Issue of the week: Facebook’s 1 billion friends

last updated 8 January 2015

“Facebook finally has something to brag about,” said Chris O’Brien in the San Jose Mercury News. Last week, the social network announced a remarkable milestone: 1 billion active users. Since its audience was just half that as recently as July 2010, and the entire world has only about 2.5 billion Internet users, that’s an impressive achievement. But CEO Mark Zuckerberg is still getting only about $1.28 in revenue per user, and hasn’t been able to translate those 1 billion friends into giant profits. So to capture the next billion users—and much-needed revenues—he’s pushing “a radical transformation” that will put mobile services at the heart of Facebook’s future.

Consider Wall Street skeptical at best, said Jon Friedman in MarketWatch.com. Of course, the shift to mobile makes perfect sense as phones become the dominant Internet medium around the world. But no matter how many users Zuckerberg boasts, his stock’s price is going to keep tanking until he can prove that his company “can monetize all of those loyalists.” Yet in that 1 billion figure, said Ryan Tate in Wired.com, “lies the fuel for a much sunnier future” for Facebook. The company is just beginning to launch new business lines based on its massive bank of user data, and it still has the potential to radically reinvent social advertising. If Facebook fully exploits that potential, “it could triple its current market valuation in five years.”

But pursuing profits too aggressively could backfire, said Josh Constine in TechCrunch.com. Facebook is now testing a feature that lets users get more visibility for their status updates—for a whopping $7 per post. Since ordinary posts are typically seen by less than 16 percent of your friends, the feature has its allure, especially for major announcements like engagements or births. But its high cost “could offend and marginalize financially strapped users.” And the new fee is just one example of a “pretty jarring shift in the site’s tone,” said Matt Miller in Forbes.com. Facebook is “getting more aggressive in goading its users to not just socialize on Facebook, but spend money too.” For instance, the company is bowing to retailers’ interests by rolling out a “Want” button that will let users create product wish lists. Last time I checked, people use Facebook to connect with friends, not to “feel like a dollar sign.” Just remember, Zuck: “1 billion friends can be made and lost with the click of a button.”