Is Facebook A Private Company?

The social media giant, Facebook, was designed to connect people worldwide by offering a dynamic – feature-rich platform that has genuinely transformed the impact of social media. In 2004, when Facebook was launched on the Internet, internet users found an ingenious way to stay in contact with friends and family. Let us know about “Is Facebook A Private Company?”

Is Facebook A Private Company?

Facebook has undergone significant changes over recent years, transitioning from a private company into a public one. Facebook is a public company with most decision-making power lying with one individual, offering a sense of privatization.

A common misconception when differentiating between public and private companies is that being a public organization requires disclosure of any information that’s private. 

Let’s gain a more objective view of whether Facebook is a private or a public company. The answer to the core question is bipartite – ‘public’ regarding stocks and ownership or ‘public’ regarding government control and censorship policies.

The Difference Between Private vs. Public Organizations

The key difference between these two types of firms is how they handle public disclosure. Private firms need not share their financial information to anyone, which isn’t the case with a public firms. The latter, since it is dealing on stock exchange, needs to provide their financial report quarterly. This is essential to maintain transparency with its shareholders. 

Understanding Facebook’s Intricate Public Status

Meta, formerly known as Facebook, is an American online social network service subset of the company Meta Platforms. When it was founded in 2004 by Mark Zuckerberg and a few other managers, like any other company, Facebook began its journey as a private organization. It wasn’t until 2012 that the decision was made concerning making Facebook’s shares to the public for purchase.

The IPO or Initial Public Offering of Facebook was $38 per share. This allowed low to average budget investors to invest in the company. The shareholders usually have some say in the company’s growth and direction of moving forward. Their shares have ‘Vote’ points which help them check their investment status and ROI.

However, despite selling its shares, Facebook still operates as a private company due to how Mark Zuckerberg designed its shares.

Facebook has divided its shares into stock A and Stock B. 

  • Stock A is the one that was available and was purchased in 2012 by the average investors. These shares have half the ‘Vote” points as Stock B shares.
  • The company’s early investors hold stock B shares. These constitute the bulk of the total vote points and are available to only a selected group of investors.

Most of the Stock B shares are held by Mark Zuckerberg himself, which allows him to act as the final authority for company decisions.

The Stocks, combined with Zuckerberg’s initial contracts with the early investors, have put him in a position where he may not have a majority of shares. Still, his voting points are enough to let him drive Facebook’s expansion in any direction he wants to.

An exciting clause that Facebook has regarding selling its shares is that if an early investor sells their Stock B shares, it automatically gets converted from Stock B to Stock A. That means that any investor buying Stock from one of the early investors is buying Stock A shares with a lower vote point than before. This ensures that the control of the company remains in Zuckerberg’s hands.

But not just in terms of Stock, The private and public status of a giant such as Facebook can be determined more than just in terms of their Stock. Whether a company is Government-owned or not is another factor that decides the public status of that organization. It refers to the role and control of government intervention and modification of company decisions. For instance, in the case of Facebook, even though an individual has the right to free speech backed by the Government, their posts and views on the social media platform giant can be censored if the company wants to. 

With so many questions surrounding its privacy policy, Facebook’s claim as a non-private company is confusing and often under scrutiny. The company has been accused of censoring and allowing some critical posts and pictures that could support particular propaganda. Suppose the control of all this information is with one person who can edit it based on their judgment. In that case, the company’s credibility and the public image get hampered when such incidents happen. 

The benefits of the private status of Facebook include a stable environment with minimal turbulence in its path, allowing it to attain long-term goals without any hassle. However, big decisions are made while considering the public opinion and its shareholders’ opinions; it will not likely change unless Zuckerberg himself initiates the change.  

“Too many cooks spoil the dish” is an apt proverb for Facebook’s current situation.

Parting Words

In conclusion, while there can be, and have been, questions about its integrity as a public company, it cannot be denied that it lacks enough interventional scope, even by the Government, to regulate its operations, decisions, and censorship policies.

Is Facebook A Private Company?

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