Strategic Actions in a Platform Context: What Should Facebook Do Next?

This teaching case highlights the complex and unique strategic issues facing social media platform companies, using Facebook as the primary, motivating example. The case centers on the breach of trust that occurred when Cambridge Analytica acquired user data from 87 million Facebook accounts and then attempted to sway the 2016 U.S. Presidential election. The student is immersed in the context of Cambridge Analytica’s violation of user trust and asked to consider the key strategic issues confronting Facebook executives and the company’s ubiquitous platform. Economic concepts of a technology platform, such as network effects, switching costs, and lock-in, as well as overall platform strategy, are considered. Meanwhile, the technological concepts of designing a social media platform that engenders trust – one that balances the conflict between privacy and personalization – are stressed. An optional exercise on the functionality of application programming interfaces (APIs) is also provided. The target courses for the case include Information Systems Strategy, Digital and Social Media Strategy, and Managing Information Systems, at both the undergraduate and graduate levels. While the incidents surrounding Facebook and Cambridge Analytica have become politicized, the teaching case here focuses on the interaction of information systems and business strategy, not directly on the political atmosphere