Understanding Facebook’s Business Model

Mark Zuckerberg

By Mark Zuckerberg, Founder, Chairman and Chief Executive Officer

Facebook turns 15 next month. When I started Facebook, I wasn’t trying to build a global company. I realized you could find almost anything on the internet—music, books, information—except the thing that matters most: people. So I built a service people could use to connect and learn about each other. Over the years, billions have found this useful, and we’ve built more services that people around the world love and use every day.

Recently I’ve heard many questions about our business model, so I want to explain the principles of how we operate.

I believe everyone should have a voice and be able to connect. If we’re committed to serving everyone, then we need a service that is affordable to everyone. The best way to do that is to offer services for free, which ads enable us to do.

People consistently tell us that if they’re going to see ads, they want them to be relevant. That means we need to understand their interests. So based on what pages people like, what they click on, and other signals, we create categories—for example, people who like pages about gardening and live in Spain—and then charge advertisers to show ads to that category. Although advertising to specific groups existed well before the internet, online advertising allows much more precise targeting and therefore more-relevant ads.

The internet also allows far greater transparency and control over what ads you see than TV, radio or print. On Facebook, you have control over what information we use to show you ads, and you can block any advertiser from reaching you. You can find out why you’re seeing an ad and change your preferences to get ads you’re interested in. And you can use our transparency tools to see every different ad an advertiser is showing to anyone else.

Still, some are concerned about the complexity of this model. In an ordinary transaction, you pay a company for a product or service they provide. Here you get our services for free—and we work separately with advertisers to show you relevant ads. This model can feel opaque, and we’re all distrustful of systems we don’t understand.

Sometimes this means people assume we do things that we don’t do. For example, we don’t sell people’s data, even though it’s often reported that we do. In fact, selling people’s information to advertisers would be counter to our business interests, because it would reduce the unique value of our service to advertisers. We have a strong incentive to protect people’s information from being accessed by anyone else.

Some worry that ads create a misalignment of interests between us and people who use our services. I’m often asked if we have an incentive to increase engagement on Facebook because that creates more advertising real estate, even if it’s not in people’s best interests.

We’re very focused on helping people share and connect more, because the purpose of our service is to help people stay in touch with family, friends and communities. But from a business perspective, it’s important that their time is well spent, or they won’t use our services as much over the long term. Clickbait and other junk may drive engagement in the near term, but it would be foolish for us to show this intentionally, because it’s not what people want.

Another question is whether we leave harmful or divisive content up because it drives engagement. We don’t. People consistently tell us they don’t want to see this content. Advertisers don’t want their brands anywhere near it. The only reason bad content remains is because the people and artificial-intelligence systems we use to review it are not perfect—not because we have an incentive to ignore it. Our systems are still evolving and improving.

Finally, there’s the important question of whether the advertising model encourages companies like ours to use and store more information than we otherwise would.

There’s no question that we collect some information for ads—but that information is generally important for security and operating our services as well. For example, companies often put code in their apps and websites so when a person checks out an item, they later send a reminder to complete the purchase. But this type of signal can also be important for detecting fraud or fake accounts.

We give people complete control over whether we use this information for ads, but we don’t let them control how we use it for security or operating our services. And when we asked people for permission to use this information to improve their ads as part of our compliance with the European Union’s General Data Protection Regulation, the vast majority agreed because they prefer more relevant ads.

Ultimately, I believe the most important principles around data are transparency, choice and control. We need to be clear about the ways we’re using information, and people need to have clear choices about how their information is used. We believe regulation that codifies these principles across the internet would be good for everyone.

It’s important to get this right, because there are clear benefits to this business model. Billions of people get a free service to stay connected to those they care about and to express themselves. And small businesses—which create most of the jobs and economic growth around the world—get access to tools that help them thrive. There are more than 90 million small businesses on Facebook, and they make up a large part of our business. Most couldn’t afford to buy TV ads or billboards, but now they have access to tools that only big companies could use before. In a global survey, half the businesses on Facebook say they’ve hired more people since they joined. They’re using our services to create millions of jobs.

For us, technology has always been about putting power in the hands of as many people as possible. If you believe in a world where everyone gets an opportunity to use their voice and an equal chance to be heard, where anyone can start a business from scratch, then it’s important to build technology that serves everyone. That’s the world we’re building for every day, and our business model makes it possible.



To help personalize content, tailor and measure ads, and provide a safer experience, we use cookies. By clicking or navigating the site, you agree to allow our collection of information on and off Facebook through cookies. Learn more, including about available controls: Cookies Policy