In this blog post, we’ll explore why executives at Facebook and other Silicon Valley tech companies are warning about the dangers of social media use and raising their children away from smartphones and digital devices.

Facebook, a Tech Giant Where Over 90% of Revenue Comes from Advertising

Founded in 2004, Facebook went through a rough adolescence in 2018. A child who has just started walking, with soft downy hair and a plump, squishy head, is adored wherever they go. But once they enter adolescence and their characteristic rebelliousness intensifies, it’s not easy to raise them without conflict—no matter how understanding the parents may be. Facebook, now entering adolescence, was no exception.
Throughout 2018, Facebook was plagued by data breaches and unfair competition scandals. Early in the year, allegations arose that the personal information of approximately 50 million Facebook users had been leaked and improperly used in the 2016 U.S. presidential election campaign. In September of the same year, a hacker attack put the personal information of approximately 50 million users at risk of exposure.
Toward the end of the year, the British Parliament analyzed Facebook’s confidential documents and published a 250-page report. The report revealed that while Facebook granted access to user data to its preferred companies, such as Airbnb and Netflix, it blocked access for competitors like Twitter. Critics accused the company of using access to user data as a weapon to restrict free competition. Along with this, revelations emerged that Facebook had exaggerated the effectiveness of its ads to advertisers.
As these allegations continued to surface, the image of Facebook—which had grown into the world’s largest social media platform under the slogan “Connecting everyone in the world to build a better world”—could not help but suffer a major blow. Founder and CEO Mark Zuckerberg, COO (Chief Operating Officer) Sheryl Sandberg, and other senior executives were forced to appear at a series of congressional hearings. Meanwhile, the company’s stock price had fallen by 21.8% (as of December 5, 2018) since January 1, 2018.

Facebook’s Reliance on Advertising for Revenue

In this chapter, we will examine the argument that Facebook’s revenue structure—which relies on advertising for 98% of its total revenue—is the root cause of the data breach crisis. In fact, contrary to their image as innovative companies paving the way for a new future based on cutting-edge ICT technology, Silicon Valley giants like Facebook and Google derive most of their revenue from advertising. Furthermore, based on testimony from former high-ranking Facebook executives, we will also examine the adverse effects that excessive use of social media has on individuals and society.
First, let’s look at the “Cambridge Analytica” scandal, in which allegations arose that the personal information of 50 million users was leaked and illegally used in a presidential election campaign. This incident is a prime example of how vulnerable social media companies like Facebook can be to data breaches.
The Cambridge Analytica scandal was one of the biggest crises Facebook has faced since its founding. This is because the company suffered a major blow when the personal information of 50 million people—a number equivalent to South Korea’s population—was leaked. What’s even more serious is that it didn’t stop at a simple data breach. Allegations arose that sensitive personal information, including users’ political leanings, was used to formulate election strategies for then-presidential candidate Donald Trump’s campaign.
The company accused of leading the data breach was Cambridge Analytica, a data analytics firm that had contracted with Republican presidential candidate Donald Trump during the 2016 U.S. presidential election. In 2014, the company distributed a personality quiz-style application to Facebook users. On the surface, it appeared to be a simple personality quiz app commonly found on Facebook. However, installing and using it collected not only basic information such as gender, place of residence, and occupation, but also most of the data stored on Facebook, including friends lists and lists of content the user had “liked.”
According to the British news outlet ‘The Guardian’, the data collected in this way was used to analyze not only users’ personalities but also their political and religious leanings, sexual orientation, and even whether their parents were divorced. It is also reported that the data was used to develop tailored election strategies—such as determining who should be exposed to articles or ads attacking an opponent’s weaknesses, what phrasing to use for voters with specific leanings, how to produce TV commercials, and in which regions and with what messages candidate Donald Trump should campaign.
If a data analytics firm was behind the data leak, one might assume that the firm itself—along with the campaign that used the data to formulate its election strategy—is at the heart of the problem. However, this incident cannot be viewed simply as a case of a single company stealing user information through malicious applications or hacking.
The personality test app in question was first distributed on a site called “Mechanical Turk,” operated by Amazon. This is a platform where researchers post surveys to collect data needed for their studies. Cambridge Analytica used this site to recruit American Facebook users who had installed the app to participate in surveys. Participants were paid a reward of $1 to $2.
Only about 270,000 users installed the application through Mechanical Turk. So how could the personal information of as many as 50 million people have been leaked? The reason is that the application had permission to access not only the information of the users who installed it but also that of their friends.
A look at Facebook’s basic business strategy helps explain why such permissions were granted to certain companies. Targeted ads posted on Facebook and ads encouraging the installation of specific applications are the company’s core sources of revenue. Companies want more accurate and diverse information about consumers. To sell more products and services, they need to understand who their consumers are and what they like and dislike. Naturally, the more information they possess, the better off they are.
The reason companies seek to obtain consumer information is to focus their advertising and marketing efforts on the groups most likely to purchase their products and services. For example, for a company selling baby products—such as bottles, diapers, formula, and toys—it is far more effective to advertise to couples raising young children or expecting a child. For a clothing brand selling relatively affordable suits, it would be more efficient to target young professionals just starting their careers.
Facebook, which understands these advertiser needs better than anyone, has developed this into a revenue model. It enables the display of targeted ads to users who are most likely to purchase products and services. For a fee, Facebook delivers ads to consumers who are most likely to buy the advertiser’s products and services.
Now, let’s take a look at how U.S. social media companies, including Facebook, actually generate revenue. Many people think of Facebook as a cutting-edge ICT company making massive investments in artificial intelligence or virtual reality. However, from the perspective of “how does it make money?”, Facebook is, in fact, closer to an advertising company. More precisely, it is a company that sells its vast advertising space to advertisers. It displays ads for a set period and receives a commission in return.
This fact can be easily confirmed by looking at its revenue figures. Of the $40.6 billion (approximately 43.5 trillion won) in annual revenue Facebook generated in 2017, about 42.6 trillion won—or 98%—came from advertising. Other IT companies also derive the majority of their revenue from advertising. Google, too, generated more than 80% of its total revenue through advertising that same year.
Platform businesses like Facebook and Google are fundamentally similar to operating a public square where people gather. Just as any product sells well when there are many people in a square, as the number of users increases, companies seeking to sell products to them naturally flock to the platform. Therefore, platform companies have a business model in which they grow by displaying ads from other companies and receiving payment in return.
Ultimately, attracting as many people as possible to the platform and keeping them there for as long as possible increases the revenue generated from selling ad space. That is why internet platform companies invest heavily in studying human psychology. However, there is no shortage of criticism that these efforts are driving users into a state bordering on addiction. Recently, as the adverse effects of excessive social media use on individuals and society have come to light one after another, criticism directed at platform companies has grown even louder.

Why Do Facebook Executives Stay Away from Social Media?

On January 23, 2018, the British news outlet ‘The Guardian’ published an article titled “Why Don’t Social Media Executives Use Social Media?” In the article, ‘The Guardian’ pointed out that among Facebook’s senior executives, almost none manage their Facebook accounts on a daily basis like ordinary users do. The article stated that most executives not only do not accept friend requests but also rarely make public posts, and even keep basic information—such as the number of friends—set to private. It added that Facebook’s top executives, who are more aware than anyone else of the adverse effects social media has on individuals’ emotions and mental health, are actually refraining from using social media themselves.
This raises a question.

“But I see in the news that Mark Zuckerberg frequently posts on his own Facebook account. If even the founder is an active user, why are they saying they don’t use it?”

This is a perfectly valid question. In fact, unlike other senior executives, Mark Zuckerberg is quite active on Facebook. However, strictly speaking, it’s difficult to view his use of Facebook as purely for personal purposes.
According to the U.S. business media outlet “Bloomberg,” there are at least 12 employees dedicated to managing Mark Zuckerberg’s Facebook account. Their role is to draft and review the posts and speeches Zuckerberg will publish. Even photos that appear to have been taken casually with family or friends are often shot by professional photographers in thoroughly prepared settings. For Mark Zuckerberg, his Facebook account is not simply a personal space but an official communication channel for conveying the company’s core messages.
In fact, during his visit to Beijing, China, in March 2016, Mark Zuckerberg posted a photo on Facebook of himself jogging in Tiananmen Square on a day shrouded in severe smog. This was interpreted as a symbolic gesture intended to send a message to the Chinese government asking it to lift the ban on Facebook.
As criticism grows that social media exploits human psychological vulnerabilities to drive users into a state bordering on addiction, some former Facebook executives have begun to join the chorus of criticism.
Facebook co-founder Sean Parker stated in October 2017, “Facebook focuses on getting users to spend as much time and conscious attention as possible on the platform. ‘When people click “Like” on someone’s photo or post, or leave a comment, they receive small bursts of dopamine-like stimulation.’” He later expressed a critical stance toward social media use, effectively signaling his intention to refuse to use it on moral grounds.
Chamath Palihapitiya, a former vice president at Facebook, also publicly criticized the company, saying, “The short-term, dopamine-driven feedback loops we’ve built are destroying the way society works. Social discourse and collaboration are disappearing, leaving only misinformation and lies.”
Hearing this criticism raised a question in my mind: “How exactly do executives at U.S. Silicon Valley tech companies like Facebook, Google, and Amazon raise their own children?” If they understand the negative effects of social media and digital device use better than anyone else, wouldn’t their approach to raising children differ from that of ordinary families?
After researching the topic, I was able to find my own answer. To cut to the chase, executives and experts working at cutting-edge Silicon Valley tech companies were raising their children in environments as far removed from digital devices as possible.
In fact, this has been common knowledge in the U.S. for several years now. In 2011, just as social media companies were beginning to grow in earnest, ‘The New York Times’ published an article titled “Silicon Valley Schools Without Computers.” According to the article, it was not uncommon for executives and experts working at Silicon Valley IT companies to send their children to schools that restricted the use of digital devices such as computers and smartphones.
These schools operate based on an alternative educational philosophy known as Waldorf education. Waldorf schools emphasize the belief that education takes place between people, not between people and machines. Until the age of seven, children’s daily lives center on activities that promote healthy physical development, and during elementary school, they focus on arts education designed to nurture emotional intelligence and creativity.
It is only around the time they graduate from middle school that they begin to learn how to use digital devices, such as computers, in earnest. Even then, rather than simply teaching how to use these tools, they first provide “digital literacy” education—helping students understand how the posts and photos they share on social media can affect their own future and those around them.
The fact that the titans of Silicon Valley—who lead the global market with cutting-edge IT technology—actually educate their own children to keep their distance from computers, smartphones, and social media raises many points for reflection.