This article has been reviewed by Sumeet Sinha, MBA (Emory University Goizueta Business School). Should you have any inquiries, please do not hesitate to contact at email@example.com.
Meta Platforms Inc, earlier known as Facebook Inc, is one of the most valuable companies in the world. It has various ways to earn money. This article will help you understand how Meta makes money.
How Meta Makes Money (Jump To Section)
Facebook is a popular online social media platform used worldwide. This company is owned by the American company Meta Platforms. In the year 2004, “Facebook” was founded by Mark Zuckerberg. His fellow Harvard University friends like Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes started this platform with him. The name Facebook was derived from the face book directories. This was often given to university students in the United States. In the beginning, membership access to Facebook was only allowed for Harvard University students. Later, all North American universities were able to get access.
As of now, Facebook has 2.8 billion monthly active users, which helps it reach the fourth rank in global internet usage. Also, it became the most downloaded mobile app of the 2010s. Facebook is available in various languages, including Afrikaans, Albanian, Bulgarian, Burmese, Dutch (België), English (UK), English (US), Japanese (Kansai), Javanese, Kannada, Simplified Chinese (China), Sinhala, Slovak, Traditional Chinese (Taiwan), Turkish, Ukrainian, Urdu, Uzbek, Vietnamese, Welsh, and much more.
This well-known social media platform can run on various devices with an active internet connection like smartphones, personal computers, desktops, tablets, etc. Any user of Facebook needs to register with this application with their personal information like name, age, location, workplace, community, etc. All users can post text, photos, and multimedia shared with other users who have been confirmed to be their “friends”. To communicate directly with each other, a messenger app and direct messages are also available.
Though Facebook has faced much criticism for the Cambridge Analytica data scandal, politically manipulating posts, mass surveillance, and more, it does not lose its relevance in this era.
Well, you may still be wondering how Meta makes money. Well, through this article, you will get to know the details. Also, detailed information on the Facebook business model is provided for your reference.
But before all this, let’s learn in brief about how Facebook came to be.
History Of Facebook- How Did Facebook Start The Journey?
- 2003–2006: The Facebook, Thiel investment, and name change
The journey of the Facebook platform has always been interesting. Mark Zuckerberg created a website named “Facemash” in 2003. At that time, Zuckerberg was at Harvard University. This website was similar to “Hot or Not” for rating photos. Through this “Hot or Not”, people could place two photos next to each other at a time and ask users to choose the “hotter” person. This application was quite interesting and attracted nearly 450 visitors. Also, 22,000 photos were viewed in the first four hours. Though it got plenty popular among campus group list-servers, the Harvard administration shut it down after a few days. Not only that, but also the administration charged Zuckerberg with breaching security, violating copyrights, and violating individual privacy.
However, the charge was dropped, and Zuckerberg expanded the project. He created a social study tool that semester. He uploaded a few images on this special study tool that included different comment sections. This website was shared with Mark Zuckerberg’s classmates.
A “face book” was a student directory that featured photos and personal information. In 2003, Harvard had only a paper version with private online directories. In January 2004, Zuckerberg started a website named “The Facebook”. A Crimson editorial about Facemash inspired this. To raise some funds, Zuckerberg met Eduardo Saverin. He agreed to invest 1000 US dollars in the website of Zuckerberg. The next month, Zuckerberg launched “TheFacebook”, originally located at thefacebook.com.
Again Zuckerberg faced a lot of issues. After launching the site, Zuckerberg’s seniors like Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra accused him of misleading people into believing he would help them build a social network called HarvardConnection.com. On the basis of this accusation, a newspaper began an investigation later Zuckerberg was sued. But the case was settled in 2008 for 1.2 million shares. These 1.2 million shares are worth $300 million. As of 2021, it will be the same as $354 million.
After these incidents, Mark Zuckerberg got new companions like Dustin Moskovitz, Andrew McCollum, and Chris Hughes. They helped Zuckerberg to help manage the growth of the website. In the same year, Facebook expanded to Columbia, Stanford and Yale. Later, it became available to all Ivy League colleges. Apart from that, it was also available to most universities in the United States.
In the middle of 2004, Sean Parker became the company president. In June month, the Facebook office shifted to Palo Alto, California. At the same time, Facebook also received the first-ever investment from Peter Thiel, the co-founder of PayPal. Next year, the company’s name changed to Facebook and purchased the domain name Facebook.com for US$200,000. The domain name was purchased from AboutFace Corporation.
In 2005, Accel Partners invested $12.7 million in Facebook. It also received another $1 million from Jim Breyer, an American venture capitalist, founder, and Chief executive officer of Breyer Capital.
- 2006–2012- new journey with Microsoft alliance and rapid growth
In 2006, Facebook onboarded its first intern Julie Zhuo, and later Julie became a full-time engineer. From September 26, 2006, Facebook was available for all users aged 13 years or more with a working email address. At the end of 2007, Facebook already had more than 100,000 Facebook pages on which various companies could promote themselves. Here they started growing, and Facebook started making some money. On October 24, 2007, Microsoft proclaimed that it invested and bought a 1.6% stake in Facebook for about $240 million.
Within 2008, Facebook got more than 400,000 registered developers. After this, Facebook won the “Top 100 Classic Websites” by PC Magazine in 2007. Another important one was the “People’s Voice Award” from the Webby Awards in 2008.
In July 2008, Facebook introduced “Facebook Beta”, a significant user interface redesign. All users were migrated to the new version of the user interface. Facebook announced its new international headquarters in Dublin, Ireland. In 2009, Facebook was already cash-flow positive. Facebook was also ranked as a top social networking service in the world by monthly active users.
In 2010, Facebook received the Crunchie “Best Overall Startup Or Product” award. The company finally announced its 500 million active users among them; there were 150 million users who used it from their mobiles. Facebook’s value became $41 billion. This made Facebook the third largest American web company after Google and Amazon.com. Later, the company decided to move its headquarters to Menlo Park, California, in the Sun Microsystems campus.
- Bug Bounty Program
On July 29, 2011, Facebook started talking about its Bug Bounty Program, which paid security researchers a minimum of $500. It is a search program that helps to find out any kind of security holes. Through this program, various researchers from various countries started taking part. Russia and India showed more interest in this program.
- 2012-2014: IPO, lawsuits, Site developments, A4AI, and 10th anniversary
In 2012, Facebook announced its first App Center, a store selling applications operated via the website. This app center is available for iPhones, Android devices, and web users. As Meta makes money, it started its first public offering on May 17, 2012, at a share price of US$38. Based on their income, Facebook joined the Fortune 500 list for the first time in May 2013. On April 15, 2013, Facebook created teamed up with the National Association of Attorneys General across 19 states so that they could expand Facebook among teenagers and parents.
Soon, Facebook also made an updated version of its policy not to tolerate any hate speech. Hate speech included domestic violence, sexual violence, etc.
Facebook also introduced clickable hashtags so that all users can follow the trend or any other recent discussion. Facebook joined Alliance for Affordable Internet (A4AI) in October. It is a coalition of public and private organizations, including Google, Intel, and Microsoft.
Facebook celebrated its 10th anniversary during the week of February 3, 2014. That year, nearly 1 billion active users joined Facebook only through mobile devices. Soon, Mark Zuckerberg participated in a Q&A session at Tsinghua University in Beijing, China.
- 2015- Present: Algorithm revision, fake news, corporate rebranding, shut down of facial recognition technology
In 2015, Facebook updated its algorithm so that no one can spread hate content or fake news that can affect society. In 2016, Zuckerberg created a clear outline of his thoughts on the main basic pillars of Facebook. These are artificial intelligence, increased global connectivity, and virtual and augmented reality. Soon after, Facebook revealed Surround 360 camera on GitHub under an open-source license. It also won an Emmy for its animated short “Henry”.
After one year, Facebook expanded its work with Definers Public Affairs. It was a PR firm. In 2018, Facebook needed to pay £500,000 to UK watchdogs for failing to respond to data erasure requests. Facebook founded its subsidiary named Lianshu Science & Technology in Hangzhou City, China, with a value of $30 million.
On July 31, 2019, Facebook mentioned their partnership with the University of California, San Francisco, so that they could build a non-invasive, wearable device that lets people type by simply imagining themselves talking. On 2020, Facebook hired new directors Tracey Travis and Nancy Killefer as their board members. On February 22, Facebook declared it had reached an agreement with the Australian government. As a part of this official agreement, Facebook and Google can avoid the News Media Bargaining Code adopted on February 25. Also, in the same year, Facebook was accused of removing and shadow banning content in India. This content may speak either in favor of protesting Indian farmers or against Narendra Modi’s government.
In 2021, the main name of the parent company of Facebook was changed to Meta Platforms, Inc because it aimed to create its focus on building the “metaverse”. This year, Facebook decided to stop targeting ads based on data related to health, race, ethnicity, political beliefs, religion, and sexual orientation. This decision is not just for the Facebook app but also for Instagram, Whatsapp, etc.
Apart from various success stories within Facebook, it experienced daily active users dropping for the first time. This incident took place in February 2022. After one month, it declared that Facebook would ease the rules to allow violent speech against “Russian invaders”.
People Behind Facebook- Mark Zuckerberg And His Fellow Students
Mark Elliot Zuckerberg, widely known as Mark Zuckerberg, is the main pillar behind Facebook. He is an American media magnate, internet entrepreneur, and philanthropist. He co-founded the social media website Facebook and Meta Platform Inc. Zuckerberg is also the chairman and chief executive officer. The controlling shareholder of Meta Platform Inc., Zuckerberg started his early schooling at Ardsley High School. Later he transferred to Phillips Exeter Academy. He was the caption of the then fencing team. He started his college life at Harvard in 2002. During his college life, he achieved the title of programming prodigy.
His subjects were psychology and computer science. He belonged to Alpha Epsilon Pi and Kirkland House. During his semester, Zuckerberg started writing new code to start a new website. And he launched “Thefacebook”. This website was run with the help of Mark Zuckerberg’s roommates Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. Though this website received lots of criticism and accusations, it became able to reach the main motto of creating a social networking site.
Mark Zuckerberg is also a board member of the solar sail spacecraft development project called “Breakthrough Starshot”, which he co-founded in 2016.
Facebook Offers A Lot Of Products And Services To People
Facebook is one of the biggest social media platforms that able people to connect with a greater community. It has to offer a lot of services to the users. It has been revealed that Facebook has 3 billion monthly active users. Apart from this, there are 1.5 billion mobile daily active users who make a total of 3.5 billion daily searches. By offering these services, Meta (Facebook) makes money.
Here check out what Facebook has to offer to you.
- Facebook Lite
- Meta View
- Instagram (including apps such as Boomerang)
- Meta Portal-branded devices
- Meta Quest products when using a Facebook account
- Meta Spark
- Meta Audience Network
- NPE Team apps
- Meta Business Tools
- Groups, events, videos, photos, free basics
How Meta Makes Money
Well, now that you know a fair bit of Meta Inc or Facebook’s history, it is time to know how they make money.
As Facebook is growing, the audience of Facebook is also growing. At first, it was an app for teenagers, but now it has become a user-friendly application for all age groups. Facebook has also acquired various platforms so that it can maintain a hold of each and every age demographic.
It acquired Instagram in 2012 for $1 billion and WhatsApp in 2014 for $16 billion. Oculus is also included under the name of the Facebook metaverse. You need to know that Meta makes money by selling various advertisements on social media platforms like Facebook, Instagram, etc. Check out Facebook’s revenue model to know how Meta makes money.
- Facebook’s annual revenue
|2019||70.69 billion US dollars|
|2020||85.96 billion US dollars|
|2021||117.92 billion US dollars|
- Facebook’s revenue by region
|Year||The US & Canada||Europe||Asia-Pacific||Rest of World|
- 2022 first quarter financial table
|In millions, except percentages and per share amounts||2022||2021|
|Total costs and expenses||19,384||14,793|
|Income from operations||8,524||11,378|
|Provision for income taxes||1,443||2,006|
|Effective tax rate||16%||17%|
|Diluted earnings per share (EPS)||2.72||3.30|
- 2022 second quarter financial table
|In millions, except percentages and per share amounts||2022||2021|
|Total costs and expenses||20,464||16,710|
|Income from operations||8,358||12,367|
|Operating margin||29 %||43 %|
|Provision for income taxes||1,499||2,119|
|Effective tax rate||18 %||17 %|
|Diluted earnings per share (EPS)||2.46||3.61|
The Bottom Line
Meta Platform Inc is a company that helps people connect and communities and grow businesses within one place. When Facebook started its journey in 2004, it made a huge difference in the way how people used to socialize using the internet. Along with this, the metaverse of Facebook, like Messenger, Instagram, and Whatsapp, makes the journey of connecting people smoother. The company is trying to add more energy and focus on its key company priorities so that the developers and users can unlock long-term opportunities and facilities from Meta Platform Inc. We hope this article was helpful to understand how Meta (Facebook) makes money. To read more such articles, keep in touch with us.
Frequently Asked Questions (FAQs)
- By offering which service Meta makes money mostly?
The main source of revenue for Facebook is selling advertising space.
- How much of Facebook’s revenue comes from selling advertising space?
Facebook earns the main part of its revenue just by selling advertising space. It is nearly 97.9%. Facebook ad revenue stood close to 86 billion U.S. dollars in 2020.
- Name a few biggest advertisers on Facebook.
Here are a few biggest advertisers who are on Facebook.
- JPMorgan Chase
- Electronic Arts
- Procter and Gamble, and much more
Our Financial Calculator Apps