How much of Facebook’s revenue comes from haram?

In addition to Facebook.com, Facebook Inc. also owns Instagram, WhatsApp, Oculus, Giphy and Mapillary, and has a 9.99% stake in Jio Platforms.

Facebook earns its revenue from the following revenue sources:

  • Advertising:

Includes revenue generated from displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications.

  • Other Revenue: 

Includes revenue generated from Facebook Reality Labs, consumer hardware devices, and net fees from developers using Facebook’s Payments infrastructure.

The contributions from each of Facebook’s revenue segments in their 2020 annual report were as follows:

Since Facebook relies almost exclusively on advertising revenue, it is laser focused on capturing as much of its users’ attention as possible often at the expense of the well-being of its users. 

If it needs to show vulgar and indecent posts to keep its users’ attention, then that’s what it will show.

If it needs to show conspiracy theories and political extremes, then that’s what it will show.

A business model where the interests of the business are at odds with the well-being of its customers is fundamentally unIslamic.

Not to mention revenue generated from advertisements that promote haram products/services, such as alcohol and gambling, is impermissible.

Practical Islamic Finance concludes:

A material portion of Facebook’s revenue comes from haram.

Does Facebook rely on interest to operate?

Year-to-Date
for period ended
6/30/2021
Fiscal year
ended
12/31/2020
Fiscal year
ended
12/31/2019
Interest Income (net)$239,000$672,000$904,000
Total Revenue$55,248,000$85,965,000$70,697,000
Interest Expense (net)
Total Expenses$31,503,000$53,294,000$46,711,000
Interest Income (net) / Revenue0.43%0.78%1.28%
Interest Expense (net) / Total Expense
*Numbers in thousands, U.S. dollars

Practical Islamic Finance concludes:

Riba is used but not relied upon in Facebook’s operations. 

What is Facebook’s Environmental, Social, and Governance (ESG) impact?

Environment

In 2020, Facebook achieved net-zero greenhouse gas emissions, 100% renewable energy use in its global operations, and restored nearly 5.8 million cubic meters of water in high water-stressed regions.

Social

Practical Islamic Finance believes Facebook’s platforms were likely created with positive intentions and have had some positive impacts.

That said, it is clear Facebook and its various platforms, like Instagram, have had negative consequences, including being used as tools to spread misinformation and extremist views as well as post immodest images and promote un-Islamic themes and media.

Governance

Facebook has a long history of getting in trouble for anti-competitive practices, sharing its users’ personal data with websites and advertisers, and in 2019, collecting audio messages from private voice chats on its Messenger app.

Practical Islamic Finance concludes:

Facebook has a net negative ESG impact.

Comfort Rating

From Facebook’s business, financial, and ESG reviews, Practical Islamic Finance rates Facebook stock as:

Uncomfortable to invest in from a Halal perspective.

Justification for our Rating

While Facebook and its various platforms certainly have some positive influences, the negative byproducts of continuously striving to grab larger shares of its customers’ attention, inadequate care for its customers’ privacy, and promotion of media that do not meet Islamic standards make us uncomfortable investing in Facebook from a halal perspective.

Sources

Facebook’s Latest Audio Transcription Scandal Exposes a Key Dilemma of AI 

Facebook Q2 2021 10-Q

Facebook 2020 10-K  

Sustainability Report 

How to Apply for Permission to Promote Online Gaming or Gambling 

Authors