Let's not let 10 days of share price fluctuation blind us to Facebook's unprecedented accomplishments. Consider this a skeptic's guide to the bull case for the social network.
Facebook just had modern history's worst IPO and it's down again today by some percentage that will be quoted endlessly.
Yet Facebook is still the world's largest social media site with more than 900 million users. And most importantly: Many of those people still visit the site each and every day, regardless of grumbling from cynics or short-term price fluctuations.
We've been hard on Facebook at times through the last year, particularly around issues of privacy. We will continue to report on them with the same rigor that we've maintained over the years. But as the company's stock has fallen since its IPO, so many people are piling on with glee that I've become skeptical of my own skepticism about the company. It's not so much that nearly a billion people can't be wrong, but more that I know that I can be. (Especially when media sentiment is running so strongly in one direction.)
So, consider this the skeptic's guide to the bull case for Facebook. Because, although you might not know it from the recent commentary, there is still a case for Facebook's success and it is strong.
A Natural Monopoly
Let's start with the most fundamental argument for Facebook: That its unique market position is profitable and will remain profitable.
"The case for Facebook is that it is a natural (tech) monopoly, and natural monopolies tend to be stable, profitable and rare, thus good investments," investor Paul Kedrosky wrote in an email to The Atlantic. "Further, such companies tend to be underestimated by the markets, with most people initially skeptical -- That can't ever get to the scale it needs! -- and then skeptical later -- That can't continue to grow! -- as the company matures. Confusing the trainwreck IPO with the company's fortunes is classic market myopia, getting caught up in short-term drama and forgetting what was interesting in the first place."
This is also a big one. Take a look at the most-recent Comscore numbers for how many minutes per month visitors to the most popular social media sites spend. Let's add up Facebook's competition: tumblr (89), Pinterest (89), Twitter.com only (21), LinkedIn (21), MySpace (8), Google Plus (3). That's 227 minutes a month. Facebook is pulling in 405 minutes. And it has the largest user base at almost 170 million monthly active users in the US.
Stop and think about that. Facebook is bigger than tumblr, Pinterest, Twitter.com, LinkedIn, MySpace, and Google Plus ... times two. Put all these numbers together and what you get is: One in every five page views on the Internet is a Facebook page. If the Internet is valuable, Facebook is valuable.
Let's put Facebook's 900 million global users in perspective. The largest international broadcast network is the BBC World Service. It reaches 188 million people a week. Facebook, by contrast, reaches so many more and in so many more places. It has become the most global and largest media channel the world has ever known.
Whatever hipster backlash to Facebook that exists in the United States, I didn't see any sign of it in Korea earlier this month. That country had a very strong entrenched social network in CyWorld. But every youngish person with a phone I could collar told me that Facebook has crushed CyWorld. Many still maintain accounts on both networks, but only really use Facebook.
Point being: Our media obsessions are not the world's media obsessions. Our backlashes are not the world's backlashes. And the fact is that 80 percent of the service's users are outside North America. Four out of every five Facebook users comes from somewhere else.
Facebook is poised for big user growth in just about every developing country except China. Facebook is already over 51 million users in India, for example, and Gartner predicts that India will overtake the US as Facebook's largest market within the next three years. Facebook's also very strong in Brazil and Indonesia; it has more than 40 million users in each country.
Even civil rights activists like the Electronic Frontier Foundation's Jillian York have grudgingly accepted that Facebook is useful for the people they are trying to help. (Though I can't help noting that Facebook can do a lot more to make itself a better platform for public action.)
Facebook's design was amazing when it launched. The competition was MySpace, which was obsessed with "personalization." MySpace's theory of design seemed to be that the more offensively cluttered the page was, the more its users would care about the service. Facebook launched with the cleanest, whitest interface imaginable, setting a new standard for How Things Should Look.
Fast forward some years and Facebook's design may not be what it once was. But watch out. Last year, they acquired the design firm Sofa. Then, of course, there was Instagram and its design team. And then Lightbox, makers of a nice Android photosharing app. The list goes on and on. Wilson Miner, who helped redesign Apple.com, just left Rdio for a new gig at Facebook. Lastly, they just acqui-hired the design usability firm Bolt | Peters.