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They aren't providing software as a "service"- they're providing user data and eyeballs as a service.

You're confusing the business model (advertising) and the medium (software).

I think we've come far enough to realize that there are many business models to the concept of software being delivered in a browser as a service. The original model was companies paying a monthly fee for a subscription. Now we have many different types of models. The point is that FB makes an application for consumers and businesses. It is delivered as a service through a browser.

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