“Babylon” is a symbol, a cipher (it is called a “mystery” in 17:5) that must be understood figuratively. It represents a world system with much power, influence and wealth (17:2-4, 15; 18:7, 16) and whose power and influence provides a model and encouragement for wickedness all over the world (17:4b-6; 18:3, 7, 9, 11-13). Babylon has encouraged wickedness by persecuting God’s people (17:6; 18:6), presumably because of her hatred of God and to remove their witness against her from the earth. Because of her wickedness, Babylon will be (has been) judged (18:4). Those she has subjugated will turn on her (17:16) and various calamities will befall her suddenly (18:8, 10, 17-19).
Based on this description, it is easy to conclude that the readers of John’s day would have seen this is a thinly veiled reference to Rome, the city set on seven hills, the seat of power and authority over the other kings of the earth, the head of commerce and trade, and the persecutor of the saints. There was precedent for the use of “Babylon” to describe Rome in Jewish apocalyptic literature (e.g., 2 Esdras), in the Sibylline Oracles (5:143), and by Peter (1 Peter 5:13).
So the immediate interpretation for John’s first generation of readers was most certainly Rome, who fits the description (17:9, 18) but it may encompass other kingdoms throughout the rest of human history (17:10-12). Once one takes into account the prophetic elements of the passage which speak of Babylon’s downfall, one may see this as yet unfulfilled. The characteristics of Babylon have been held by many earthly authorities since John’s time and may be held by more still. So while Babylon’s immediate referent is Rome, by extension, it may refer to whatever world power is in the forefront at a given time. This world system outlasts government and nations and rises up at various times and in various places, but its downfall is certain.