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. The company has been criticized for its lack of transparency and its role in the social media platform’s role in promoting hate and division.
This is not always the case. A private company can be a public organization if it discloses all information that is publicly available.
Facebook is a public company because it is owned by the people. The government has no control over its content or policies, and therefore Facebook is a public company.
The Difference Between Private vs. Public Organizations
The two types of firms have different ways of handling public disclosure. A private firm, such as a hedge fund, does not need to share their financial information with the public. This is because they are dealing on stock exchange and need to provide their financial report quarterly. On the other hand, a public firm, such as a company on the stock market, needs to share their financial information with the public every quarter. This is essential for transparency with its shareholders.
Understanding Facebook’s Intricate Public Status
Facebook was founded in 2004 by Mark Zuckerberg and a few other managers as a private organization. It wasn’t until 2012 that the decision was made concerning making Facebook’s shares to the public for purchase. In order to make Facebook more accessible to as many people as possible, it was decided in 2012 that its shares would be made available for purchase.
The IPO of Facebook was a great way for low-budget investors to invest in the company. The shareholders usually have some say in the company’s growth and direction, and their shares have “Vote” points which help them check their investment status and ROI.
Facebook still operates as a private company because of how Mark Zuckerberg designed its shares.
Facebook has divided its shares into two classes: stock A and stock B.
Stock A is the one that was available and was purchased by the average investors in 2012. 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. ..
Zuckerberg has a large majority of the voting power in Facebook, which gives him the ability to make decisions unilaterally. ..
Zuckerberg’s voting power and stock holdings give him significant control over Facebook’s future, even if he doesn’t have a majority of shares. This gives him the ability to steer the company in any direction he desires, regardless of shareholder opinion. ..
Facebook has a clause in their stock agreement that if an early investor sells their shares, it automatically converts them to Stock A. This 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.
The public and private 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. ..
Facebook’s privacy policy 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 private status of Facebook has a few benefits. For one, it allows Facebook to achieve long-term goals without any hassle. However, big decisions are made while considering the public opinion and its shareholders’ opinions; it is not likely to change unless Zuckerberg himself initiates the change.
Facebook has become a bloated and over-complicated platform, with too many people trying to do their own thing. This has led to confusion and chaos, and the site is no longer as useful as it once was. ..
Parting Words
While there can be, and have been, questions about its integrity as a public company, it cannot be denied that the lack of interventional scope by the Government leaves it open to censorship policies. ..
