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gone up or down since its I PO? Why? Was investing in Facebook at I PO a move that paid off or
that has resulted in losses?
4. Why was Z uckerberg able to demand and receive control of Facebook, even as the firm went
public? What strategic factors were at work in Facebook’s rise that gave the founder such
5. Why study Facebook? Who cares if it succeeds? 8.2 Does Facebook Want to Eat Your Firm’s Lunch?
Enveloping Markets across the Internet L E A RN I N G OBJ E C T I V E S
1. Recogniz e that Facebook’s power is allowing it to encroach on and envelop other I nternet
2. Understand the concept of the “dark Web” and why some feel this may one day give Facebook a
source of advantage vis‐à‐vis Google.
3. Describe why a “walled garden” may be threatening to other firms and the public good.
4. Understand the basics of Facebook’s infrastructure, and the costs required to power the effort. Facebo o k isn’t just a co llectio n o f perso nal ho me pages and a place to declare yo ur allegiance to
yo ur f riends. Facebo o k is gradually turning o n f eatures that allo w it to leverage its massive user
base to encro ach o n a wide swath o f Internet businesses. Co nsider pho to s. Go o gle, Yaho o !, and
MySpace all spent millio ns to acquire pho to sharing sites (P icasa, Flickr, and P ho to bucket,
respectively). But to beco me the webs leading pho to sharing service, Facebo o k didn’t acquire
anyo ne. The site simply turned o n a substandard pho to -sharing f eature and quickly became the
biggest pho to -sharing site o n the Web. Facebo o k users no w po st o ver three billio n pho to s each
mo nth.J. Kincaid, “Facebo o k Users Uplo aded a Reco rd 750 Millio n P ho to s o ver New Year’s,”
TechCrunch, January 3, 2011. Video is also o n the rise. Yo uTube will get yo u f amo us, but Facebo o k is the place mo st go to share
clips they o nly want f riends to see.F. Vo gelstein, “Mark Zuckerberg: The Wired Interview,” Wired,
June 29, 2009. Facebo o k users share video at a rate ten times greater than tho se o n Twitter,P .
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- Winter '14