PESTLE/PESTEL analysis of Facebook: How politics and regulations affect the social media giant
You’ve likely seen Facebook in the news lately. It’s in hot water more often than not. And now, the continuous bad publicity is affecting their stocks and bottom line.
See how this social media giant is affected by the six macro-environmental influences in this PESTLE analysis of Facebook.
Also read: How to write a PESTLE analysis from scratch
Political factors: A platform for friends, family, and political agendas
The spread of fake news.
Facebook is a social media platform used by more than 2 billion users all over the world. Although it started as a way to stay in contact with peers and family, it’s since become a stage to discuss corrupt practices and government policies.
Mark Zuckerberg, the CEO and founder of Facebook, has landed in hot water because of alleged Russian meddling in US elections. And Facebook is blamed for the spreading of “fake news” to all users. These controversies affect public opinions about local politics, current politicians in power, and may affect the result of future elections.
Restrictions in conservative countries.
In more conservative countries, Facebook is seen as a tool to push certain agendas and help people unite against political parties. To prevent people from uniting, as well as the spread of misinformation, some countries have restricted Facebook access to their citizens. China and North Korea are just two examples.
Political ties and agendas.
Facebook itself pushes its own agenda. To enhance ties with Washington, D.C., the platform has created a Political Action Committee. Facebook is already connected to billions of audiences around the world. With an enormous reach, the platform can easily affect how people think about policies, the government, and elections. This is something citizens fear, but nothing has truly intercepted Facebook’s influence.
Economic factors: Losses and massive economic influence
Losses of $100 million USD.
The strong US dollar has cost Facebook millions in foreign currencies. Specifically, Facebook has lost more than $100 million USD worldwide. Costs and expenses are on the rise as the company continues to expand and employ new workers.
Boosting the economy.
Facebook also has a hand in improving the economy. In 2014, the company has allegedly affected more than 4 million jobs and had an economic global impact of more than $200 billion USD. These numbers may be inflated, according to some economists.
A business platform and model.
This social media isn’t only a platform to talk to your great aunt Jean. Facebook is a business platform too. Users have access to paid Facebook ads to push their own products. And they can pay to “boost” their posts to reach new audiences. Recruiters also use Facebook to hire people based on their personal profiles.
Plummeting stocks.
Facebook’s stock prices have dropped significantly since the summer. This means advertisers are jumping ship and losing faith in the company. The more information about data breaches reach the public — alongside the troublesome fake news articles — the fewer investors feel secure in putting their money in the company.
Social factors: A shift in ideals and values
A lost core value.
Facebook is a social media platform. The largest in the world. It started as a means to connect with people you haven’t seen in awhile. To share big announcements and everyday moments with friends and families. But it’s slowly shifted away from this premise.
It now has a marketplace where you can sell your items to people close to you. The platform is loaded with ads — Facebook sponsored and not. Your timeline may be filled with “Popular posts from around the world” — posts from company pages that you’ve never seen or “liked” before. Facebook’s algorithm seems to focus more on showing company and businesses pages than your friend’s statuses. This is a problem for people who only want to stay in contact with their loved ones.
Loss of quality.
Not to mention the data breaches affecting millions of users isn’t helping Facebook’s retain favor amongst their users. People are more wary about connecting other accounts and websites to Facebook. Yet, billions of people still use Facebook every day. Although people complain, they’re still logging in, scrolling through their feeds. But nearly everyone can agree the quality of Facebook has taken a downturn since it was founded.
Technological factors: Continuous advancements and acquisitions
More than just a website.
The platform relies on the internet. Without it, Facebook wouldn’t even exist. And it’s more than just a website now. The company offers a standalone messenger app to talk with people on your friend’s list, regardless if you log into your Facebook or use it. But the apps and Facebook are known to track you while you visit other websites. And it’s believed to be selling this information to advertisers.
More data safety needed.
Then there’s the security issues, as I’ve discussed multiple times already. Facebook should look into enhancing the security of their platform to counteract hacking attempts and data leaks. Customers would appreciate it.
Expansions.
Facebook also owns other platforms including Instagram, another type of social media. People favor Instagram as a means to showcase their lives, message their friends, and stay connected. It focuses heavily on pictures rather than text messages. It’s becoming more popular amongst the younger generation than Facebook.
Legal factors: Problems with following regulations
More about breaches.
Data breaches are what Facebook is becoming most known for, at least if you search through recent articles about the company. And the consistent trouble with keeping users’ information out of the clutches of scammers is affecting Facebook’s reputation. Negatively. It may also land them in hot water or in front of judge.
GDPR.
On another note, Europe has introduced the European Union’s General Data Protection Regulation (GDPR) this year. It’s a stricter policy regarding data and data privacy of users. Violating the regulation could lead to several penalties. And Facebook has had a few issues with following the GDPR guidelines already. As has other big name companies like Google.
Environmental factors: Data center and emissions
A small carbon footprint.
Most of Facebook’s emissions are from the company’s American data centers. However, it’s been rather low over the last few years, compared to other companies. Facebook still uses coal power to generate power in the data centers, but they also use gas and nuclear as well. They should put more effort into using renewable energy systems to cut their carbon footprint further. It will put less strain on the environment as well.
Photo by Tim Bennett on Unsplash
