Meta Platforms, Inc. (META) 2012年年度報告「NASDAQ」.pdf

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1、This has been an exciting and challenging year for Facebook.We connected one billion people,we transformed our products and business to be primarily focused on mobile,and we transitioned to being a public company.Our guiding compass is our mission:to give people the power to share and make the world

2、 more open and connected.This is why we are here.We try to help you stay connected with everyone you care about,give you a voice to share whats important to you,and hopefully make the world a little smaller as a result.Each step in our journey brings new opportunities to serve the world in new ways.

3、Over the next few years,our focus on our mission will lead us to work on a few of the worlds greatest opportunities.We can help redefine the relationship we all have with our phones and technology so its more about people and less about apps and features.We process the world through interacting with

4、 other people.Our technology should be personal and work in the same way.Its natural and its how were wired.The work were doing on Home is the start of this effort.We can help connect the next five billion people.Over the next five to ten years,most people with feature phones will get smart phones.S

5、ome of them will get smart phones just so they can use Facebook to stay connected with family and friends.We feel it is a great opportunityas well as our responsibilityto help everyone in the world get connected and join the modern knowledge economy.We can establish Facebook as one of the great econ

6、omic engines of our time.Small businesses will be able to acquire new customers and build deeper relationships than ever before.Great brands will be better able to tell their stories and build meaningful connections with consumers.E-commerce services will be able to sell products inline as millions

7、of people discuss them.Developers will have the tools to remake every product category and deliver new experiences to people everywhere.When I think about the world today,the thing that amazes me most is how many peoples lives are getting better every day by just getting online and joining the knowl

8、edge economy.As we all connect with the people we care about,with our communities,with businesses and with governments,we are all empowered.Together,we are about to see the most empowered generation in history.If Facebook can help enable this future,in the process we will build a global platform tha

9、t creates lasting value for people everywhere and a strong lasting company as well.These are technology problems and they are also social problems.This is the kind of work that Facebook,our culture and our community are uniquely built to do.I want to thank everyone at Facebook and in our community f

10、or helping us get so far.Our journey is 1%done.Im excited to build something great together.Mark ZuckerbergChairman and Chief Executive OfficerUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE

11、ACT OF 1934For the fiscal year ended December 31,2012orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period fromtoCommission File Number:001-35551FACEBOOK,INC.(Exact name of registrant as specified in its charter)Delaware20-1665019(State or

12、other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification Number)1601 Willow Road,Menlo Park,California 94025(Address of principal executive offices and Zip Code)(650)308-7300(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of th

13、e Act:Class A Common Stock,$0.000006 par valueThe NASDAQ Stock Market LLC(Title of each class)(Name of each exchange on which registered)Securities registered pursuant to Section 12(g)of the Act:None(Title of class)Indicate by check mark if the registrant is a well-known seasoned issuer,as defined i

14、n Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities

15、Exchange Act of 1934(Exchange Act)during the preceding 12 months(or for such shorter period that the registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically

16、and posted on its corporate Website,if any,every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12months(or for such shorter period that the registrant was required to submit and post such files).Yes No Ind

17、icate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(229.405 of this chapter)is notcontained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statementsincorporated by reference in Part III of this Form

18、10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smallerreporting company.See definition of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of t

19、heExchange Act.(Check one):Large accelerated filer Accelerated filerNon-accelerated filer(Do not check if a smaller reporting company)Smaller reporting companyIndicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market va

20、lue of the voting and non-voting stock held by non-affiliates of the registrant as of June 29,2012,the lastbusiness day of the registrants most recently completed second fiscal quarter,was$47,206,114,899 based upon the closing price reportedfor such date on the NASDAQ Global Select Market.On January

21、 29,2013 the registrant had 1,684,185,170 shares of Class A common stock and 697,948,924 shares of Class B common stockoutstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants Proxy Statement for the 2013 Annual Meeting of Stockholders are incorporated herein by reference in Part I

22、IIof this Annual Report on Form 10-K to the extent stated herein.Such proxy statement will be filed with the Securities and ExchangeCommission within 120 days of the registrants fiscal year ended December 31,2012.FACEBOOK,INC.FORM 10-KTABLE OF CONTENTSNote About Forward-Looking Statements.3Limitatio

23、ns of Key Metrics.4PART IItem1.Business.5Item1A.Risk Factors.16Item 1B.Unresolved Staff Comments.37Item 2.Properties.37Item 3.Legal Proceedings.37Item 4.Mine Safety Disclosures.38PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases ofEquity Securities.3

24、9Item 6.Selected Financial Data.41Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.43Item 7A.Quantitative and Qualitative Disclosures About Market Risk.66Item 8.Financial Statements and Supplementary Data.68Item 9.Changes in and Disagreements with Accountan

25、ts on Accounting and Financial Disclosure.101Item 9A.Controls and Procedures.101Item 9B.Other Information.101PART IIIItem 10.Directors,Executive Officers and Corporate Governance.102Item 11.Executive Compensation.102Item 12.Security Ownership of Certain Beneficial Owners and Management and Related S

26、tockholderMatters.102Item 13.Certain Relationships and Related Transactions,and Director Independence.102Item 14.Principal Accounting Fees and Services.102PART IVItem 15.Exhibits,Financial Statement Schedules.103Signatures.1042NOTE ABOUT FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K cont

27、ains forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995.All statements contained in this Annual Report on Form 10-K otherthan statements of historical fact,including statements regarding our future results of operations and financialposition,our busi

28、ness strategy and plans,and our objectives for future operations,are forward-lookingstatements.The words“believe,”“may,”“will,”“estimate,”“continue,”“anticipate,”“intend,”“expect,”andsimilar expressions are intended to identify forward-looking statements.We have based these forward-lookingstatements

29、 largely on our current expectations and projections about future events and trends that we believe mayaffect our financial condition,results of operations,business strategy,short-term and long-term businessoperations and objectives,and financial needs.These forward-looking statements are subject to

30、 a number ofrisks,uncertainties and assumptions,including those described in Part I,Item 1A,“Risk Factors”in this AnnualReport on Form 10-K.Moreover,we operate in a very competitive and rapidly changing environment.New risksemerge from time to time.It is not possible for our management to predict al

31、l risks,nor can we assess the impactof all factors on our business or the extent to which any factor,or combination of factors,may cause actualresults to differ materially from those contained in any forward-looking statements we may make.In light ofthese risks,uncertainties and assumptions,the futu

32、re events and trends discussed in this Annual Report on Form10-K may not occur and actual results could differ materially and adversely from those anticipated or implied inthe forward-looking statements.We undertake no obligation to revise or publicly release the results of any revision to these for

33、ward-lookingstatements,except as required by law.Given these risks and uncertainties,readers are cautioned not to placeundue reliance on such forward-looking statements.Unless expressly indicated or the context requires otherwise,the terms“Facebook,”“company,”“we,”“us,”and“our”in this document refer

34、 to Facebook,Inc.,a Delaware corporation,and,where appropriate,its whollyowned subsidiaries.The term“Facebook”may also refer to our products,regardless of the manner in which theyare accessed.3LIMITATIONS OF KEY METRICSThe numbers of our monthly active users(MAUs),daily active users(DAUs),mobile MAU

35、s,and averagerevenue per user(ARPU)are calculated using internal company data based on the activity of user accounts.While these numbers are based on what we believe to be reasonable estimates of our user base for the applicableperiod of measurement,there are inherent challenges in measuring usage o

36、f our products across large online andmobile populations around the world.For example,there may be individuals who maintain one or moreFacebook accounts in violation of our terms of service.We estimate,for example,that“duplicate”accounts(anaccount that a user maintains in addition to his or her prin

37、cipal account)may have represented approximately5.0%of our worldwide MAUs as of December 31,2012.We also seek to identify“false”accounts,which wedivide into two categories:(1)user-misclassified accounts,where users have created personal profiles for abusiness,organization,or non-human entity such as

38、 a pet(such entities are permitted on Facebook using a Pagerather than a personal profile under our terms of service);and(2)undesirable accounts,which represent userprofiles that we determine are intended to be used for purposes that violate our terms of service,such asspamming.As of December 31,201

39、2,for example,we estimate user-misclassified accounts may haverepresented approximately 1.3%of our worldwide MAUs and undesirable accounts may have representedapproximately 0.9%of our worldwide MAUs.We believe the percentage of accounts that are duplicate or false ismeaningfully lower in developed m

40、arkets such as the United States or Australia and higher in developingmarkets such as Indonesia and Turkey.However,these estimates are based on an internal review of a limitedsample of accounts and we apply significant judgment in making this determination,such as identifying namesthat appear to be

41、fake or other behavior that appears inauthentic to the reviewers.As such,our estimation ofduplicate or false accounts may not accurately represent the actual number of such accounts.We are continuallyseeking to improve our ability to identify duplicate or false accounts and estimate the total number

42、 of suchaccounts,and such estimates may change due to improvements or changes in our methodology.Some of our historical metrics through the second quarter of 2012 have also been affected by applicationson certain mobile devices that automatically contact our servers for regular updates with no user

43、action involved,and this activity can cause our system to count the user associated with such a device as an active user on the daysuch contact occurs.For example,we estimate that less than 5%of our estimated worldwide DAUs as ofDecember 31,2011 and 2010 resulted from this type of automatic mobile a

44、ctivity,and that this type of activityhad a substantially smaller effect on our estimate of worldwide MAUs and mobile MAUs.The impact of thisautomatic activity on our metrics varies by geography because mobile usage varies in different regions of theworld.In addition,our data regarding the geographi

45、c location of our users is estimated based on a number offactors,such as the users IP address and self-disclosed location.These factors may not always accurately reflectthe users actual location.For example,a mobile-only user may appear to be accessing Facebook from thelocation of the proxy server t

46、hat the user connects to rather than from the users actual location.Themethodologies used to measure user metrics may also be susceptible to algorithm or other technical errors.Forexample,in early June 2012,we discovered an error in the algorithm we used to estimate the geographic locationof our use

47、rs that affected our attribution of certain user locations for the period ended March 31,2012.While thisissue did not affect our overall worldwide MAU number,it did affect our attribution of users to differentgeographic regions.We estimate that the number of MAUs as of March 31,2012 for the United S

48、tates&Canadaregion was overstated as a result of the error by approximately 3%and these overstatements were offset byunderstatements in other regions.Our estimates for revenue by user location and revenue by user device are alsoaffected by these factors.We regularly review and may adjust our process

49、es for calculating these metrics toimprove their accuracy.In addition,our MAU and DAU estimates will differ from estimates published by thirdparties due to differences in methodology.For example,some third parties are not able to accurately measuremobile users or do not count mobile users for certai

50、n user groups or at all in their analyses.The numbers of MAUs,DAUs,and mobile MAUs discussed in this Annual Report on Form 10-K,as wellas ARPU,do not include users of Instagram unless such users would otherwise qualify as MAUs,DAUs,andmobile MAUs,respectively,based on activity that is shared back to

51、 Facebook.In addition,our other userengagement metrics,such as friend connections,do not include Instagram unless otherwise specifically stated.4PART IItem 1.BusinessOverviewOur mission is to make the world more open and connected.Millions of people come to Facebook every day to stay connected with

52、their friends and family,to discoverwhat is going on in the world around them,and to share and express what matters to them to the people they careabout.Developers can use the Facebook Platform to build applications(apps)and websites that integrate withFacebook to reach our global network of users a

53、nd to build products that are more personalized and social.Marketers can engage with more than one billion monthly active users on Facebook or subsets of our usersbased on information people have chosen to share with us such as their age,location,gender,or interests.Weoffer marketers a unique combin

54、ation of reach,relevance,social context,and engagement to enhance the value oftheir ads.We believe that we are at the forefront of enabling faster,easier,and richer communication between peopleand that Facebook has become an integral part of many of our usersdaily lives.2012 HighlightsWe had 1.06 bi

55、llion monthly active users(MAUs)as of December 31,2012,an increase of 25%ascompared to 845 million MAUs as of December 31,2011.We had 618 million daily active users(DAUs)on average in December 2012,an increase of 28%ascompared to 483 million DAUs in December 2011.We had 680 million MAUs who used Fac

56、ebook mobile products in December 2012,an increase of57%as compared to 432 million MAUs who used Facebook mobile products in December 2011.There were more than 150 billion friend connections on Facebook as of December 31,2012.On average more than 350 million photos per day were uploaded to Facebook

57、in the fourth quarter of2012.Over 240 billion photos have been shared on Facebook.As of December 31,2012,there were more than 50 million Pages with ten or more Likes.In August 2012,we acquired Instagram,a photo-sharing service with over 100 million registered users.In 2012,we released a number of ne

58、w Facebook apps for iPhone,iPad,and Android devices.Thesereleases were built to improve the speed and quality of our mobile product offerings.In 2012,we introduced features that give marketers new ways to reach people who use Facebook.These include ads in News Feed on both desktop and mobile devices

59、 and Custom Audiences,a featurethat allows marketers to find their offline customers among Facebook users,and Facebook Exchange(FBX),a real-time bidded ad exchange.How We Create Value for UsersOur top priority is to build useful and engaging products that enable you to:Connect and Share with Your Fr

60、iends.With more than one billion MAUs worldwide,Facebook usersare increasingly able to find and stay connected with their friends,family,and colleagues on Facebook.Discover and Learn.We believe that people come to Facebook to discover and learn more about whatis going on in the world around them,par

61、ticularly in the lives of their friends and family and with5public figures and organizations that interest them.Each persons experience on Facebook is uniquebased on the content shared by his or her friends and connections.This content is personalized for eachuser in our products such as News Feed a

62、nd Timeline.Express Yourself.We enable people to share and publish their opinions,ideas,photos,and activities toaudiences ranging from their closest friends to our one billion users,giving everyone a voice within theFacebook community.Through Facebooks privacy and sharing settings,people can control

63、 what theyshare and with whom they share it.Stay Connected Everywhere.People can access Facebook through our website,mobile sites,smartphone apps,and feature phone products.Through apps and websites built by developers using theFacebook Platform,people can interact with their Facebook friends while

64、playing games,listening tomusic,watching movies,reading news,and engaging in other activities across the web and on mobiledevices.Our product development approach is centered on building the most useful tools that enable people toconnect,share,discover,and communicate with each other on mobile devic

65、es and computers.Timeline.Timeline allows people to organize and display the events and activities that matter most tothem,enabling them to curate their memories in a searchable personal narrative that is organizedchronologically.People choose what information to share on their Timeline,such as thei

66、r interests,photos,education,work history,relationship status,and contact information,and people can controlwith whom each piece of content is shared on their Timeline.News Feed.The Facebook News Feed is the core feature of a persons homepage and is a regularlyupdating list of stories from friends,P

67、ages,and other entities to which the person is connected onFacebook.It includes posts,photos,event updates,group memberships,app updates,and otheractivities.Each persons News Feed is personalized based on his or her interests and the sharingactivity of his or her friends.Stories in a users News Feed

68、 are prioritized based on several factors,including how many friends have Liked or Commented on a certain piece of content,who posted thecontent,and what type of content it is.Photos and Videos.Facebook is the most popular photo uploading service on the web.People canupload an unlimited number of hi

69、gh resolution photos,create photo albums,and share them with theirfriends or any audience they choose.Users can also upload and share videos.People can set specificprivacy settings for each of their photo albums and videos,making them visible to everyone,or only tocertain friends.In addition,in 2012

70、,we acquired Instagram,a mobile phone-based photo-sharingservice,to enhance our photos product offerings and to enable users to increase their levels of mobileengagement and photo sharing.Messages.Our messaging products include email,chat,and text messaging.The delivery of messagesis optimized for t

71、he device through which the person is accessing Facebook.We aim to be the fastestand most reliable way for users to communicate through:-Email.Users can set up a free address.-Chat.Users can send messages to their friends in an instant message format.-Text Messaging.Users can activate text messaging

72、 on Facebook,allowing the texts they exchangewith friends to be incorporated into their respective conversations along with their message andchat history.How We Create Value for Developers Through the Facebook PlatformThe Facebook Platform is a set of development tools and application programming in

73、terfaces(APIs)thatenables developers to easily integrate with Facebook to create social apps and websites and to reach our more6than one billion users.More than 10 million apps and websites were integrated with Facebook as ofDecember 31,2012.We are focused on providing Platform developers with uniqu

74、e opportunities to increase theirgrowth,engagement,and monetization,while offering users new ways to connect with their friends throughthings like games,music,fitness and video apps.Facebook offers tools and APIs that enable developers to increase growth,engagement and monetization.Growth.We enable

75、Platform developers to reach our global user base and use our distribution channelslike News Feed and App Center to increase traffic to their apps and websites.Engagement.We enable Platform developers to create better products that are personalized and socialand that offer new ways for our users to

76、engage with friends and share experiences across mobiledevices and on the web.Monetization.We provide an online payments infrastructure that enables Platform developers toreceive payments from our users in an easy-to-use,secure,and trusted environment.In 2012,ourPlatform developers received more tha

77、n$1.96 billion from transactions enabled by our Paymentsinfrastructure.Key elements of the Facebook Platform include:Open Graph.Our underlying Platform is a set of APIs that developers can use to build apps andwebsites that enable users to share their activities with friends on Facebook.As Open Grap

78、h connectedapps and websites become an important part of how users express themselves,activities such as thebooks people are reading,the movies people want to watch and the songs they are listening to are moreprominently displayed throughout Facebooks Timeline and News Feed.This enables developer ap

79、psand websites to become a key part of the Facebook experience for users and can increase growth andengagement for developers.Social Plugins.Social plugins,such as the Like button,are social features that developers can easilyintegrate with their websites by incorporating a few lines of HTML code.So

80、cial Plugins enabledevelopers to provide engaging and personalized social experiences to their users.Payments.Facebook provides an online payments infrastructure that enables developers to receivepayments from users through an efficient and secure system.Our Payments infrastructure enables userson p

81、ersonal computers to purchase virtual or digital goods from developers and third-party websites byusing debit and credit cards,PayPal,mobile phone payments,gift cards or other methods.Currently,substantially all of our Payments revenue is from users purchases of virtual goods used in socialgames.We

82、receive a fee of up to 30%when users make such purchases from our Platform developersusing our Payments infrastructure.Mobile applications integrated with our Platform do not utilize ourPayments infrastructure.How We Create Value for MarketersWe focus on providing value for all kinds of marketers,in

83、cluding brand marketers,direct marketers,smalland medium-sized businesses,and developers by offering a unique combination of reach,relevance,socialcontext,and engagement:Reach.With over one billion MAUs,Facebook offers marketers the ability to reach a vast consumeraudience.Relevance.Marketers can ta

84、rget users on Facebook based on demographic factors such as age,location,gender,education,work history,and specific interests that users have chosen to share with uson Facebook.In addition,marketers may choose to match their own data or third-party data with ours,so they can find their customers or

85、those who look like them directly on Facebook.We believe thatusers have a better experience when ads are effectively tailored and,therefore,more relevant to them.7Social Context.We believe that the recommendations of friends have a powerful influence onconsumer interest and purchase decisions.We off

86、er marketers the ability to include“social context”with their marketing messages.Social context is information that highlights a friends connections witha particular brand or business.Engagement.We believe that the shift to a more social web creates new opportunities for businesses toengage with int

87、erested customers.Many of our ad products offer new and innovative ways for ourmarketers to interact with our users,such as ads that encourage comments,include polls,invite peopleto an event or help users discover and install mobile applications.Any brand or business can have a presence on Facebook

88、by creating a Facebook Page.Through Pages,we give brands the opportunity to form direct and ongoing relationships with their existing andprospective customers,with the potential to turn them into valuable advocates.When a Facebook user“Likes”a Page,the Page owner has the opportunity to publish stori

89、es to the persons News Feed on anongoing basis.We believe that this ongoing connection provides businesses with a significantadvantage as compared to advertising on traditional websites.In addition,businesses can use Pages todrive awareness,traffic to their e-commerce websites or physical stores,sal

90、es,and ultimately customerloyalty.We do not charge businesses for their Pages,nor do we charge for the resulting organicdistribution of their content.However,Page owners can use Facebook ads to reach a larger audience orutilize our Promoted Posts feature,which enables businesses to pay a fixed fee t

91、o boost the distributionof posts that they care about to people who have“Liked”the Page,to gain more prominent distribution.Facebook offers products and tools that enable marketers to leverage our unique combination of reach,relevance,social context,and engagement.Facebook Ads.Our ads,including spon

92、sored stories,offer businesses the opportunity to direct a user tospecific content,a destination web page or a Facebook Page if the user clicks on the ad.Our adsprovide our users with a consistent ad experience and enable marketers to deploy and adjust campaignsrapidly.Currently,ads can appear in mu

93、ltiple locations including in the right-hand side of most page types onpersonal computers,and in the News Feed on personal computers and mobile devices.Ads with socialcontext allow marketers to highlight the interactions of a users friends with a brand or product,such asLiking or Commenting on the m

94、arketers Facebook Page.Ads with social context respect usersprivacy settings and may be shown only to the people users have already shared their activity with onFacebook.Facebook Ad System.When marketers create an ad campaign on Facebook,they specify the types ofusers they want to reach based on inf

95、ormation that users chose to share.In addition,marketers can useother products such as FBX and Custom Audiences to more precisely target their desired audience.Marketers indicate the maximum price they are willing to pay for their ad,per click(CPC)or perthousand impressions(CPM),and their maximum bu

96、dget.Our system also supports guaranteeddelivery of a fixed number of ad impressions for a fixed price.Facebooks ad serving technologydynamically determines the best available ad to show each person based on the combination of thepersons unique attributes and the real-time comparison of bids from el

97、igible ads.Ad Analytics and Facebook Insights.Marketers can use our analytics platform to track and optimizethe performance of their campaigns.Facebook Ad Analytics enable marketers to gain insights intowhich ads were displayed and clicked on.These analytics help marketers make modifications to thei

98、rad campaigns to maximize results.For marketers with Facebook Pages,Facebook Insights provides timely information about theperformance of their Page and related posts.The data include the number of users who Liked andCommented on the Page and a metric,“People Talking About This,”which shows how many

99、 storiesabout the marketers brand are being created and shared,among other aggregated and anonymizedengagement data.8Our StrategyWe are in the early stages of pursuing our mission to make the world more open and connected.We believewe have a significant opportunity to further enhance the value we de

100、liver to users,developers,and marketers.Key elements of our strategy are:Expand Our Global User Community.There are more than 1.5 billion internet users on personalcomputers,and more than three billion mobile users worldwide according to GSMA WirelessIntelligence,and we aspire to someday connect all

101、 of these people.As of December 31,2012,we had1.06 billion MAUs globally with approximately 84%accessing Facebook from outside the UnitedStates.We continue to focus on increasing the number of people using Facebook across allgeographies,including relatively less-penetrated,large markets such as Braz

102、il,India,Mexico andJapan.We intend to increase the size of our network by continuing our marketing and user acquisitionefforts and enhancing our products,including mobile apps,in order to make Facebook more accessible,useful and engaging.Build Great Social Products to Increase Engagement and Provide

103、 the Most Compelling UserExperience.We prioritize product development investments that we believe will create engaginginteractions between our users,developers,and marketers.We continue to invest significantly inimproving our core products such as News Feed,Timeline,and Photos,developing new product

104、s,andenabling new Platform apps and website integrations.To provide the most compelling user experience,we continue to develop products and technologies focused on optimizing our social distributionchannels to deliver the most useful content to each user by analyzing and organizing vast amounts ofin

105、formation in real time.Make our Mobile Products Engaging and Easily Available.We are devoting substantial resources todeveloping mobile products and experiences for a wide range of platforms,including smartphones andfeature phones.In addition,we are working across the mobile industry with operators,

106、hardwaremanufacturers,operating system providers,and developers to improve the Facebook experience onmobile devices and make Facebook available to more people around the world.We had 680 millionMAUs who used Facebook mobile products in December 2012.In August 2012,we acquiredInstagram,Inc.,which has

107、 built a mobile phone-based photo-sharing service that enables people toincrease their levels of mobile engagement and sharing.We believe that mobile usage of Facebook iscritical to user growth and engagement over the long term,and accordingly are prioritizing mobileproduct development.Enable Develo

108、pers to Build Great Social Products Using the Facebook Platform.The success ofPlatform developers and the vibrancy of our Platform ecosystem are part of our strategy to increaseuser engagement.Social games have achieved significant levels of adoption by people using Facebook,and we are also focused

109、on working with leading app developers in categories such as news,movies,books,fitness and music.Engagement with our Platform developers apps and websites can createvalue for Facebook in multiple ways:our Platform supports our advertising business because apps onFacebook create engagement that enabl

110、es us to show ads;our Platform developers may purchaseadvertising on Facebook to drive traffic to their apps and websites;Platform developers use ourPayment infrastructure to facilitate transactions with users on personal computers;Platform apps sharecontent with Facebook that makes our products mor

111、e engaging;and engagement with Platform appsand websites contributes to our understanding of peoples interests and preferences,improving ourability to personalize content.We continue to invest in tools and APIs that enhance the ability ofPlatform developers to deliver products that are more social a

112、nd personalized and better engage peopleon Facebook,on mobile devices and across the web.Improve Ad Products for Marketers and Users.We are investing to improve our ad products in orderto attract more marketers to work with Facebook,to create more value for our marketers,and toenhance their ability

113、to make their advertising more relevant for users.Our advertising strategy centerson the belief that ad products that are social,relevant,and well-integrated with other content on9Facebook can enhance the user experience while providing an attractive return for marketers.Weintend to invest in additi

114、onal products for our marketers,such as ads in News Feeds on personalcomputers and mobile devices,while continuing to balance our monetization objectives with ourcommitment to optimizing the user experience.We will continue to work to develop new tools such asCustom Audiences that help marketers to

115、target their ads most effectively and thereby increases theirreturn on ad spend.We also continue to focus on analytics and measurement tools to evaluate,demonstrate,and improve the effectiveness of ad campaigns on Facebook.Build a Scalable Infrastructure to Provide the Most Compelling,Robust,and Rel

116、iable ProductExperience.We are investing in software and hardware infrastructure that enables us to provide aunique,personalized experience to each of our users around the world.We believe the speed andreliability of our products are important competitive advantages.Building and Maintaining User Tru

117、stTrust is a cornerstone of our business.We dedicate significant resources to the goal of building user trustthrough developing and implementing programs designed to protect user privacy,promote a safe environment,and assure the security of user data.The resources we dedicate to this goal include en

118、gineers,analysts,lawyers,policy experts,and operations specialists,as well as hardware and software from leading vendors and solutionswe have designed and built.Privacy and Sharing.People come to Facebook to connect and share.Protecting user privacy is animportant part of our product development pro

119、cess.Our objective is to give users choice over whatthey share and with whom they share it.This effort is fundamental to our business and focuses oncontrol,transparency,and accountability.-Control.We believe that by providing our users with clear and easy-to-use controls,we willcontinue to promote t

120、rust in our products.For example,when a user posts a status update oruploads a photo to Facebook,our in-line controls allow the user to select his or her audience at thesame time that he or she is publishing the post.In addition,we provide other data managementtools.“Activity Log”is a unified tool t

121、hat people can use to review and manage the content theyhave posted and the actions they have taken on Facebook.When using the Activity Log,a usercan view his or her activity with a particular app,delete a specific post,change who can see aphoto,or remove an app completely.Additionally,our“Download

122、Your Information”tool enablesusers to remove or store their personal information off of Facebook.-Transparency.Our Data Use Policy describes in plain language our data use practices and howprivacy works on Facebook.We also offer a number of tools and features that provide users withtransparency abou

123、t their information on Facebook.Our application settings feature enables users toview each of the apps they have chosen to use,the information needed by each app,and the audiencewith whom the user has chosen to share his or her interactions with each app.We believe that thistransparency enables peop

124、le to make more informed decisions about their activities on Facebook.-Accountability.We continue to build new procedural safeguards as part of our comprehensiveprivacy program.These include a dedicated team of privacy professionals who are involved innew product and feature development from design

125、through launch;ongoing review andmonitoring of the way data is handled by existing features and apps;and rigorous data securitypractices.We regularly work with online privacy and safety experts and regulators around theworld.In August 2012,the Federal Trade Commission formally approved a 20-year agr

126、eement toenhance our privacy program.We made a clear and formal long-term commitment to giving userstools to control how they share on Facebook.We also have undergone two audits by the Office ofthe Irish Data Protection Commissioner.The audits comprehensively reviewed our compliancewith Irish data p

127、rotection law,which is grounded in European data protection principles.As partof the audit process,we agreed to enhance various data protection and privacy practices to ensurecompliance with the law and adherence to industry best practices.10Safety.We design our products to include safety tools.Thes

128、e tools are coupled with educationalresources and partnerships with online safety experts to offer protections for all users,particularlyteenagers.We take into account the unique needs of teenagers who use our service and employ age-appropriate settings that restrict their visibility,limit the audie

129、nce with whom they can share,and helpprevent unwanted contact from strangers.Our abuse reporting infrastructure allows anyone on Facebook to report inappropriate,offensive,ordangerous content through“report”links found throughout our site.We have enhanced this reportingsystem to include“Social Repor

130、ting,”which gives users the option to report content to us,to reportcontent to a trusted friend,or to block the person who posted the content with one easy-to-use tool.OurSafety Advisory Board,comprised of five leading online safety organizations from around the world,advises us on product design an

131、d helps us to create comprehensive safety resources for everyone whouses our service.These resources are located in our multimedia Family Safety Center on our website,which also offers special information for parents,educators,teenagers,and members of the lawenforcement community.Additionally,we wor

132、k with law enforcement to help promote the safety ofour users as required by law.Security.We invest in technology,processes,and people as part of our commitment to safeguardingour usersinformation.We use a variety of techniques to protect the data that we are entrusted with,and we rely on multiple l

133、ayers of network segregation using firewalls to protect against attacks orunauthorized access.We also employ proprietary technologies to protect our users.For example,if wesuspect that a users account may have been compromised,we may use a process that we refer to as“social authentication”to validat

134、e that the person accessing the account is the actual account holder.The process of social authentication may include asking the person accessing the account to identifyphotos of the account holders friends.Our security team actively scans for security vulnerabilitiesusing commercial tools,penetrati

135、on tests,code security reviews,and internal and external audits.Wealso have a network of geographically distributed single-tenant data centers,and we take measures toprotect the information stored in these data centers.CompetitionOur business is characterized by innovation,rapid change,and disruptiv

136、e technologies.We face significantcompetition in every aspect of our business,including from companies that provide tools to facilitate the sharingof information,that enable marketers to display personalized advertising and that provide development platformsfor application-developers.We compete with

137、 the following:Companies that offer full-featured products that replicate the range of communications and relatedcapabilities we provide.These offerings include,for example,Google+,which Google has integratedwith certain of its products,including search and Android,as well as other,largely regional,

138、socialnetworks that have strong positions in particular countries,such as Mixi in Japan and vKontakte andOdnoklassniki in Russia.Companies that develop applications,particularly mobile applications,that replicate discretecapabilities we provide,such as photo-sharing,messaging,and micro-blogging.Comp

139、anies that provide web-and mobile-based information and entertainment products and servicesthat are designed to engage users.Companies that offer platforms for game developers to reach broad audiences with free-to-play gamesincluding Apples iOS and Googles Android mobile platforms.Traditional and on

140、line businesses that provide media for marketers to reach their audiences and/ordevelop tools and systems for managing and optimizing advertising campaigns.We compete to attract,engage,and retain users,to attract and retain marketers,to attract and retaindevelopers to build compelling apps and websi

141、tes that integrate with Facebook,and to attract and retain highlytalented individuals,especially software engineers,designers,and product managers.11As we introduce new products,as our existing products evolve,or as other companies introduce newproducts and services,we may become subject to addition

142、al competition.TechnologyWe have assembled a team of highly skilled engineers and computer scientists whose expertise spans abroad range of technical areas.We make significant investments in product and feature development,datamanagement and personalization technologies,large-scale systems and scala

143、ble infrastructure,mobiletechnologies,and advertising technologies,including:Product and Feature Development.We aim to improve our existing products continuously and todevelop new products for our users,developers,and marketers.Our product development philosophy iscentered on continuous innovation i

144、n creating products that are social by design,which means that ourproducts are designed to place people and their social interactions at the core of the product experience.Data Management and Personalization Technologies.To provide each user with a personalizedFacebook experience,we must process and

145、 analyze a vast and growing amount of content shared byour users,developers,and marketers and surface the most relevant content in real time.As such,weinvest extensively in developing technologies and analytics in areas including content optimization anddelivery,graph query,media storage and serving

146、,large-scale data management,and softwareperformance.Large-Scale Systems and Scalable Infrastructure.Our products are built on a shared computinginfrastructure.We use a combination of off-the-shelf and custom software running on clusters ofcommodity computers to amass substantial computing capabilit

147、y.Our infrastructure has enabled thestorage and processing of large datasets and facilitated the deployment of our products on a globalscale.As our user base grows,and the level of engagement and sharing from our users continues toincrease,our computing needs continue to expand.We aim to provide our

148、 products rapidly and reliablyto all users around the world,including in countries where we do not expect significant short-termmonetization.As the number of international users increases we are investing in extending ourinfrastructure to be closer to our users wherever they are in the world.We are

149、currently building ourfirst major custom international datacenter presence in Lulea,Sweden,which is expected to beoperational in the first half of 2013.Mobile Technologies.In order to providing a high-quality experience on a wide variety of mobiledevices and operating systems,we invest in developing

150、 novel techniques and technologies including:custom graphics rendering,operating system customizations,development tools,systems forcustomizing the user experience based on a variety of factors,and systems for monitoring the behaviorof the applications in the field.Advertising Technologies.We invest

151、 extensively in advertising technology capable of serving billionsof ad impressions every day while maximizing the relevance of each impression to selected users basedupon the information that users have chosen to share.Our system manages our entire set of ads,theselected audiences,and the marketers

152、 bids to determine which ads to show each person and how todisplay them for every page on Facebook.We use an advanced click prediction system that weighsmany real-time updated features using automated learning techniques.Our technology incorporates theestimated click-through rate with both the marke

153、ters bid and a user relevancy signal to select theoptimal ads to show.Our research and development expenses were$1.4 billion,$388 million and$144 million in 2012,2011,and 2010,respectively.For information about our research and development expenses,see Part II,Item 7,“Managements Discussion and Anal

154、ysis of Financial Condition and Results of Operations Results ofOperations Research and development”of this Annual Report on Form 10-K.12Sales and OperationsThe majority of our marketers use our self-service ad platform to establish accounts and to launch andmanage their advertising campaigns.We wor

155、k directly with advertisers,through traditional advertising agenciesand with an ecosystem of agencies that have a specialized focus on Facebook advertising.We also have a globalsales force that is focused on attracting and retaining marketers and providing support to them throughout thestages of the

156、 advertising campaign cycle from pre-purchase decision making to real-time optimizations to post-campaign analytics.We currently operate more than 30 sales offices around the globe.We have operations teams to provide support for our users,developers,and marketers in five regionalcenters located in M

157、enlo Park,California;Austin,Texas;Dublin,Ireland;Hyderabad,India;and Singapore.Wealso invest in and rely on self-service tools to provide direct customer support to our users,developers,andmarketers.MarketingTo date,the Facebook user community has grown virally with users inviting their friends to c

158、onnect withthem,supported by internal efforts to stimulate user awareness and interest.In addition we have invested and willcontinue to invest in marketing our services to build our brand and user base around the world.We leverage theutility of our products and our social distribution channels as ou

159、r most effective marketing tools.In addition,weundertake various user acquisition efforts and regularly host events and conferences to engage with developersand marketers.Intellectual PropertyTo establish and protect our proprietary rights,we rely on a combination of patents,patent applications,trad

160、emarks,copyrights,trade secrets,including know-how,license agreements,confidentiality procedures,non-disclosure agreements with third parties,employee disclosure and invention assignment agreements,and othercontractual rights.In addition,to further protect our proprietary rights,from time to time we

161、 have purchasedpatents and patent applications from third parties.We do not believe that our proprietary technology is dependenton any single patent or copyright or groups of related patents or copyrights.We believe the duration of ourpatents is adequate relative to the expected lives of our product

162、s.Government RegulationWe are subject to a number of U.S.federal and state,and foreign laws and regulations that affect companiesconducting business on the Internet,many of which are still evolving and being tested in courts,and could beinterpreted in ways that could harm our business.These may invo

163、lve user privacy,rights of publicity,dataprotection,content,intellectualproperty,distribution,electroniccontractsand other communications,competition,protection of minors,consumer protection,taxation and online payment services.In particular,weare subject to federal,state,and foreign laws regarding

164、privacy and protection of user data.Foreign dataprotection,privacy,and other laws and regulations are often more restrictive than those in the United States.U.S.federal and state and foreign laws and regulations are constantly evolving and can be subject to significantchange.In addition,the applicat

165、ion and interpretation of these laws and regulations are often uncertain,particularly in the new and rapidly-evolving industry in which we operate.There are also a number of legislativeproposals pending before the U.S.Congress,various state legislative bodies,and foreign governments concerningdata p

166、rotection which could affect us.For example,a revision to the 1995 European Union Data ProtectionDirective is currently being considered by legislative bodies that may include more stringent operationalrequirements for data processors and significant penalties for non-compliance.In August 2012,the F

167、TC approved a settlement agreement with us to resolve an investigation into variouspractices,that,among other things,requires us to establish and refine certain practices with respect to treatmentof user data and privacy settings and also requires we complete bi-annual independent privacy assessment

168、s.13Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary finesand other penalties that could negatively affect our financial condition and results of operations.Various laws and regulations in the United States and abroad,such as the Bank Secr

169、ecy Act,the Dodd-Frank Act,the USA PATRIOT Act,and the Credit CARD Act,impose certain anti-money launderingrequirements on companies that are financial institutions or that provide financial products and services.Underthese laws and regulations,financial institutions are broadly defined to include m

170、oney services businesses suchas money transmitters,check cashers,and sellers or issuers of stored value.Requirements imposed on financialinstitutions under these laws include customer identification and verification programs,record retention policiesand procedures,and transaction reporting.To increa

171、se flexibility in how our use of Payments may evolve and tomitigate regulatory uncertainty,we have applied through subsidiaries for certain money transmitter licenses inthe United States and similar licenses in certain foreign countries,which will generally require us to showcompliance with many dom

172、estic and foreign laws relating to money transmission,gift cards and other prepaidaccess instruments,electronic funds transfers,anti-money laundering,counter-terrorist financing,gambling,banking and lending,and import and export restrictions.EmployeesAs of December 31,2012,we had 4,619 employees.Cor

173、porate InformationWe were incorporated in Delaware in July 2004.We completed our initial public offering in May 2012 andour Class A common stock is listed on The Nasdaq Global Select Market under the symbol“FB.”Our principalexecutive offices are located at 1601 Willow Road,Menlo Park,California 9402

174、5,and our telephone number is(650)308-7300.Facebook,the Facebook logo,FB,the Like Button,Instagram and our other registered or common lawtrademarks,service marks,or trade names appearing in this Annual Report on Form 10-K are the property ofFacebook,Inc.or its affiliates.Other trademarks,service mar

175、ks,or trade names appearing in this Annual Reporton Form 10-K are the property of their respective owners.Information about Segment and Geographic RevenueInformation about segment and geographic revenue is set forth in Notes 1 and 14 of our Notes toConsolidated Financial Statements included in Part

176、II,Item 8,“Financial Statements and Supplementary Data”ofthis Annual Report on Form 10-K.Available InformationOur website address is .Our Annual Report on Form 10-K,Quarterly Reports onForm 10-Q,Current Reports on Form 8-K,and amendments to reports filed pursuant to Sections 13(a)and 15(d)of the Sec

177、urities Exchange Act of 1934,as amended(Exchange Act),are filed with the U.S.Securities andExchange Commission(SEC).We are subject to the informational requirements of the Exchange Act and file orfurnish reports,proxy statements,and other information with the SEC.Such reports and other information f

178、iledby the Company with the SEC are available free of charge on our website at when such reportsare available on the SECs website.We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.Accordingly,investors sh

179、ould monitor such portions of ,in addition to following press releases,SEC filingsand public conference calls and webcasts.The public may read and copy any materials filed by Facebook with the SEC at the SECs Public ReferenceRoom at 100 F Street,NE,Room 1580,Washington,DC 20549.The public may obtain

180、 information on the14operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.The SEC maintains an Internetsite that contains reports,proxy and information statements and other information regarding issuers that fileelectronically with the SEC at www.sec.gov.The contents of the we

181、bsites referred to above are not incorporated into this filing.Further,our references tothe URLs for these websites are intended to be inactive textual references only.15Item 1A.Risk FactorsCertain factors may have a material adverse effect on our business,financial condition and results of operatio

182、ns.You should consider carefully the risks and uncertainties described below,in addition to other informationcontained in this Annual Report on Form 10-K,including our consolidated financial statements and relatednotes.The risks and uncertainties described below are not the only ones we face.Additio

183、nal risks anduncertainties that we are unaware of,or that we currently believe are not material,may also become importantfactors that adversely affect our business.If any of the following risks actually occurs,our business,financialcondition,results of operations,and future prospects could be materi

184、ally and adversely affected.In that event,the trading price of our Class A common stock could decline,and you could lose part or all of your investment.Risks Related to Our Business and IndustryIf we fail to retain existing users or add new users,or if our users decrease their level of engagement wi

185、thFacebook,our revenue,financial results,and business may be significantly harmed.The size of our user base and our userslevel of engagement are critical to our success.We had 1.06 billionmonthly active users(MAUs)as of December 31,2012.Our financial performance has been and will continue tobe signi

186、ficantly determined by our success in adding,retaining,and engaging active users.We anticipate that ouractive user growth rate will decline over time as the size of our active user base increases,and as we achievehigher market penetration rates.To the extent our active user growth rate slows,our bus

187、iness performance willbecome increasingly dependent on our ability to increase levels of user engagement and monetization.If peopledo not perceive our products to be useful,reliable,and trustworthy,we may not be able to attract or retain usersor otherwise maintain or increase the frequency and durat

188、ion of their engagement.A number of other socialnetworking companies that achieved early popularity have since seen their active user bases or levels ofengagement decline,in some cases precipitously.There is no guarantee that we will not experience a similarerosion of our active user base or engagem

189、ent levels.Our user engagement patterns have changed over time andcan be difficult to measure,particularly as users engage increasingly via mobile devices and as we introduce newand different services.Any decrease in user retention,growth,or engagement could render Facebook lessattractive to develop

190、ers and marketers,which may have a material and adverse impact on our revenue,business,financial condition,and results of operations.Any number of factors could potentially negatively affect userretention,growth,and engagement,including if:users increasingly engage with other products or activities;

191、we fail to introduce new and improved products or if we introduce new products or services that are notfavorably received;users feel that their Facebook experience is diminished as a result of the decisions we make withrespect to the frequency,prominence,and size of ads that we display;we are unable

192、 to continue to develop products for mobile devices that users find engaging,that workwith a variety of mobile operating systems and networks,and that achieve a high level of marketacceptance;there are changes in user sentiment about the quality or usefulness of our products or concerns relatedto pr

193、ivacy and sharing,safety,security,or other factors;we are unable to manage and prioritize information to ensure users are presented with content that isinteresting,useful,and relevant to them;users adopt new technologies where Facebook may not be featured or otherwise available;there are adverse cha

194、nges in our products that are mandated by legislation,regulatory authorities,orlitigation,including settlements or consent decrees;technical or other problems prevent us from delivering our products in a rapid and reliable manner orotherwise affect the user experience,such as any failure to prevent

195、spam or similar content;16we adopt policies or procedures related to areas such as sharing or user data that are perceivednegatively by our users or the general public;we fail to provide adequate customer service to users,developers,or marketers;we,our Platform developers,or other companies in our i

196、ndustry are the subject of adverse mediareports or other negative publicity;orour current or future products,such as the Facebook Platform,reduce user activity on Facebook bymaking it easier for our users to interact and share on third-party websites.If we are unable to maintain and increase our use

197、r base and user engagement,our revenue and financialresults may be adversely affected.We generate a substantial majority of our revenue from advertising.The loss of marketers,or reduction inspending by marketers with Facebook,could seriously harm our business.The substantial majority of our revenue

198、is currently generated from third parties advertising on Facebook.For 2012,2011,and 2010,advertising accounted for 84%,85%and 95%,respectively,of our revenue.As iscommon in the industry,our marketers do not have long-term advertising commitments with us.Many of ourmarketers spend only a relatively s

199、mall portion of their overall advertising budget with us.In addition,marketersmay view some of our products as experimental and unproven.Marketers will not continue to do business withus,or they will reduce the prices they are willing to pay to advertise with us,if we do not deliver ads in aneffecti

200、ve manner,or if they do not believe that their investment in advertising with us will generate a competitivereturn relative to other alternatives.Our advertising revenue could be adversely affected by a number of otherfactors,including:decreases in user engagement,including time spent on Facebook;in

201、creased user access to and engagement with Facebook through our mobile products or other newdevices in the future,where our ability to monetize is less proven than it is from use on personalcomputers;product changes or inventory management decisions we may make that reduce the size,frequency,orrelat

202、ive prominence of ads displayed on Facebook;our inability to increase advertiser demand,which affects pricing;our inability to increase the quality of ads shown to users,particularly on mobile devices;the accuracy of our analytics and measurement solutions that demonstrate the value of our ads,or ou

203、rability to further improve such tools;decisions by marketers to use our free products,such as Facebook Pages,instead of advertising onFacebook;loss of advertising market share to our competitors,including if such competitors offer more integratedproducts;adverse legal developments relating to adver

204、tising,including legislative and regulatory developmentsand developments in litigation;adverse media reports or other negative publicity involving us,our Platform developers,or othercompanies in our industry;our inability to create new products that sustain or increase the value of our ads;the degre

205、e to which users opt out of social ads;the degree to which users cease or reduce the number of times they click on our ads;changes in the way online advertising is priced;17the impact of new technologies that could block or obscure the display of our ads;andthe impact of macroeconomic conditions and

206、 conditions in the advertising industry in general.The occurrence of any of these or other factors could result in a reduction in demand for our ads,which mayreduce the prices we receive for our ads,or cause marketers to stop advertising with us altogether,either ofwhich would negatively affect our

207、revenue and financial results.Growth in the use of Facebook through our mobile products as a substitute for use on personal computersmay negatively affect our revenue and financial results.We had 680 million mobile MAUs in December 2012.While most of our mobile users also accessFacebook through pers

208、onal computers,we anticipate that the rate of growth in mobile usage will exceed thegrowth in usage through personal computers for the foreseeable future and that the usage through personalcomputers may decline or continue to decline in certain markets,in part due to our focus on developing mobilepr

209、oducts to encourage mobile usage of Facebook.For example,during the fourth quarter of 2012,the number ofdaily active users(DAUs)using personal computers declined modestly compared to the third quarter of 2012,including declines in key markets such as the United States,while mobile DAUs continued to

210、increase.While webegan showing ads in usersmobile News Feeds in early 2012,we have generated only a small portion of ourrevenue from the use of Facebook mobile products to date.In addition,we do not currently offer our Paymentsinfrastructure to applications on mobile devices.If users increasingly ac

211、cess Facebook mobile products as asubstitute for access through personal computers,and if we are unable to continue to grow mobile revenues,or ifwe incur excessive expenses in this effort,our financial performance and ability to grow revenue would benegatively affected.Facebook user growth and engag

212、ement on mobile devices depend upon effective operation with mobileoperating systems,networks,and standards that we do not control.There is no guarantee that popular mobile devices will continue to feature Facebook,or that mobile deviceusers will continue to use Facebook rather than competing produc

213、ts.We are dependent on the interoperability ofFacebook with popular mobile operating systems that we do not control,such as Android and iOS,and anychanges in such systems that degrade our products functionality or give preferential treatment to competitiveproducts could adversely affect Facebook usa

214、ge on mobile devices.Additionally,in order to deliver high qualitymobile products,it is important that our products work well with a range of mobile technologies,systems,networks,and standards that we do not control.We may not be successful in developing relationships with keyparticipants in the mob

215、ile industry or in developing products that operate effectively with these technologies,systems,networks,or standards.In the event that it is more difficult for our users to access and use Facebook ontheir mobile devices,or if our users choose not to access or use Facebook on their mobile devices or

216、 use mobileproducts that do not offer access to Facebook,our user growth and user engagement could be harmed.Our business is highly competitive.Competition presents an ongoing threat to the success of our business.We face significant competition in every aspect of our business,including from compani

217、es that providetools to facilitate the sharing of information,companies that enable marketers to display personalized advertisingand companies that provide development platforms for applications developers.We compete with companies thatoffer full-featured products that replicate the range of communi

218、cations and related capabilities we provide.Theseofferings include,for example,Google+,which Google has integrated with certain of its products,includingsearch and Android,as well as other,largely regional,social networks that have strong positions in particularcountries,such as Mixi in Japan and vK

219、ontakte and Odnoklassniki in Russia.We also complete with companiesthat develop applications,particularly mobile applications,that replicate discrete capabilities we provide,such asphoto-sharing,messaging,and micro-blogging,and companies that provide web-and mobile-based informationand entertainment

220、 products and services that are designed to engage users and capture time spent online and on18mobile devices.In addition,we face competition from traditional and online businesses that provide media formarketers to reach their audiences and/or develop tools and systems for managing and optimizing a

221、dvertisingcampaigns.Some of our current and potential competitors may have significantly greater resources or better competitivepositions in certain product segments,geographic regions or user demographics than we do.These factors mayallow our competitors to respond more effectively than us to new o

222、r emerging technologies and changes inmarket conditions.We believe that some of our users,particularly our younger users,are aware of and activelyengaging with other products and services similar to,or as a substitute for,Facebook.For example,we believethat some of our users have reduced their engag

223、ement with Facebook in favor of increased engagement withother products and services such as Instagram.In the event that our users increasingly engage with other productsand services,we may experience a decline in user engagement and our business could be harmed.Our competitors may develop products,

224、features,or services that are similar to ours or that achieve greateracceptance,may undertake more far-reaching and successful product development efforts or marketingcampaigns,or may adopt more aggressive pricing policies.In addition,Platform partners may use informationshared by our users through

225、the Facebook Platform in order to develop products or features that compete with us.Certain competitors,including Google,could use strong or dominant positions in one or more markets to gaincompetitive advantage against us in areas where we operate including:by integrating competing socialnetworking

226、 platforms or features into products they control such as search engines,web browsers,or mobiledevice operating systems;by making acquisitions;or by making access to Facebook more difficult.As a result,our competitors may acquire and engage users at the expense of the growth or engagement of our use

227、r base,which may negatively affect our business and financial results.We believe that our ability to compete effectively depends upon many factors both within and beyond ourcontrol,including:the popularity,usefulness,ease of use,performance,and reliability of our products compared to ourcompetitors;

228、the size and composition of our user base;the engagement of our users with our products;the timing and market acceptance of products,including developments and enhancements to our or ourcompetitorsproducts;our ability to monetize our products,including our ability to successfully monetize mobile usa

229、ge;the frequency,size,and relative prominence of the ads displayed by us or our competitors;customer service and support efforts;marketing and selling efforts;our ability to establish and maintain developersinterest in building on the Facebook Platform;changes mandated by legislation,regulatory auth

230、orities,or litigation,including settlements and consentdecrees,some of which may have a disproportionate effect on us;acquisitions or consolidation within our industry,which may result in more formidable competitors;our ability to attract,retain,and motivate talented employees,particularly software

231、engineers;our ability to cost-effectively manage and grow our operations;andour reputation and brand strength relative to our competitors.If we are not able to compete effectively,our user base and level of user engagement may decrease,whichcould make us less attractive to developers and marketers a

232、nd materially and adversely affect our revenue andresults of operations.19We may not be successful in our efforts to grow usage of and engagement with the Facebook Platform.We have made and are continuing to make investments to enable developers to build applications(apps)andwebsites that integrate

233、with the Facebook Platform.Existing and prospective Platform developers may not besuccessful in building apps or websites that create and maintain user engagement.Additionally,developers maychoose to build on other platforms,including mobile platforms controlled by third parties,rather than building

234、 onthe Facebook Platform.We are continuously seeking to balance the distribution objectives of our Platformdevelopers with our desire to provide an optimal user experience,and we may not be successful in achieving abalance that continues to attract and retain Platform developers.From time to time,we

235、 have taken actions toreduce the volume of communications from Platform developers to users on Facebook with the objective ofenhancing the user experience,and such actions have reduced distribution from,user engagement with,and ourmonetization opportunities from,Facebook-integrated apps and websites

236、.In some instances,these actions haveadversely affected our relationships with Platform developers.If we are not successful in our efforts to grow ourPlatform or if we are unable to build and maintain good relations with Platform developers,our user growth anduser engagement and our financial result

237、s may be adversely affected.We may not be successful in our efforts to further monetize the Facebook Platform.We currently monetize the Facebook Platform in several ways,including ads on pages generated by apps onFacebook,direct advertising on Facebook purchased by Platform developers to drive traff

238、ic to their apps andwebsites,and fees from our Platform developers use of our Payments infrastructure to sell virtual and digitalgoods to users accessing Facebook via personal computers.Apps built by developers of social games arecurrently responsible for substantially all of our revenue derived fro

239、m Payments.While we have expanded thenumber of developers using our Payments infrastructure,our overall Payments revenue may decrease or stay flatin future periods.In addition,a relatively small percentage of our users have transacted with Facebook Payments.For example,for the fiscal year ended Dece

240、mber 31,2012,approximately 27 million users purchased virtualgoods using Facebook Payments.If the Platform apps that currently generate revenue fail to grow or maintaintheir users and engagement,if Platform developers do not continue to introduce new apps that attract users andcreate engagement,if P

241、latform developers reduce their advertising on Facebook,if we fail to maintain goodrelationships with Platform developers or attract new developers,or if Platform apps outside of social games donot gain popularity and generate significant revenue for us,our financial performance and ability to growr

242、evenue could be adversely affected.Additionally,we are actively supporting Platform developersefforts to develop their own mobile apps andwebsites that integrate with Facebook.Unlike apps that run within the Facebook website which enable us toshow ads and offer Payments,we generally do not directly

243、monetize from Platform developersintegrating theirown mobile apps and websites with Facebook.Therefore,our Platform developersefforts to prioritize Facebookintegrations with their own mobile apps or websites may reduce or slow the growth of our user activity thatgenerates advertising and Payments op

244、portunities,which could negatively affect our revenue.Although webelieve that there are significant long-term benefits to Facebook resulting from increased engagement onFacebook-integrated websites and mobile apps,these benefits may not offset the possible loss of revenue,inwhich case our business c

245、ould be harmed.Action by governments to restrict access to Facebook in their countries could substantially harm our businessand financial results.It is possible that governments of one or more countries may seek to censor content available on Facebookin their country,restrict access to Facebook from

246、 their country entirely,or impose other restrictions that mayaffect the accessibility of Facebook in their country for an extended period of time or indefinitely.For example,access to Facebook has been or is currently restricted in whole or in part in China,Iran,North Korea,and Syria.In addition,gov

247、ernments in other countries may seek to restrict access to Facebook if they consider us to be inviolation of their laws.In the event that access to Facebook is restricted,in whole or in part,in one or more20countries or our competitors are able to successfully penetrate geographic markets that we ca

248、nnot access,ourability to retain or increase our user base and user engagement may be adversely affected,we may not be able tomaintain or grow our revenue as anticipated,and our financial results could be adversely affected.Our new products and changes to existing products could fail to attract or r

249、etain users or generate revenue.Our ability to retain,increase,and engage our user base and to increase our revenue will depend heavily onour ability to create successful new products,both independently and in conjunction with Platform developers orother third parties.We may introduce significant ch

250、anges to our existing products or develop and introduce newand unproven products,including using technologies with which we have little or no prior development oroperating experience.If new or enhanced products fail to engage users,developers,or marketers,we may fail toattract or retain users or to

251、generate sufficient revenue,operating margin,or other value to justify ourinvestments,and our business may be adversely affected.In the future,we may invest in new products andinitiatives to generate revenue,but there is no guarantee these approaches will be successful.For example,in2012,we launched

252、 our Gifts product that enables users to send physical or digital gifts to friends.We may not besuccessful in generating meaningful revenue from this product.If we are not successful with new approaches tomonetization,we may not be able to maintain or grow our revenue as anticipated or recover any a

253、ssociateddevelopment costs,and our financial results could be adversely affected.Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.We have a culture that encourages employees to quickly develop and launch new and innovative products.As our busi

254、ness grows and becomes more complex,our cultural emphasis on moving quickly may result inunintended outcomes or decisions that are poorly received by users,developers,or marketers.Our culture alsoprioritizes user engagement over short-term financial results,and we frequently make product decisions t

255、hat mayreduce our short-term revenue or profitability if we believe that the decisions are consistent with our mission andbenefit the aggregate user experience and will thereby improve our financial performance over the long term.These decisions may not produce the long-term benefits that we expect,

256、in which case our user growth andengagement,our relationships with developers and marketers,and our business and results of operations could beharmed.If we are not able to maintain and enhance our brand,or if events occur that damage our reputation andbrand,our ability to expand our base of users,de

257、velopers,and marketers may be impaired,and our businessand financial results may be harmed.We believe that the Facebook brand has significantly contributed to the success of our business.We alsobelieve that maintaining and enhancing our brand is critical to expanding our base of users,developers,and

258、marketers.Many of our new users are referred by existing users.Maintaining and enhancing our brand willdepend largely on our ability to continue to provide useful,reliable,trustworthy,and innovative products,whichwe may not do successfully.We may introduce new products or terms of service that users

259、 do not like,whichmay negatively affect our brand.Additionally,the actions of our Platform developers may affect our brand ifusers do not have a positive experience using third-party apps and websites integrated with Facebook.We havein the past experienced,and we expect that in the future we will co

260、ntinue to experience,media,legislative,orregulatory scrutiny of our decisions regarding user privacy or other issues,which may adversely affect ourreputation and brand.We also may fail to provide adequate customer service,which could erode confidence inour brand.Our brand may also be negatively affe

261、cted by the actions of users that are deemed to be hostile orinappropriate to other users,or by users acting under false or inauthentic identities.Maintaining and enhancingour brand may require us to make substantial investments and these investments may not be successful.If we failto successfully p

262、romote and maintain the Facebook brand or if we incur excessive expenses in this effort,ourbusiness and financial results may be adversely affected.21Improper access to or disclosure of our users information,or violation of our terms of service or policies,could harm our reputation and adversely aff

263、ect our business.Our efforts to protect the information that our users have chosen to share using Facebook may beunsuccessful due to the actions of third parties,software bugs or other technical malfunctions,employee error ormalfeasance,or other factors.In addition,third parties may attempt to fraud

264、ulently induce employees or users todisclose information in order to gain access to our data or our usersdata.If any of these events occur,our usersinformation could be accessed or disclosed improperly.Our Data Use Policy governs the use of information thatusers have chosen to share using Facebook a

265、nd how that information may be used by us and third parties.SomePlatform developers may store information provided by our users through apps on the Facebook Platform orwebsites integrated with Facebook.If these third parties or Platform developers fail to adopt or adhere toadequate data security pra

266、ctices or fail to comply with our terms and policies,or in the event of a breach of theirnetworks,our usersdata may be improperly accessed or disclosed.Any incidents involving unauthorized access to or improper use of the information of our users or incidentsinvolving violation of our terms of servi

267、ce or policies,including our Data Use Policy,could damage ourreputation and our brand and diminish our competitive position.In addition,the affected users or governmentauthorities could initiate legal or regulatory action against us in connection with such incidents,which couldcause us to incur sign

268、ificant expense and liability or result in orders or consent decrees forcing us to modify ourbusiness practices.Any of these events could have a material and adverse effect on our business,reputation,orfinancial results.Unfavorable media coverage could negatively affect our business.We receive a hig

269、h degree of media coverage around the world.Unfavorable publicity regarding,forexample,our privacy practices,product changes,product quality,litigation or regulatory activity,or the actionsof our Platform developers or our users,could adversely affect our reputation.Such negative publicity also coul

270、dhave an adverse effect on the size,engagement,and loyalty of our user base and result in decreased revenue,which could adversely affect our business and financial results.Our financial results will fluctuate from quarter to quarter and are difficult to predict.Our quarterly financial results have f

271、luctuated in the past and will fluctuate in the future.Additionally,wehave a limited operating history with the current scale of our business,which makes it difficult to forecast ourfuture results.As a result,you should not rely upon our past quarterly financial results as indicators of futureperfor

272、mance.You should take into account the risks and uncertainties frequently encountered by companies inrapidly evolving markets.Our financial results in any given quarter can be influenced by numerous factors,manyof which we are unable to predict or are outside of our control,including:our ability to

273、maintain and grow our user base and user engagement;our ability to attract and retain marketers in a particular period;fluctuations in spending by our marketers due to seasonality,such as historically strong spending in thefourth quarter of each year,or other factors;the number of ads shown to users

274、;the pricing of our ads and other products;the rate of growth in mobile usage compared to usage through personal computers,and our ability tomonetize through our mobile products;our ability to maintain or increase Payments and other fees revenue;the diversification and growth of revenue sources beyo

275、nd advertising and Payments;the development and introduction of new products or services by us or our competitors;22increases in marketing,sales,and other operating expenses that we may incur to grow and expand ouroperations and to remain competitive;our ability to maintain gross margins and operati

276、ng margins;costs related to the acquisition of businesses,talent,technologies or intellectual property,includingpotentially significant amortization costs;our ability to obtain equipment and components for our data centers and other technical infrastructurein a timely and cost-effective manner;syste

277、m failures which could prevent us from serving ads for any period of time,or breaches of securityor privacy,and the costs associated with remediating any such failures or breaches;inaccessibility of Facebook due to third-party actions;share-based compensation expense;adverse litigation judgments,set

278、tlements,or other litigation-related costs;changes in the legislative or regulatory environment,including with respect to privacy,or enforcementby government regulators,including fines,orders,or consent decrees;the overall tax rate for our business,which may be affected by the financial results of o

279、ur internationalsubsidiaries;fluctuations in currency exchange rates and changes in the proportion of our revenue and expensesdenominated in foreign currencies;fluctuations in the market values of our portfolio investments and in interest rates;changes in U.S.generally accepted accounting principles

280、;andchanges in global business or macroeconomic conditions.We expect our rates of growth will decline in the future.We believe that our rates of user and revenue growth will decline over time.For example,our revenue grew37%from 2011 to 2012,88%from 2010 to 2011 and 154%from 2009 year to 2010.Histori

281、cally,our usergrowth has been a primary driver of growth in our revenue.While our periodic rates of growth may be flat orincrease from time to time,we expect that our user growth and revenue growth rates will decline over time as thesize of our active user base increases and as we achieve higher mar

282、ket penetration rates.As our growth ratesdecline,investorsperceptions of our business may be adversely affected and the trading price of our Class Acommon stock could decline.Our costs are continuing to grow,which could harm our business and profitability.Providing our products to our users is costl

283、y and we expect our expenses to continue to increase in the futureas we broaden our user base,as users increase the number of connections and amount of data they share with us,as we develop and implement new product features that require more computing infrastructure.Historically,ourcosts have incre

284、ased each year due to these factors and we expect to continue to incur increasing costs,inparticular for servers,storage,power,and data centers,to support our anticipated future growth.We expect tocontinue to invest in our global infrastructure in order to provide our products rapidly and reliably t

285、o all usersaround the world,including in countries where we do not expect significant short-term monetization.In addition,our costs may increase as we hire additional employees,particularly as a result of the significant competition thatwe face to attract and retain technical talent.Our expenses may

286、 continue to grow faster than our revenue overtime.Our expenses may be greater than we anticipate,and our investments may not be successful.In addition,we may increase marketing,sales,and other operating expenses in order to grow and expand our operations andto remain competitive.Increases in our co

287、sts may adversely affect our business and profitability.23Our business is subject to complex and evolving U.S.and foreign laws and regulations regarding privacy,dataprotection,and other matters.Many of these laws and regulations are subject to change and uncertaininterpretation,and could result in c

288、laims,changes to our business practices,monetary penalties,increasedcost of operations,or declines in user growth or engagement,or otherwise harm our business.We are subject to a variety of laws and regulations in the United States and abroad that involve matterscentral to our business,including use

289、r privacy,rights of publicity,data protection,content,intellectual property,distribution,electronic contracts and other communications,competition,protection of minors,consumerprotection,taxation,securities law compliance,and online payment services.The introduction of new productsmay subject us to

290、additional laws and regulations.For example,depending on how our new Gifts productevolves,we may be subject to laws and regulations governing returns,taxability of purchases,purchase ofrestricted products such as alcohol,product liability,and international import and export restrictions.In addition,

291、foreign data protection,privacy,and other laws and regulations are often more restrictive than those in the UnitedStates.These U.S.federal and state and foreign laws and regulations,which can be enforced by private parties orgovernment entities,are constantly evolving and can be subject to significa

292、nt change.In addition,the applicationand interpretation of these laws and regulations are often uncertain,particularly in the new and rapidly evolvingindustry in which we operate.For example,the interpretation of some laws and regulations that govern the use ofnames and likenesses in connection with

293、 advertising and marketing activities is unsettled and developments inthis area could affect the manner in which we design our products,as well as our terms of use.A number ofproposals are pending before federal,state,and foreign legislative and regulatory bodies that could significantlyaffect our b

294、usiness.For example,a revision to the 1995 European Union Data Protection Directive is currentlybeing considered by European legislative bodies that may include more stringent operational requirements fordata processors and significant penalties for non-compliance.Similarly,there have been a number

295、of recentlegislative proposals in the United States,at both the federal and state level,that would impose new obligationsin areas such as privacy and liability for copyright infringement by third parties.These existing and proposedlaws and regulations can be costly to comply with and can delay or im

296、pede the development of new products,result in negative publicity,increase our operating costs,require significant management time and attention,andsubject us to inquiries or investigations,claims or other remedies,including fines or demands that we modify orcease existing business practices.We have

297、 been subject to regulatory investigations and settlements and we expect to continue to be subject tosuch proceedings in the future,which could cause us to incur substantial costs or require us to change ourbusiness practices in a manner materially adverse to our business.From time to time,we receiv

298、e inquiries from regulators regarding our compliance with laws and othermatters.For example,in 2012,the Federal Trade Commission approved a settlement agreement with us that,among other things,requires us to establish and refine certain practices with respect to treatment of user data andprivacy set

299、tings and also requires that we complete bi-annual independent privacy assessments.As anotherexample,in 2011 and 2012,the Irish Data Protection Commissioner audited the data,security,and privacypractices and policies of Facebook Ireland.We expect to continue to be the subject of regulatory investiga

300、tionsand audits in the future by these and other regulators throughout the world.It is possible that a regulatory inquiry might result in changes to our policies or practices.Violation ofexisting or future regulatory orders or consent decrees could subject us to substantial monetary fines and otherp

301、enalties that could negatively affect our financial condition and results of operations.In addition,it is possiblethat future orders issued by,or enforcement actions initiated by,regulatory authorities could cause us to incursubstantial costs or require us to change our business practices in a manne

302、r materially adverse to our business.If we are unable to protect our intellectual property,the value of our brand and other intangible assets may bediminished,and our business may be adversely affected.We rely and expect to continue to rely on a combination of confidentiality and license agreements

303、with ouremployees,consultants,and third parties with whom we have relationships,as well as trademark,copyright,24patent,trade secret,and domain name protection laws,to protect our proprietary rights.In the United States andinternationally,we have filed various applications for protection of certain

304、aspects of our intellectual property,and we currently hold a number of issued patents in multiple jurisdictions and have acquired patents and patentapplications from third parties.In addition,in the future we may acquire additional patents or patent portfolios,which could require significant cash ex

305、penditures.Third parties may knowingly or unknowingly infringe ourproprietary rights,third parties may challenge proprietary rights held by us,and pending and future trademarkand patent applications may not be approved.In addition,effective intellectual property protection may not beavailable in eve

306、ry country in which we operate or intend to operate our business.In any or all of these cases,wemay be required to expend significant time and expense in order to prevent infringement or to enforce our rights.Although we have taken measures to protect our proprietary rights,there can be no assurance

307、 that others will notoffer products or concepts that are substantially similar to ours and compete with our business.In addition,weregularly contribute software source code under open source licenses and have made other technology wedeveloped available under other open licenses,and we include open s

308、ource software in our products.Forexample,we have contributed certain specifications and designs related to our data center equipment to the OpenCompute Project Foundation,a non-profit entity that shares and develops such information with the technologycommunity,under the Open Web Foundation License

309、.As a result of our open source contributions and the use ofopen source in our products,we may license or be required to license innovations that turn out to be material toour business and may also be exposed to increased litigation risk.If the protection of our proprietary rights isinadequate to pr

310、event unauthorized use or appropriation by third parties,the value of our brand and otherintangible assets may be diminished and competitors may be able to more effectively mimic our service andmethods of operations.Any of these events could have an adverse effect on our business and financial resul

311、ts.We are currently,and expect to be in the future,party to patent lawsuits and other intellectual property rightsclaims that are expensive and time consuming,and,if resolved adversely,could have a significant impact onour business,financial condition,or results of operations.Companies in the Intern

312、et,technology,and media industries own large numbers of patents,copyrights,trademarks,and trade secrets,and frequently enter into litigation based on allegations of infringement,misappropriation,or other violations of intellectual property or other rights.In addition,various“non-practicingentities”t

313、hat own patents and other intellectual property rights often attempt to aggressively assert their rights inorder to extract value from technology companies.Furthermore,from time to time we may introduce newproducts,including in areas where we currently do not compete,which could increase our exposur

314、e to patent andother intellectual property claims from competitors and non-practicing entities.From time to time,we receive notice letters from patent holders alleging that certain of our products andservices infringe their patent rights.We presently are involved in a number of intellectual property

315、 lawsuits,andas we face increasing competition and gain an increasingly high profile,we expect the number of patent andother intellectual property claims against us to grow.Defending patent and other intellectual property litigation iscostly and can impose a significant burden on management and empl

316、oyees,and there can be no assurances thatfavorable final outcomes will be obtained in all cases.In addition,plaintiffs may seek,and we may becomesubject to,preliminary or provisional rulings in the course of any such litigation,including potential preliminaryinjunctions requiring us to cease some or

317、 all of our operations.We may decide to settle such lawsuits anddisputes on terms that are unfavorable to us.Similarly,if any litigation to which we are a party is resolvedadversely,we may be subject to an unfavorable judgment that may not be reversed upon appeal.The terms ofsuch a settlement or jud

318、gment may require us to cease some or all of our operations or pay substantial amounts tothe other party.In addition,we may have to seek a license to continue practices found to be in violation of a thirdpartys rights,which may not be available on reasonable terms,or at all,and may significantly inc

319、rease ouroperating costs and expenses.As a result,we may also be required to develop alternative non-infringingtechnology or practices or discontinue the practices.The development of alternative non-infringing technology orpractices could require significant effort and expense or may not be feasible

320、.Our business,financial condition,and results of operations could be adversely affected as a result of an unfavorable resolution of the disputes andlitigation referred to above.25We are involved in numerous class action lawsuits and other litigation matters that are expensive and timeconsuming,and,i

321、f resolved adversely,could harm our business,financial condition,or results of operations.In addition to intellectual property claims,we are also involved in numerous other lawsuits,includingputative class action lawsuits brought by users and marketers,many of which claim statutory damages,and weant

322、icipate that we will continue to be a target for numerous lawsuits in the future.Because we have over a billionusers,the plaintiffs in class action cases filed against us typically claim enormous monetary damages even if thealleged per-user harm is small or non-existent.Any negative outcome from suc

323、h lawsuits could result inpayments of substantial monetary damages or fines,or changes to our products or business practices,andaccordingly our business,financial condition,or results of operations could be materially and adversely affected.Although the results of such lawsuits and claims cannot be

324、predicted with certainty,we do not believe that thefinal outcome of those matters relating to our products that we currently face will have a material adverse effecton our business,financial condition,or results of operations.In addition,following our initial public offering(IPO),we became the subje

325、ct of stockholder class action suits.We believe these lawsuits are without merit andare vigorously defending these lawsuits.There can be no assurances that a favorable final outcome will be obtained in all our cases,and defendingany lawsuit is costly and can impose a significant burden on management

326、 and employees.Any litigation to whichwe are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal or inpayments of substantial monetary damages or fines,or we may decide to settle lawsuits on similarly unfavorableterms,which could adversely affect our busines

327、s,financial conditions,or results of operations.Our CEO has control over key decision making as a result of his control of a majority of our voting stock.As a result of voting agreements with certain stockholders,together with the shares he holds,MarkZuckerberg,our founder,Chairman,and CEO,is able t

328、o exercise voting rights with respect to a majority of thevoting power of our outstanding capital stock as of December 31,2012.Mr.Zuckerberg therefore has the abilityto control the outcome of matters submitted to our stockholders for approval,including the election of directorsand any merger,consoli

329、dation,or sale of all or substantially all of our assets.This concentrated control coulddelay,defer,or prevent a change of control,merger,consolidation,or sale of all or substantially all of our assetsthat our other stockholders support,or conversely this concentrated control could result in the con

330、summation ofsuch a transaction that our other stockholders do not support.This concentrated control could also discourage apotential investor from acquiring our Class A common stock due to the limited voting power of such stockrelative to the Class B common stock and might harm the trading price of

331、our Class A common stock.Inaddition,Mr.Zuckerberg has the ability to control the management and major strategic investments of ourcompany as a result of his position as our CEO and his ability to control the election or replacement of ourdirectors.In the event of his death,the shares of our capital

332、stock that Mr.Zuckerberg owns will be transferred tothe persons or entities that he designates.As a board member and officer,Mr.Zuckerberg owes a fiduciary dutyto our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of ourstockholders.As a stockh

333、older,even a controlling stockholder,Mr.Zuckerberg is entitled to vote his shares,andshares over which he has voting control as a result of voting agreements,in his own interests,which may notalways be in the interests of our stockholders generally.We plan to continue to make acquisitions,which could require significant management attention,disrupt ourbusiness,result in dilution to our stockholder