Rob Enderle, of TechNewsWorld has written an article that claims, among other things, that Facebook is nothing but one huge Fraud. According to the publication, Facebook is not being honest to anyone about their company and most of the statistics that they claim are just plain made up. It’s an interesting read, that examines both the actual user base and the value of the advertisements, combined with the reality about the company and who really owns and runs it. Here are a few interesting points:
The number that is officially tossed out is 1 billion users, and there are 1 billion people who in some way come into contact with Facebook. But the implied assumption is that this 1 billion is connected to making a profit, and there lies the rub. However, the person being misled, which makes this interesting, isn’t the investor — it is the advertiser.
Stop for a moment. Name one ad you have ever seen on Facebook? Just one. Now if you can, and most I’ve spoken with can’t, name one time you have actually bought something based on that ad. I’ve bought things after seeing Internet ads, TV ads, magazine ads — but I’ll bet even if you remember seeing a Facebook ad, you haven’t ever bought anything based on it.
Facebook is marketed as a corporation, but it uses a unique format that lets Zuckerberg exclusively control the company. In short, it isn’t really a corporation as we would think of it; it is more like a limited partnership in which the limited — and virtually powerless — investors are represented by a powerless board.
I would think a structure like that would need to be fully understood by investors, because they should fully understand the risks of having a 28-year-old-billionaire in charge without real oversight before investing.
We did get a warning when Zuckerberg used investor money to buy Instagram, a tiny company, for $1 billion, as if it were out of his own pocket — no corporate oversight or board involvement.
You can read the full article here: Facebook is a Fraud