Comprehensive Report: Socio-Economic and Legal Environment of Facebook

This report provides a detailed analysis of the socio-economic and legal environment surrounding Facebook. It examines various factors impacting the company's growth, including political influences, economic trends, and legal frameworks. The report explores the impact of political factors like government policies and trade regulations, as well as economic drivers such as market stability and disposable incomes. It also addresses the implications of the sharing economy and the impact of legal frameworks, including data privacy concerns and anti-trust laws. The report further investigates the influence of social factors, presents a case study, and reviews relevant literature to provide a comprehensive understanding of Facebook's operating environment and its challenges.

Running Head: SOCIO-ECONOMIC-LEGAL ENVIRONMENT
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Facebook
SOCIO-ECONOMIC-LEGAL ENVIRONMENT
6/1/2019

The report has been prepared so that the socio economic and the legal implications of the Facebook
can be ascertained. There are many factors that are affecting the growth and the development of the
Facebook. In this report there are the various factors has explained and through which it is evaluated
that the political factors affecting the business at the large context. If any policies made by the
government is in the favor of the company then growth can be seen and if not then vice versa. It has
been evaluated that Facebook Inc. has taking the high growth so there are many economic trends and
the conditions which affect the company. There are various economic drivers which affects the
business activities. The platform of the Facebook is very huge which contributes to the economy of
the country. It operates various functions so it affects the economic conditions of the Facebook. The
Facebook has improved its quality standards of the services and also satisfying their customers by
displaying the advertising services. The company can also earn the high profit through the retail sales
marketing as increasing online business. There are many factors that affects the political market such
as the risk of the military invasion, political stability in the economy, level of corruption in the
country, intellectual property protection,. Trade regulations, taxation rates incentives, etc. The
performance of the organization is also get affected by the big and the small political factors.

Contents
Introduction......................................................................................................................................3
Literature Review on Knowledge economy and various drivers of economic change...................5
Macro and micro factors that affects the business...........................................................................7
Impact of the legal framework and political factors........................................................................7
The political factors that affect Facebook.......................................................................................9
Implications of ‘sharing economy’ for your chosen organization.................................................11
Formal and informal legal systems and anti-trust laws.................................................................12
Impact of the social factors on the development and the growth of the Facebook.......................13
Case study......................................................................................................................................15
References......................................................................................................................................18

Introduction
Facebook is the social networking sites which were founded on February 4, 2004. In Cambridge,
Massachusetts, the company was founded 15 years ago. The company has the headquartered in
Menio Park, California, the U.S. The services of Facebook are served globally in the worldwide
area. The founder of the company was Mark Zuckerberg who is the Chairman and the CEO. It is
the social media company which is considered as the fourth biggest technology company
(Rauniar, et al, 2014).
Earlier when the company was founded, the website's membership is given to the limited people
such as Harvard students and subsequently to the Columbia students. But later on, it has
expanded to the Ivy League schools, MIT, etc. IN the year 2006, any user any register to the
Facebook who has the age of the 13 years old. The company held its IPO in 2012 and the value
of the company at $104 billion. With the connectivity of the internet, only Facebook can be
accessed. The users can reveal their personal information and create a customized profile. The
company has a huge operating profit in the year 2018 with US$24.913 billion. The revenue of
the company was US$55.838 billion.
There is the positive and the negative impact of the socioeconomic trend in the country such as
Facebook is very helpful in maintaining the relationship with the friends and family but it also
gas the negative impact that it has created the health problems for the users who use Facebook in
the excess manner (Hamari, et al, 2016). The low academic performance has also seen through
Facebook. In the global economy, Facebook is creating jobs for many people and also providing
much important information through social media sources. To reach a large number of people it
is the best social media source but if the people use it frequently then they can become
narcissistic. So there are many socio-economic trends which affect Facebook which will be
explained in this report.
In this report, the implication of the sharing economy on Facebook will be explained. In this
report, for the economic growth and the development of the company many political factors will
be explained which has to be complied with the company to achieve higher profits. As the
company is rising so there was a lot of the economic issues which the company has to face so
they incurred a huge loss which cost millions in the foreign currencies (Van Dijck, 2013). Due to

the increase in the demand of the mobile services the use of the internet has also increased which
helps in increasing the economic growth of the company. The saving rate, inflation rate, interest
rate, foreign exchange rate, and the economic cycle affect Facebook. The personal information of
the people is getting disclose through Facebook so the legal issues are also taken against that.

Literature Review on Knowledge economy and various drivers of economic change
In the economy, Facebook Inc. has to take high growth so there are many economic trends and
the conditions which affect the company. There are various economic drivers which affect the
business activities which are stated below:
Increasing stability of the developing countries: As per the author (Bakir and McStay, 2018),
the Company has increased its market penetration which results in increasing their stability. The
platform of Facebook is very huge which contributes to the economy of the country. It operates
various functions so it affects the economic conditions of Facebook. Facebook also get affected
by the purchasing power and the consumer pattern in the country. As now developing countries
have enough money that they are using Facebook and have the ability to use the device of
Facebook. The global market is influenced by the environment so the economic growth in the
company can be seen when Facebook will enhance more.
The rapid economic growth of the countries: As per the author (Kenney and Zysman,2016),
there are many countries which are developed and there are still some countries which are
developing so the use of the Facebook in those countries are done at the huge level. Through
Facebook, many important data and information can be accessed and it is the main sources
through which a large number of the sectors can be gathered. So it also helps in increasing the
rapid growth of the country (Nadkarni and Hofmann, 2012).
Increasing disposable incomes: When the disposables incomes of the person increase in the
economy then they start using the income in the different sources. So when the income of the
person rises they start using in accessing Facebook. At the free time, they used to scroll the
social media to contact their friends and to know about what is happening in the country. So
increasing disposable incomes has increased the use of Facebook which also leads to the
economic growth of the country.
Losses of $100 million USD: According to the author (Eesley and Miller, 2018), the Company
has lost the US $100 Million worlds widely. As the company, Facebook continues to rise so they
have incurred many expenses and the cost. As the company is rising so there was a lot of the

economic issues which the company has to face so they incurred a huge loss which cost millions
in foreign currencies.
Boost the economy: Facebook has improved the economy of the country as it has given the job
to the millions of the people which have increased the economy of the people. Still, also the
number of people is increasing which are getting employment from the company Facebook.
Give the platform to many users: As per the views of the author (Colangelo and Maggiolino,
2017), Facebook is the accessed by a large number of the people so it is the biggest platform for
providing the tools for the marketers. For developing any application this tool is effective as
many people are accessing it. It is also creating the demand for the internet as Facebook is
connected through the internet so people also connect to the internet to use Facebook.
Contribution in Asia: In the region of the Asia Pacific the Facebook has contributed $13 billion
in the economy as there is the increase in the demand of the Facebook which has motivated the
device purchases and data usage.
Overcoming the trade barriers: Many people get employment through Facebook so the small
and medium enterprises are also able to grow beyond their geographical area and helps in driving
more economic growth. It helps in overcoming with trade barriers as Facebook facilitates the
trade through social sites only (Ugander, et al, 2011).
Building the resilient communities: With the help of the Facebook, people can generally
communicate with each other and make new friends on the social platform so that donation to the
charitable movement can be enabled as well as diversity can be created through the resilient
communities.
The shift in the export dynamics: According to the author (Sundararajan, 2014), Facebook is
supported by a large number of the people and it is accessed the greater global connectivity so to
venture into the foreign market is quite easy. Earlier the business exports the goods domestically
but now exporting has been done in the foreign market.
The demand of the mobile devices and internet services are increasing: Due to increase in
the Facebook the demand for the mobile services and the use of the internet has increased which
has led to the economic growth also (Arvis, et al, 2012). Due to the increase in the demand of the

mobile services the use of the internet has also increased which helps in increasing the economic
growth of the company.
Marketing effect: Facebook has a broad impact on marketing as it helps in growing sales online
and also increases the brand value of the company. As there is a large number of traffic on the
websites of Facebook so doing the marketing through the Facebook services helps in increasing
the in store of the business (Kenney and Zysman, 2016). It is the macroeconomic effect as it
helps in increasing the awareness of the brand through Facebook.
Macro and micro factors that affects the business
Macro factors: As per the author (Sokol and Comerford, 2015), the saving rate, inflation rate,
interest rate, foreign exchange rate, and the economic cycle affect Facebook. These factors help
in analyzing the aggregate demand and the aggregate investment in the economy. The growth
rate can be analyzed or forecasted through the inflation, growth rate of the economic indicators.
With the help of the internet information provider, the economic growth of Facebook is
evaluated.
Micro factors that affect Facebook: The micro factors include the competition norms of the
social media that is affecting Facebook. Nowadays there are many social sites such as integral,
twitter, snap chat, etc. which are providing the same side of the services so these factors affect
the company (Junco, 2012). If the competition in the market will be higher than the chances of
earning the profit will be less but if the competition in the market is less than the chances of the
profit will be higher.
Impact of the legal framework and political factors
Legal frameworks are the set of the rules and the doctrines which set out of the laws as there are
many websites who do the online advertising at the different brands so it is very important to
keep the advertising safe. It is very important for the Facebook to use the GDPR so that business
can be safely advertised on the Facebook as the seasoned marketer mostly used this social media
like the Facebook as the high probability of growing the business through the ads. GDPR is
important for Facebook to protect the privacy of the people. The important information of the
people is losing through Facebook so many people are concerned about privacy (Bakir and

McStay, 2018). There are many legal issues in the company and for that reasons, the rules and
regulations are framed so that Facebook can become the popular platform of social media.
Fake news: There is the legal issue with Facebook in Russia that with use advertising tool the
company spreads the fake news and inflammatory stories which result in the manipulating the
users. So there is no external regulations are there in the Facebook as it was impacting the
working of the Facebook (Jelenchick, et al, 2013).
Cyberstalks, Cyberbullying: There are many cases have been done for the cyberstalking and
cyber bullying against Facebook and people also use the platform for abusing it. There are many
people who commit suicide as they are bullying through Facebook. The legal cases have been
done against the individual who is the users of Facebook as they are doing the cyberbullying
which is unethical (Anderson, et al, 2011).
Privacy: The legal issues have been done against Facebook that the privacy of the individual is
getting violated. The private details of the public are getting spoil due to Facebook as people are
hacking it and also using the photos of the person in a negative way (Bicen and Cavus,2011).
The personal information of the people is getting disclose through Facebook so the legal issues
are also taken against that.
Other legal issues: Facebook has faced many legal issues which are related to business, e-
commerce, technology, and internet laws. As Facebook was increasing its business so there were
many rules and regulations which the company has to follow (Bucher, 2012). As Facebook
required internet so some people are spoiling its use as they were using the technology in a
negative way. When the company starting feeding the news on Facebook they get to face many
legal challenges as the company was very famous and it was accessed with a large number of
people.
Defaming problems: The legal issues have been seen in social media as many people are using
the statements which defame the business. People generally do the anonymous post on Facebook
which was traced but it is the legal issue. To do any defaming remarks and unethical post on
social media is serious repercussions.

Illegal use of the copyrighted work: Through Facebook much illegal use has been done by
copyright the work of the videos, articles, photos, websites, etc. To use the copyright of some
other work is unethical and it is a serious crime. So to use the copyrighted work of others without
their permission is the crime and it is the legal issue which the Facebook faces (Rosen, et al,
2013).
Fake testimonials: In social media sites such as Facebook the fake testimonials has happened
which distract the people. Testimonials are used for advertising and promotion of the products
and for the virtue of the product (Rieder, 2013). So sometimes the fake news for the products is
established so that people can be distracted and buy the product. So this kind of work in social
media is illegal.
The political factors that affect Facebook
There are many political factors which are affecting the profitability of Facebook. As the
company, Facebook is operating in the internet information providers so their many countries
which are accessing Facebook and each country has a different political structure. As Facebook
is using in the diversified countries so there is a lot of the risk of the political environment. There
are many factors that affect the political market such as the risk of the military invasion, political
stability in the economy, level of corruption in the country, intellectual property protection
(Smock, et al, 2011). Trade regulations, taxation rates incentives, etc. The performance of the
organization is also get affected by big and small political factors.
Political stability: The Company Facebook likes to invest in that country only when there is
stability in the political structure. When there is stability in the political structure it is easy to
enhance the country economy with the internet information (Kross, et al, 2013).
Level of corruption: In some countries, the level of corruption is very high so the chances of the
profitability for the company are lower. As there are many technology regulations which were
corrupted so it declines the profit of the company. So where the level of the corruption is high
Facebook doesn’t like to invest in that country (Stucke and Grunes, 2015).
Taxation rate and incentives: Every country has its own policies and has a different tax rate. So
the profitability of the company also depends upon the taxation rate of that country and their

incentoive4s. If the tax rate of the country is quite easy to pay then the Facebook can have the
huge profit but if the tax policies are high then the profit of the company declines (Hausman and
Johnston, 2014).
Wage legislation: The wages of the employees of Facebook is different in every country. If the
wages of the employees are higher than they will have to pay the higher tax so they try to hide
their income. So the wage legislation is the political factor which also affects Facebook.
Democracy: The democracy in the country has been increased with the use of the social media
such as the Facebook as it helps in increasing the number of the votes in the politics (Deng and
Tavares, 2013). People get aware of the votes through social media so Facebook is helpful in
increasing the democracy in the country.
Political participation: Facebook becomes the greatest source for increasing and spreading the
information so people take a large number of participants through Facebook. So people
participate more through social sites and the political factors spread more in the country (Eesley
and Miller, 2018).
Changes in regulations: When any rules and regulations are changed by the government then
the business gets affected. If the; rules and regulations set by t eh government is in the favor of
the Facebook then the company could have the benefit for that and if the rules and regulations set
by the government are not in the favor of the Facebook then it could have the negative impact
(Colangelo and Maggiolino, 2017). The accounting scandals are set by the government which
has to be complied by the corporate ‘sector so this also impacts the profitability of the company.
Political stability: The business operation of Facebook gets affected by the political stability of
the country., if there is a lack of the political stability in the company then the profitability of the
company get lower but if the political stability in the company is higher than the profitability of
the company get increased (Schor, 2016).
Tariffs control: For increasing the price of the goods and services the imports are restricted. So
tariffs are the taxes which are imposed on foreign goods and services. It has been observed that
tariffs are hurting the American families and communities and have a higher completion rate
which affects the working of Facebook.

Environmental and consumer-protection legislation: It is the act which is set by the
government to protect the interests of the consumers and also makes provision to make it
effective. Whenever any disputes arose between the members of the employees and the
consumers then helps in the settlement of the consumer disputes. The main aim of environmental
legislation is to protect the environment so that the environment couldn’t be harm.
Levels of bureaucracy: As there is a different level of the bureaucracy in the market of a
government institution so it brings the level of the complexity in the employment system. The
procedures and the rules of the bureaucracy are very complex. So it becomes difficult for
Facebook to respond to the fast-changing business environment.
Implications of ‘sharing economy’ for your chosen organization
In the company Facebook, the sharing economy has a great impact as it grows and enables by the
internet. Sharing economy means sharing the resources, technology, and other useful things to
make the working organization more effective. In Facebook people share their photos, ideas,
news, and much other information to the other people and the company are making the money
from that. Facebook is hiring permanent employees and giving contracts to many people by
extending the talent and services in the economy. There are many people who work from home
and can earn money so this kind of facility is also provided by Facebook and this is the sharing
economy (Wilson, et al, 2012). With the help of the internet, the work of the people has become
easy. As people are using more Facebook through the internet so the pressure of the people has
been reducing through Facebook and inflation and the cost of living is also declined. Sharing
economy is the kind of the solving economy which focuses on the issues that have occurred in a
company which is related to the political, social and economic factors.
The sharing economy has given many benefits to Facebook such as it has increased the
accessibilities to the self-employment opportunities. With the use of the internet, the work of the
employees has become simpler as they can work while being home which offers the economic
benefits to the employees. Haring economy is also helpful in embeds a sense of trust in the
community as it contributes to both society and the environment. The trust between the different
community members of Facebook has been developed. the ratings have been given to Facebook
which results in evaluating the performance and if there were any implication or issues then the