficult. Unlike file sharing websites in which advertisers use fake download buttons to try to solicit clicks, users all know what the typical “like” and “comment” buttons look like. In addition, whether by past miscues or by observation of mistakes by friends, most know what fake videos and applications look like. Even if we don’t and fall prey to these, the “Report story or spam” button makes cleanup and damage control fairly simple. As a result, traditional spamming strategies do not work very well on Facebook, as many preventative measures have been taken to prevent such behavior. Only time will tell how spammers will get creative for future attacks.

A socially outgoing couple is hopelessly in love. Cheesy poems, gooey statuses, and photos of the couple together follow on Facebook. At special occasions such as Valentine’s day, an anniversary, or a birthday, gifts will be exchanged, and without a shadow of a doubt, photographic evidence will appear on Facebook along with a tag that reads something like “MY BOO JUST GOT ME A HUGE TEDDY AND CHOCOLATE! LOVE HIM SO MUCH XOXO.” Luckily we don’t see too many of these posts. Yet.

Recently, Facebook decided to expand the gifts section by including products from partnered companies. Gifts will now include physical, real-life items from dozens of partners with notable ones including L’Occitane and Baby Gap.

Will this work? Why not. People love to post pictures of their Christmas and birthday gifts, and when people give gifts, the givers appreciate other people knowing about their generosity. On top of that, Facebook makes it incredibly convenient to implement this feature as reminders about birthdays and anniversaries on the website itself would give people cues on buying gifts. Popping a link to the application page next to the daily birthday and event reminders would be extremely simple and would make it easy for users to buy gifts for friends.

This idea is incredible. It provides an easy outlet for Facebook in terms of generating revenue, as this method cannot do harm. With woes concerning monetizing Facebook lingering, this provides an opportunity for Facebook to expand in increasing profits. Because Facebook has a record of all the purchases, Facebook gets more information about the user, allowing more targeted ads. This would increase ad click frequency on the website, as ad relevance would be substantially enhanced. As for the partner companies, desire for social attention would cause people to make these purchases public, so more exposure will definitely follow. This allows companies to advertise to the friends of the previous consumer, and given that friends are usually similar and affiliate with similar people, these companies will get exposure to a relevant base of future consumers. Even though a cut of the revenue will be directed to Facebook, indirect advertising to this relevant base is quite valuable.

Still, there are downsides. If this catches on, friends may be offended if they do not receive gifts on special occasions, complicating relations. In addition, this may provide Facebook a chance to monopolize online purchases. Because so many internet users use Facebook, this could cause a redirection of online shopping traffic in Facebook’s direction, making smaller companies’ sites less competitive as people would focus mainly on Facebook’s store when shopping online. Although good for Facebook, that situation would harm opportunities for small business.

As long as people can get over the hurdle of viewing Facebook as a social platform and begin to think about making purchases through Facebook, this will take off (just in time for the holiday season, nice). Of course, that is a tall hurdle.

How often do you see offensive or inappropriate posts on Facebook that definitely would not have been stated in person? Ever see those pictures of friends in overtly skimpy clothing or engaging in inappropriate acts on Facebook? These are definitely not isolated incidents, and are destined to proliferate. Even David Petraeus’ mistress posted statuses that clearly were poor decisions, as they insinuated her insider knowledge on the war in Afghanistan and similar high security clearance events. These lapses in judgment clearly resulted in grave ramifications, as they pinned suspicion on her relation to Petraeus and brought much hindsight evidence after Petraeus’ affair became prominent.

Why exactly do we post these bits of our lives that we would not share in the real world? Why do these apparent holes in judgment online persist? I believe that there is a definitely altered view of online reality by Facebook and online users in general. We log onto Facebook with a hand-selected profile picture, personally crafted statuses, and a carefully maintained list of connections. Based on our ability to pick and choose our online profile and presence, we make Facebook a different platform of reality. Because interacting on social networks appears to be between a person and a computer, we behave differently. In the process, I think we are psychologically led to believe that the Facebook realm does not intersect with actual reality completely, leading some to acquire extensive online presences that do not match up with the real person. That causes the extreme comments, the potentially offensive statuses, and the obviously inappropriate pictures. Posting information behind a computer screen really leads us to act differently.

How can this thought process be corrected? Past miscues are definitely a major source of knowledge for future behavior. Once we make a crucial mistake and experience the ramifications, we definitely learn how to correct ourselves. However, this is a flawed solution. We should never have to experience mistakes in order to learn the right method. Also, it clearly isn’t a lasting solution as some people continue to make these mistakes after a period of caution. The problem is that there’s no silver bullet solution to this thought process. I don’t think we can solve this problem without a complete overhaul of online thought and behavior. Facebook definitely has taken steps to make the online presence line up more with reality (partnerships with other websites to force users to sign in to post comments has decreased some of the obscene and extremist comments), but this issue has not been completely corrected. Thus, I wonder: is this a problem that society should try to solve, or has the advent of social networks shaped our thinking such that this behavior (maintaining a distinction between online and virtual presences) serves as the norm?

Hurricane Sandy: the cause of a death toll of over one hundred and the source of complications and financial damages all over the northeastern region. It had and still has around-the-clock coverage by new channels, and it even affected Princeton directly. Given the sheer prominence of this storm, let’s take a look into the role of social networks during and after the disaster.

Before and during the storm, social networks were used to update people with hurricane news. People posted statuses about hurricane readiness, and several of my friends inquired about possible travel plans to avoid the storm. During the storm, some Facebook groups served as a personal news outlet on the status of houses in certain communities, allowing people to remain updated. Just the number of people talking about Hurricane Sandy on social networks would make it obvious that social networks were affiliated with the storm. Afterwards, Facebook was quickly used to organize volunteer support to aid victims. Even Princeton had its own Facebook group for disaster relief (Sandy Relief). Donations have been solicited by groups, and attention has been drawn toward various ways to contribute.

Of course, though, Facebook isn’t perfect. First of all, a tagging option would increase attention to major topics of discussion. Currently, it’s not possible to easily tag things that haven’t been previously “liked.” Twitter and Instagram have developed convenient tagging options that clearly show what is trending in the news, and streamlined Facebook tagging would allow people to find disaster relief possibilities with trending #sandyrelief tags. Also, many of the Facebook pages concerning Hurricane Sandy are unofficial and simply for people to hoard likes. A quick search for “hurricane sandy” results in hundreds of Facebook pages, groups, and events. Even pages dedicated to relief are numerous, disorganized, and unofficial. Several of the top search results are clearly in a state of inaction or in no situation to coordinate relief efforts.

Thus, Facebook has possibilities to expand in terms of aiding social welfare. It could provide an “official” status for pages that actually coordinates volunteer support, or it could work faster to target and delete the pages that are simply fishing for likes. It could take a look into direct donations from its website toward major disaster relief efforts, and it could also provide free advertising for the Red Cross and similar organizations during times of stress. This would improve its image and offer real help toward rebuilding communities in tatters. Obviously, the possibility of this happening is extremely low, as this would thrust Facebook into a larger role in social related issues and could serve as a precedent for other parties demanding support for a range of concerns. Still, this is an opportunity for Facebook to play a larger role in the community.

“John Doe invited you to his event BIG BIG PARTY.” Despite being the root of dozens of pesky notifications in our news feed, Facebook events is an extremely convenient event planning tool as I blogged about last week. In my limited experience, most of the invites I’ve received have been for celebrations and frivolity. However, Facebook events have been incredibly effective in gathering people for protests and demonstrations. Facebook events helped the Egyptian protests by mobilizing thousands of protesters, and recent suspicions of election fraud caused thousands of Russians to plan Facebook events for mass demonstrations at Moscow’s Revolution Square. Used for a variety of purposes ranging from small dinner parties to uprooting a regime, this Facebook tool is clearly quite versatile. On this note, let’s examine its strengths and weaknesses, particularly for social activism purposes.

The advantages of Facebook events center around the network nature of Facebook. On Facebook, people are friends with quite a bit of other people in various social circles (family, friends, acquaintances, etc), so finding the right people to invite to social occasions isn’t difficult. Inviting them is even easier as Facebook simplifies it to a mouse click and optional descriptions. For demonstrations, though, Facebook events is extremely useful. It allows people to invite everyone on their friends list, and with enough organizers, thousands of people may be easily invited. From there, invitees can choose to invite their own friends, creating an exponential rate of increase. The sheer number of people who are “going” reveals the popularity of the event, and more attendees will cause more people to want to go. Just the amount of people who support these events by clicking “attending” on the RSVP represents the scale of the protest and serves as a good indication of disapproval of current conditions, political or social.

On the other hand, many disadvantages exist when using Facebook events. First of all, invitations are less personal and clicking “attending” is extremely simple, so actual attendance cannot be ascertained. Also, because invitations are much more easily spread through Facebook than by word of mouth, the chance of outside attendees going are low, so the number of people who are “going” on Facebook will almost always overshoot the eventual attendance. If invitations were more personal (as they used to be), attendance rate would be higher but it would be more difficult to invite large numbers of people. Other concerns include government censors, such as the Egyptian shutdown of social networks in the wake of protests coordinated through Facebook and Twitter. In addition, it’s very easy to locate and identify organizers and attendees of these events, so persecution is a real possibility even before the demonstration takes place.

Despite these concerns, Facebook events is a great tool for organizing large events, as we have seen with recent examples. We’ll just have to wait to see the next creative use of Facebook tools.

According to a recent study, Americans spend around 14 hours per person per month on Facebook. If all that lost productivity could be directly translated to minimum wage payments to the government, the national debt could be lowered by at least $15 billion per month. That’s definitely a good wad of cash.

That raises a good question: why do we use Facebook that often? I believe that the excuses people come up with to use Facebook will keep it a staple of social life.

Basically, Facebook acts as several tools for social life. First of all, it serves as a news service, but instead of broadcasting global news, it offers news that is more relevant on a personal level. Why would one use CNN to read about news that might only slightly affect his/her life if he/she could read about her friends and stay updated about community happenings?  Because each comment and interaction is from an actual, personal relation, these engagements seem more personal and we get more emotional benefit. We give others satisfaction with a simple stroke of a mouse or keyboard through likes and supportive comments, and they return the favor as well. As a result, Facebook functions as a form of entertainment. On this thought, Facebook acts as a sort of gaming platform. Of course, the graphics and level of engagement are lacking, but it is an inexpensive and convenient alternative to consoles. In addition, it offers an opportunity to play games with friends, thus making games more interesting and forging stronger relationships with friends. Due to an ability to post, accept likes, and allow comments, Facebook can resemble a Craigslist-like atmosphere or even an advertising agency. It allows large and small business owners alike to advertise free of charge through posting wall posts to its subscribers’ news feeds. Furthermore, it acts as a contact book by saving the email addresses, phone numbers, and birthdays of friends. Through a few clicks, it is very easy to locate the contact information of friends in the “About” section. By organizing the birthdays and reminding users of friends’ birthdays, it allows users to avoid the guilt and shame of forgetting a close friend’s birthday. Also, the number of birthday wishes increase as a result of Facebook notifying users of birthdays, so users feel more social acceptance by receiving these wishes. Facebook even functions as an agenda (both for past and future happenings) by allowing users to record their past events through locations and updates and to keep track of future events through its built-in events organizer. It goes further to allow users to make events and invite friends to attend through a highly convenient interface.

Clearly, Facebook offers so many services that it is becoming a one-stop shop. Google has been trying to build the same empire and has been fairly successful with developments like a popular search engine, a popular email with Gmail, and a clean calendar through Google Calendars. Facebook has lots of directions to expand in terms of offered services, but Google’s lead in dominating internet usage has dwindled.

Source: http://techcrunch.com/2012/05/11/time-spent-on-facebook-mobile/

Perched as the king of social networks, Facebook must be pretty cozy right now… if you ignore its massive woe pertaining to revenue. With this thought, Facebook could learn some revenue-improving tips from the successful and failed efforts of other social networks or service providers.

First of all, Facebook should look into promoted posts. Twitter and Youtube both feature tweets and videos that people pay to promote. These “promoted tweets” and “featured videos” allow for the website to generate revenue by requiring payment in order to let people see them. What makes this even better for Facebook is that Youtube and Twitter are less successful in obtaining user information. Facebook has much more information related to its users so the promoted posts would be more geared toward the right audience, and it can charge more per post.

Next, Facebook should add the group video chatting service that Google+ uses for its hangout. However, it should build on Skype’s model of a premium account required for such video chatting. Facebook already has an option for 1 on 1 video chatting, so if people wanted to group video chat, they can purchase one-time, monthly, or yearly subscriptions of a “premium Facebook” service that would include perks such as group video chatting, free trials/tokens in games, reduced ads, and some bonus related to Facebook’s gifts system. This would promote Facebook-related games and gifts and increase revenue through the membership fees.

Also, the mobile advertisement sector of Facebook can develop significantly. Right now, Facebook publishes virtually no advertisements on their mobile application. Even the mobile messaging application lacks advertisements. It can begin implementing the “promoted post” type of scheme that Twitter uses with the promoted tweets or explore other mobile ad possibilities such as banners and ads that appear at some interval as you scroll down. Other mobile applications have implemented advertisement tactics that were significantly unappealing, like the 15-30 second video advertisements by gaming apps, and Facebook should refrain from implementing those to avoid users flocking away. Pandora would be a good model for Facebook to look into as their mobile revenue figures are substantial.

Most importantly, of course, Facebook should make sure they keep their users with them. Two main groups of people aren’t on Facebook yet: Chinese people and under-13 kids. As long as China wishes to keep its internet censors active, Facebook most likely will not expand significantly in China. Thus, Facebook simply needs to make sure that future generations are still interested in social networking and will eventually sign up and become active users. If not, none of the above suggestions would have an effect and Facebook would become a relic (see MySpace).

3.6  million: the estimated number of underage Facebook users per month. 20,000: the number of underage Facebook profiles taken down every day (link).

Clearly, underage users make up a significant portion of the Facebook population despite the age requirement of thirteen years. This policy is implemented for good reason, too, as cyberbullying, online predators, and computer viruses may be bypassed. However, it would be interesting to take a look at why Facebook should not have this age requirement.

First of all and most superficially, Facebook can improve typing skills. I know that I personally learned how to type accurately and quickly through Yahoo! Messenger and online role playing games, and this has benefitted me in numerous (and sometimes subtly) situations. I’d be the first to claim that I’m not the best typist in the world, but my skills were honed through constant chatting in those chat-room-like conditions, and Facebook would foster children’s improvements in typing.

Second, those same chat-room-like conditions may allow children to better develop social skills. Facebook is pretty much a virtual world, in which people may hide behind avatars (albeit avatars of their own face) and discuss any variety of topics. Games exist to strengthen friendships, and kids would be exposed to other aspects of social beings like music and television. By friending adults like their parents and older siblings, they will learn the societal norms of maintaining friendships and holding conversations. Facebook is less exclusive than the childish friendship circles of middle school, so a greater sense of equality and friendliness will be present. Through chatting with friends and posting interesting media to friends’ walls, more ideas will be spread and kids will learn more about themselves and their friends.

Third, the current age requirement is as good as useless. All one needs is an email address, a name, and a birthday to join Facebook. I remember getting my first email address at 9 years of age, so technically, I could join Facebook with a false birthday when I was only nine. Of course, Facebook algorithms try their best to identify age requirement infringements, but the vast majority of these cases slip by. As long as kids want to join, they will have the means and capacity to join, whether it’s by lying on their own or having a parent sign up for them. Even now, only the ones who really want to join end up violating the requirement, as the rest of underage kids go about their business without Facebook.

As for the activists concerned about cyberbullying, bullying occurs anyways. Whether it’s at school or at the playground, kids can get bullied. Keeping kids away from Facebook will not make potential bullying of the kids disappear.

As for the activists concerned about privacy, make the kids friend their parents or let the parents be able to sign in onto the kids account to monitor them. If parents are irresponsible enough to neglect online privacy of their kids, that blame should be placed on them.

As for the activists concerned about viruses and inappropriate images, the internet is already rife with those. A misspelled web address, an accidental click of a malicious advertisement, a single minute without antivirus protection could result in viruses and inappropriate material flooding the computer. Prohibiting Facebook will not solve nearly all of these problems. Good monitoring and solid antivirus protection will.