Facebook started out as a free social media platform when it was created in 2004 by Mark Zuckerberg and his college roommates. For many years, Facebook has remained free to use for its core features like posting statuses, uploading photos, commenting on posts, joining groups and messaging friends. However, as Facebook has grown into one of the largest technology companies in the world, its business model has become more complex. So is Facebook really free or are users paying in other ways?
Is a Facebook account free?
The short answer is yes, creating a Facebook account and accessing the core Facebook features like your News Feed, posting statuses, commenting and messaging friends is completely free. Facebook generates the bulk of its revenue from selling advertising, not charging its users. As of June 2022, Facebook reported having 2.93 billion monthly active users worldwide. All of those accounts were created for free.
Facebook does offer some additional features and services that users have to pay for, such as Facebook Pay, Facebook Marketplace fees, in-app purchases on Facebook games, and subscriptions to Facebook Groups. But the main Facebook experience has always been free and likely will continue to be as that is central to the company’s ad-based business model.
How does Facebook make money if it’s free?
Facebook makes money by showing ads to its users. These ads come in many forms – sponsored posts in News Feeds, display ads on the sidebar, ads within Stories, ads in Marketplace and video ads that play before or during Facebook Watch videos. Advertisers pay Facebook to display these ads to its base of billions of users. Thanks to advanced ad targeting options, advertisers can zero in on specific demographics and user interests to make sure their ads are being shown to the people most likely to find their product, service or cause relevant. This targeted ad model has proven extremely lucrative for Facebook, allowing it to bringing in $29 billion in ad revenue in Q4 2021 alone.
Facebook’s ad targeting capabilities
What makes Facebook ads so valuable to advertisers is the granular data Facebook is able to collect on its user base for ad targeting purposes. Users provide a wealth of demographic and interest data directly to Facebook through their profiles as well as indirectly through their activity on the platform. Facebook also tracks users across devices and the rest of the web through its embedded Facebook pixels and social plugins. This gives Facebook incredibly detailed data on not just who its users are but what they like, what they buy and what they do all across the internet. Advertisers can take advantage of all this data to laser target their ads. Some of the ways Facebook enables detailed ad targeting include:
- Location
- Age
- Gender
- Interests and hobbies
- Relationship status
- Education level
- Job title and industry
- Pages and groups a user has liked or joined
- Purchase history and shopping patterns
- Mobile device and operating system
- Birthday
- Life events
- Contact info such as email address or phone number
Having this level of user data enables Facebook to charge advertisers premium rates to target ads to specific user segments who are likely to convert. And Facebook’s vast reach ensures that no matter how narrow the targeting, there is still a sizable audience that can be served the ads.
Does Facebook sell user data?
Facebook does not directly sell its users’ personal data to third parties or advertisers. However, it does allow advertisers to target users based on their data and serves ads to users based on the information Facebook has collected on them across its family of apps and services. So user data is still being leveraged and monetized, just not through direct sales.
Some key things to know about how Facebook handles user data:
- User data helps Facebook refine its ad targeting systems and algorithms.
- Advertisers can target users based on demographics, interests and behaviors derived from user data.
- Facebook shares data with its business partners and platforms that implement Facebook services.
- Academic researchers can request access to user data for approved research studies.
- Facebook has faced scrutiny over how it shares and protects user data.
While Facebook says it does not sell data in the traditional sense, its business fundamentally relies on leveraging user data to boost ad targeting and thus increase the value of ads on its platform. So user data is the lifeblood of the company’s ad sales even if not being directly packaged up and sold.
The cost of using Facebook
If Facebook is free, what exactly are users paying with then? While no monetary fee is required, using Facebook does come with more abstract costs.
Attention and time
The main ‘price’ of Facebook is the attention and time users give to the platform, time spent viewing ads and generating data through their engagement. The average user spends 38 minutes a day on Facebook and its family of products according to company data. Facebook captures this engaged attention and converts it into an opportunity to show highly targeted, relevant advertising.
Personal data and privacy
To enable its targeted ad business, Facebook collects massive amounts of data on its user base, including personal information many users may prefer to keep private. Things like relationship details, political and religious views, contact info and even purchase history can be scooped up by Facebook’s data gathering apparatus. Much of this occurs without explicit user consent as Facebook relies on dark patterns and confusing privacy settings. This data is then used to fuel a highly profitable advertising machine, raising ethical concerns about a lack of user agency.
Mental health and wellbeing
Research suggests that increased social media use and addiction can contribute to poorer mental health outcomes. Critics accuse Facebook’s algorithms of being intentionally addictive to boost engagement. Additionally, misleading or inflammatory content can lead to real world harm. While not empirically measured, these are potential costs to users’ mental wellbeing.
Security and hacking risks
Storing vast amounts of personal data also makes Facebook an attractive target for hacking and security breaches. The platform has exposed user data through vulnerabilities multiple times. Most recently in April 2022, 533 million Facebook accounts were compromised in a breach exposing emails, phone numbers, locations and other private info. Facebook’s poor security and negligence around user data puts people’s privacy and safety at risk.
Controversies around Facebook’s business practices
Facebook has faced intense scrutiny, especially in recent years, over its business model dependent on user data and targeted advertising. Here are some of the most high profile controversies:
Cambridge Analytica data scandal
In 2018 it was revealed that the data firm Cambridge Analytica accessed private information from 87 million Facebook user accounts without consent to build psychographic profiles and target political ads. This raised concerns about Facebook’s data practices and violation of user privacy.
Spread of misinformation and manipulation
Facebook’s algorithms favor engaging, shareable content which can help viral misinformation spread rapidly. Groups spreading fake news, propaganda or extremist content can manipulate the platform. Critics say Facebook has not done enough to curb this issue which has real world consequences.
Antitrust violations
Facebook has been repeatedly accused of violating antitrust laws by acquiring competitors like Instagram and WhatsApp to become a social media monopoly. The FTC and 48 states have sued Facebook for this, and some have called for Facebook to be broken up.
Harmful effects on teens
Facebook is accused of knowing its platforms like Instagram can be toxic and damaging to teens’ mental health and body image based on internal research. But the company allegedly hides this data and does little to address the issue or protect younger users.
Allowing election disinformation and insurrection
Facebook failed to stop the rampant spread of election disinformation and conspiracy theories after the 2020 U.S. presidential election, culminating in the Jan. 6 Capitol riots it helped organize. Critics say it puts profits over people and democracy.
Facebook has faced lawsuits, Congressional hearings and public outrage over these and other issues. But little has threatened its core ad-based business model built on user data and engagement.
Alternatives to Facebook
For users uncomfortable with Facebook’s data collection, targeted advertising and other issues, there are alternatives. Here are some options:
Delete or deactivate your Facebook account
If you no longer want Facebook collecting your data or impacting your online experience, fully deleting your Facebook account is an option. It’s a bit of a process requiring you to download your data first, but will remove your info from Facebook’s systems. You can also simply deactivate your account temporarily.
Adjust privacy settings
Keep using Facebook but lock down your privacy settings. Restrict ad targeting, limit sharing of profile info, opt out of certain tracking features and be choosy about what apps you allow.
Use ad blockers
Browser extensions like uBlock Origin can block Facebook ads and trackers from following you around the web.
Limit time on Facebook
Reduce your personal data collection by cutting down mindless Facebook browsing. Set a timer or allotted time per day or week for the platform.
Switch to alternative social networks
Sites like MeWe, Mastodon or Hive Social offer social media experiences without the same level of data collection or reliance on ads. Or ditch social media entirely.
The future of Facebook’s business model
Facebook has hit some stumbling blocks in recent years – slowing growth, loss of users, targeting restrictions on iOS, threats of regulation. But its core business continues churning along, still completely free for users and massively profitable from advertiser demand. However, as scrutiny rises and demographics shift, Facebook may need to seriously reconsider its approach.
Some possibilities Facebook has for the future include:
- Introducing a paid ad-free tier for users willing to pay a subscription fee
- Offering more services through Facebook Pay or Substack-like creator subscriptions
- Buying hot new startups like it did with Instagram and WhatsApp to stay competitive
- Pushing its metaverse vision to open up new revenue streams
- Finding ethical ways to monetize its messaging products
Facebook will likely aim to keep its social platforms free and accessible to preserve reach and engagement. But with pressures mounting, expect ongoing evolution of its business model going forward.
Conclusion
While no monetary payment is required, using the “free” Facebook platform certainly comes at a cost – namely the personal data and attention users hand over in exchange for access. Facebook then monetizes that data via targeted ads. This core business model has made Facebook extremely profitable but also extremely controversial as more downsides come to light around issues like data privacy, screen addiction, mental health and the spread of misinformation. However, Facebook has so far resisted any major moves to charge users fees or significantly back away from targeted ads built on user data collection. As long as the platform remains embedded in daily life for billions and advertisers find great value in access to those audiences, expect Facebook to stick to this successful blueprint. But increased scrutiny could force changes over time as users push back against the hidden costs of the platform.