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Facebook make approx. 83% of their cash from advertising, and the rest from "other fees and services", such as in-game currency.
What makes Facebook so valuable and such a popular advertising platform is the amount of personal data they have about their users, which means adverts can be targeted at users' specific likes and interests. This is very valuable to the seller of whatever goods or services are being advertised as it results in higher sales than non-targeted advertising.
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