Meta Platforms, Inc. (META) 2015年年度報告「NASDAQ」.pdf

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1、?UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 _FORM 10-K_(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2015 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE AC

2、T OF 1934 For the transition period from to Commission File Number:001-35551 _FACEBOOK,INC.(Exact name of registrant as specified in its charter)_Delaware20-1665019(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification Number)1601 Willow Road,Menlo Park,Californ

3、ia 94025(Address of principal executive offices and Zip Code)(650)543-4800(Registrants telephone number,including area code)_Securities registered pursuant to Section 12(b)of the Act:Class A Common Stock,$0.000006 par valueThe NASDAQ Stock Market LLC(Title of each class)(Name of each exchange on whi

4、ch 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 in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant t

5、o 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 Exchange Act of 1934(Exchange Act)during the preceding 12 months(or for such shorter period that the registrant was requir

6、ed to file such 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 and posted on its corporate Website,if any,every Interactive Data File required to be submitted and posted pursuant to Ru

7、le 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(229.405 of this chapter)i

8、s not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an

9、 accelerated filer,a non-accelerated filer,or a smaller reporting company.See definition of large accelerated filer,accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filerAccelerated filerNon-accelerated filer(Do not check if a smaller re

10、porting 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 value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30,2015,the last business d

11、ay of the registrants most recently completed second fiscal quarter,was$198 billion based upon the closing price reported for such date on the NASDAQ Global Select Market.On January 25,2016,the registrant had 2,294,939,865 shares of Class A common stock and 551,340,611 shares of Class B common stock

12、 outstanding.DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrants Proxy Statement for the 2016 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.Such proxy statement will be filed with the Securit

13、ies and Exchange Commission within 120 days of the registrants fiscal year ended December 31,2015.2FACEBOOK,INC.FORM 10-K TABLE OF CONTENTS Note About Forward-Looking Statements?Limitations of Key Metrics and Other Data?PART IItem 1.?BusinessItem 1A.?Risk FactorsItem 1B.?Unresolved Staff Comments?It

14、em 2.?PropertiesItem 3.?Legal ProceedingsItem 4.?Mine Safety DisclosuresPART IIItem 5.?Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities?Item 6.?Selected Financial DataItem 7.?Managements Discussion and Analysis of Financial Condition and Resu

15、lts of OperationsItem 7A.?Quantitative and Qualitative Disclosures About Market RiskItem 8.?Financial Statements and Supplementary DataItem 9.?Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A.?Controls and ProceduresItem 9B.?Other InformationPART IIIItem 10

16、.?Directors,Executive Officers and Corporate GovernanceItem 11.?Executive CompensationItem 12.?Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters?Item 13.?Certain Relationships and Related Transactions,and Director IndependenceItem 14.?Principal Accounting

17、 Fees and ServicesPART IVItem 15.?Exhibits,Financial Statement Schedules?Signatures3458272727272830325253818181828282828283This page intentionally left blank 3NOTE ABOUT FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Se

18、curities Litigation Reform Act of 1995.All statements contained in this Annual Report on Form 10-K other than statements of historical fact,including statements regarding our future results of operations and financial position,our business strategy and plans,and our objectives for future operations,

19、are forward-looking statements.The words believe,may,will,estimate,continue,anticipate,intend,expect,and similar expressions are intended to identify forward-looking statements.We have based these forward-looking statements largely on our current expectations and projections about future events and

20、trends that we believe may affect our financial condition,results of operations,business strategy,short-term and long-term business operations and objectives,and financial needs.These forward-looking statements are subject to a number of risks,uncertainties and assumptions,including those described

21、in Part I,Item 1A,Risk Factors in this Annual Report on Form 10-K.Moreover,we operate in a very competitive and rapidly changing environment.New risks emerge from time to time.It is not possible for our management to predict all risks,nor can we assess the impact of all factors on our business or th

22、e extent to which any factor,or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statements we may make.In light of these risks,uncertainties and assumptions,the future events and trends discussed in this Annual Report on Form 10-K may

23、not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements,except as required by law.Given these risks

24、and uncertainties,readers are cautioned not to place undue 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 to Facebook,Inc.,a Delaware corporation,and,where appropriate,its wholly

25、 owned subsidiaries.The term Facebook may also refer to our products,regardless of the manner in which they are accessed.For references to accessing Facebook on the web or via a website,such terms refer to accessing Facebook on personal computers.For references to accessing Facebook on mobile,such t

26、erm refers to accessing Facebook via a mobile application or via a mobile-optimized version of our website such as ,whether on a mobile phone or tablet.4LIMITATIONS OF KEY METRICS AND OTHER DATAThe numbers for our key metrics,which include our daily active users(DAUs),mobile DAUs,monthly active user

27、s(MAUs),mobile MAUs,and average revenue per user(ARPU),as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs,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 u

28、ser base for the applicable period of measurement,there are inherent challenges in measuring usage of our products across large online and mobile populations around the world.For example,there may be individuals who maintain one or more Facebook accounts in violation of our terms of service.We estim

29、ate,for example,that duplicate accounts(an account that a user maintains in addition to his or her principal account)may have represented less than 5%of our worldwide MAUs in 2015.We also seek to identify false accounts,which we divide into two categories:(1)user-misclassified accounts,where users h

30、ave created personal profiles for a business,organization,or non-human entity such as a pet(such entities are permitted on Facebook using a Page rather than a personal profile under our terms of service);and(2)undesirable accounts,which represent user profiles that we determine are intended to be us

31、ed for purposes that violate our terms of service,such as spamming.In 2015,for example,we estimate user-misclassified and undesirable accounts may have represented less than 2%of our worldwide MAUs.We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed m

32、arkets such as the United States or United Kingdom and higher in developing markets such as India and Turkey.However,these estimates are based on an internal review of a limited sample of accounts and we apply significant judgment in making this determination,such as identifying names that appear to

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

34、number of such accounts,and such estimates may change due to improvements or changes in our methodology.Our data limitations may affect our understanding of certain details of our business.For example,while user-provided data indicates a decline in usage among younger users,this age data is unreliab

35、le because a disproportionate number of our younger users register with an inaccurate age.Accordingly,our understanding of usage by age group may not be complete.Some of our metrics have also been affected by applications on certain mobile devices that automatically contact our servers for regular u

36、pdates with no user action involved,and this activity can cause our system to count the user associated with such a device as an active user on the day such contact occurs.The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the

37、 world.In addition,our data regarding the geographic location of our users is estimated based on a number of factors,such as the users IP address and self-disclosed location.These factors may not always accurately reflect the users actual location.For example,a mobile-only user may appear to be acce

38、ssing Facebook from the location of the proxy server that the user connects to rather than from the users actual location.The methodologies used to measure user metrics may also be susceptible to algorithm or other technical errors.Our estimates for revenue by user location and revenue by user devic

39、e are also affected by these factors.We regularly review our processes for calculating these metrics,and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy,including adjustments that may result in the recalculation of our historical metrics.We

40、 believe that any such inaccuracies or adjustments are immaterial unless otherwise stated.In addition,our DAU and MAU estimates will differ from estimates published by third parties due to differences in methodology.For example,some third parties are not able to accurately measure mobile users or do

41、 not count mobile users for certain user groups or at all in their analyses.The numbers of DAUs,mobile DAUs,MAUs,mobile MAUs,mobile-only DAUs and mobile-only MAUs discussed in this Annual Report on Form 10-K,as well as ARPU,do not include users of Instagram or WhatsApp unless they would otherwise qu

42、alify as such users,respectively,based on their other activities on Facebook.In addition,other user engagement metrics included herein do not include Instagram or WhatsApp unless otherwise specifically stated.5PART IItem 1.BusinessOverviewOur mission is to give people the power to share and make the

43、 world more open and connected.Our top priority is to build useful and engaging products that enable people to connect and share through mobile devices and personal computers.We also help people discover and learn about what is going on in the world around them,enable people to share their opinions,

44、ideas,photos and videos,and other activities with audiences ranging from their closest friends to the public at large,and stay connected everywhere by accessing our products,including:Facebook.Facebook is a mobile application and website that enables people to connect,share,discover,and communicate

45、with each other on mobile devices and personal computers.We had 1.04 billion daily active users(DAUs)on average in December 2015,an increase of 17%compared to December 2014.We had 934 million DAUs who accessed Facebook from a mobile device on average in December 2015,an increase of 25%compared to De

46、cember 2014.There are a number of different ways to engage with people on Facebook,the most important of which is News Feed which displays an algorithmically-ranked series of stories and advertisements individualized for each person.Instagram.Instagram is a mobile application that enables people to

47、take photos or videos,customize them with filter effects,and share them with friends and followers in a photo feed or send them directly to friends.Messenger.Messenger is a messaging application available for mobile and web on a variety of platforms and devices.Messenger enables people to reach othe

48、rs instantly and simply,and also enables businesses to engage with customers seamlessly and securely.WhatsApp.WhatsApp Messenger is a fast,simple and reliable mobile messaging application that is used by people around the world and is available on a variety of mobile platforms.Oculus.Our Oculus virt

49、ual reality technology and content platform power products that allow people to enter a completely immersive and interactive environment to play games,consume content,and connect with others.We generate substantially all of our revenue from selling advertising placements to marketers.Our ads let mar

50、keters reach people based on a variety of factors including age,gender,location,interests,and behaviors.Marketers purchase ads that can appear in multiple places including on Facebook,Instagram,and third-party applications and websites.CompetitionOur business is characterized by innovation,rapid cha

51、nge,and disruptive technologies.We face significant competition in every aspect of our business,including from companies that provide tools to facilitate communications and the sharing of information,companies that enable marketers to display advertising,and companies that provide development platfo

52、rms for application developers.We compete to attract,engage,and retain people who use our products,to attract and retain marketers,and to attract and retain developers to build compelling mobile and web applications that integrate with our products.We compete with the following:Companies that offer

53、products that replicate the full range of capabilities we provide.For example,Google has integrated social functionality into a number of its products,including search and Android,as well as other,largely regional,social networks that have strong positions in particular countries.Companies that deve

54、lop applications,particularly mobile applications,that provide social or other communications functionality,such as messaging,photo-and video-sharing,and micro-blogging.Companies that provide web-and mobile-based information and entertainment products and services that are designed to engage people

55、and capture time spent on mobile devices and online.Traditional,online,and mobile businesses that provide media for marketers to reach their audiences and/or develop tools and systems for managing and optimizing advertising campaigns.As we introduce or acquire new products,as our existing products e

56、volve,or as other companies introduce new products and services,we may become subject to additional competition.6TechnologyOur product development philosophy is centered on continuous innovation in creating and improving products that are social by design,which means that our products are designed t

57、o place people and their social interactions at the core of the product experience.As our user base grows,and the level of engagement from the people who use our products continues to increase,including on mobile devices,our computing needs continue to expand.We make significant investments in techn

58、ology both to improve our existing products and services and to develop new ones,as well as for our marketers and developers.We are also investing in a number of longer-term initiatives,such as connectivity efforts,artificial intelligence research,and virtual reality,to develop technologies that we

59、believe will help us better serve our communities and pursue our mission to make the world more open and connected.Our research and development expenses were$4.82 billion,$2.67 billion,and$1.42 billion in 2015,2014,and 2013,respectively.For information about our research and development expenses,see

60、 Part II,Item 7,Managements Discussion and Analysis of Financial Condition and Results of OperationsResults of OperationsResearch and development of this Annual Report on Form 10-K.Sales and OperationsThe majority of our marketers use our self-service ad platform to establish accounts and to launch

61、and manage their advertising campaigns.We also have a global sales force that is focused on attracting and retaining marketers and providing support to them throughout the stages of the advertising campaign cycle from pre-purchase decision-making to real-time optimizations to post-campaign analytics

62、.We work directly with marketers,through traditional advertising agencies,and with an ecosystem of specialized agencies and partners.We currently operate five support offices and more than 35 sales offices around the globe.We also invest in and rely on self-service tools to provide direct customer s

63、upport to our users and partners.We own and lease data centers in various locations throughout the United States,and also own a data center facility in Sweden.MarketingTo date,our communities have grown organically with people inviting their friends to connect with them,supported by internal efforts

64、 to stimulate awareness and interest.In addition,we have invested and will continue to invest in marketing our products and services to build our brand,grow our user base,and increase engagement around the world.We leverage the utility of our products and our social distribution channels as our most

65、 effective marketing tools.Intellectual PropertyTo establish and protect our proprietary rights,we rely on a combination of patents,patent applications,trademarks,copyrights,trade secrets,including know-how,license agreements,confidentiality procedures,non-disclosure agreements with third parties,em

66、ployee disclosure and invention assignment agreements,and other contractual rights.In addition,to further protect our proprietary rights,from time to time we have purchased patents and patent applications from third parties.We do not believe that our proprietary technology is dependent on any single

67、 patent or copyright or groups of related patents or copyrights.We believe the duration of our patents is adequate relative to the expected lives of our products.Government RegulationWe are subject to a number of U.S.federal and state and foreign laws and regulations that affect companies conducting

68、 business on the Internet.Many of these laws and regulations are still evolving and being tested in courts,and could be interpreted in ways that could harm our business.These may involve user privacy and data protection,rights of publicity,content,intellectual property,advertising,marketing,distribu

69、tion,data security,data retention and deletion,personal information,electronic contracts and other communications,competition,protection of minors,consumer protection,telecommunications,product liability,taxation,economic or other trade prohibitions or sanctions,securities law compliance,and online

70、payment services.In particular,we are subject to federal,state,and foreign laws regarding privacy and protection of peoples data.Foreign data protection,privacy,and other laws and regulations can be more restrictive than those in the United States.U.S.federal and state and foreign laws and regulatio

71、ns,which in some cases can be enforced by private parties in addition to government entities,are constantly evolving and can be subject to significant change.In addition,the application,interpretation,and enforcement of these laws and regulations are often uncertain,particularly in the new and rapid

72、ly-evolving industry in which we operate,and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.There are also a number of legislative proposals pending before federal,state,and foreign legislative and regulatory bodies,in

73、cluding a data protection regulation that is pending final approval by the European legislature that may include operational requirements for companies that receive personal data that are different than those currently in place in the European Union,and that will include significant penalties for no

74、n-compliance.In addition,some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.7We are currently,and may in t

75、he future,be subject to regulatory orders or consent decrees.Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations.Various laws and regulat

76、ions in the United States and abroad,such as the U.S.Bank Secrecy Act,the Dodd-Frank Act,the USA PATRIOT Act,and the Credit CARD Act,impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services.Under these laws and reg

77、ulations,financial institutions are broadly defined to include money services businesses such as money transmitters,check cashers,and sellers or issuers of stored value or prepaid access products.Requirements imposed on financial institutions under these laws include customer identification and veri

78、fication programs,record retention policies and procedures,and transaction reporting.To increase flexibility in how our use of Payments may evolve and to mitigate regulatory uncertainty,we have received certain money transmitter licenses in the United States and are applying for certain regulatory l

79、icenses in Europe,which will generally require us to demonstrate compliance with many domestic and foreign laws relating to money transmission,gift cards and other prepaid access instruments,electronic funds transfers,anti-money laundering,charitable fundraising,counter-terrorist financing,gambling,

80、banking and lending,financial privacy and data security,and import and export restrictions.EmployeesAs of December 31,2015,we had 12,691 employees.Corporate InformationWe were incorporated in Delaware in July 2004.We completed our initial public offering in May 2012 and our Class A common stock is l

81、isted on The NASDAQ Global Select Market under the symbol FB.Our principal executive offices are located at 1601 Willow Road,Menlo Park,California 94025,and our telephone number is(650)543-4800.Facebook,the Facebook logo,FB,the Like button,Instagram,Oculus,WhatsApp,and our other registered or common

82、 law trademarks,service marks,or trade names appearing in this Annual Report on Form 10-K are the property of Facebook,Inc.or its affiliates.Other trademarks,service marks,or trade names appearing in this Annual Report on Form 10-K are the property of their respective owners.Information about Segmen

83、t and Geographic RevenueInformation about segment and geographic revenue is set forth in Notes 1 and 14 of our Notes to Consolidated Financial Statements included in Part II,Item 8,Financial Statements and Supplementary Data of this Annual Report on Form 10-K.Available InformationOur website address

84、 is .Our Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments to reports filed pursuant to Sections 13(a)and 15(d)of the Securities Exchange Act of 1934,as amended(Exchange Act),are filed with the U.S.Securities and Exchange Commission(SEC).We are subj

85、ect to the informational requirements of the Exchange Act and file or furnish reports,proxy statements,and other information with the SEC.Such reports and other information filed by the Company with the SEC are available free of charge on our website at when such reports are available on the SECs we

86、bsite.We use our website and Mark Zuckerbergs Facebook Page(https:/ means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.The public may read and copy any materials filed by Facebook with the SEC at the SECs Public Reference Room at

87、 100 F Street,NE,Room 1580,Washington,DC 20549.The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.The SEC maintains an Internet site that contains reports,proxy and information statements,and other information regarding issuers that f

88、ile electronically with the SEC at www.sec.gov.The contents of the websites referred to above are not incorporated into this filing.Further,our references to the URLs for these websites are intended to be inactive textual references only.8Item 1A.Risk FactorsCertain factors may have a material adver

89、se effect on our business,financial condition,and results of operations.You should consider carefully the risks and uncertainties described below,in addition to other information contained in this Annual Report on Form 10-K,including our consolidated financial statements and related notes.The risks

90、and uncertainties described below are not the only ones we face.Additional risks and uncertainties that we are unaware of,or that we currently believe are not material,may also become important factors that adversely affect our business.If any of the following risks actually occurs,our business,fina

91、ncial condition,results of operations,and future prospects could be materially 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 us

92、ers or add new users,or if our users decrease their level of engagement with our products,our revenue,financial results,and business may be significantly harmed.The size of our user base and our users level of engagement are critical to our success.Our financial performance has been and will continu

93、e to be significantly determined by our success in adding,retaining,and engaging active users.We anticipate that our active user growth rate will continue to decline over time as the size of our active user base increases,and as we achieve higher market penetration rates.If people do not perceive ou

94、r products to be useful,reliable,and trustworthy,we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement.A number of other social networking companies that achieved early popularity have since seen their active user bases or leve

95、ls of engagement decline,in some cases precipitously.There is no guarantee that we will not experience a similar erosion of our active user base or engagement levels.Our user engagement patterns have changed over time,and user engagement can be difficult to measure,particularly as we introduce new a

96、nd different products and services.Any number of factors could potentially negatively affect user retention,growth,and engagement,including if:users increasingly engage with other products or services;we fail to introduce new products or services that users find engaging or if we introduce new produ

97、cts or services that are not favorably received;users feel that their experience is diminished as a result of the decisions we make with respect to the frequency,prominence,format,size,and quality of ads that we display;users have difficulty installing,updating,or otherwise accessing our products on

98、 mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services;user behavior on any of our products changes,including decreases in the quality and frequency of content shared on our products and services;we are unable to continue to

99、develop products for mobile devices that users find engaging,that work with a variety of mobile operating systems and networks,and that achieve a high level of market acceptance;there are decreases in user sentiment about the quality or usefulness of our products or concerns related to privacy and s

100、haring,safety,security,or other factors;we are unable to manage and prioritize information to ensure users are presented with content that is interesting,useful,and relevant to them;we are unable to obtain or attract engaging third-party content;users adopt new technologies where our products may be

101、 displaced in favor of other products or services,or may not be featured or otherwise available;there are adverse changes in our products that are mandated by legislation,regulatory authorities,or litigation,including settlements or consent decrees;technical or other problems prevent us from deliver

102、ing our products in a rapid and reliable manner or otherwise affect the user experience,such as security breaches or failure to prevent or limit spam or similar content;we adopt terms,policies,or procedures related to areas such as sharing or user data that are perceived negatively by our users or t

103、he general public;9 we elect to focus our user growth and engagement efforts more on longer-term initiatives,or if initiatives designed to attract and retain users and engagement are unsuccessful or discontinued,whether as a result of actions by us,third parties,or otherwise;we fail to provide adequ

104、ate customer service to users,marketers,or developers;we,developers whose products are integrated with our products,or other companies in our industry are the subject of adverse media reports or other negative publicity;or our current or future products,such as our development tools and application

105、programming interfaces that enable developers to build,grow,and monetize mobile and web applications,reduce user activity on our products by making it easier for our users to interact and share on third-party mobile and web applications.If we are unable to maintain or increase our user base and user

106、 engagement,our revenue and financial results may be adversely affected.Any decrease in user retention,growth,or engagement could render our products less attractive to users,marketers,and developers,which is likely to have a material and adverse impact on our revenue,business,financial condition,an

107、d results of operations.If our active user growth rate continues to slow,we will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive revenue growth.We generate substantially all of our revenue from advertising.The loss of

108、marketers,or reduction in spending by marketers,could seriously harm our business.Substantially all of our revenue is currently generated from third parties advertising on Facebook.For 2015,2014,and 2013,advertising accounted for 95%,92%and 89%,respectively,of our revenue.In addition,we have recentl

109、y introduced advertising on Instagram.As is common in the industry,our marketers do not have long-term advertising commitments with us.Many of our marketers spend only a relatively small portion of their overall advertising budget with us.We expect our ability to grow advertising revenue will contin

110、ue to be dependent on our ability to generate revenue from ads displayed on mobile devices.In addition,marketers may view some of our products as experimental and unproven.Marketers will not continue to do business with us,or they will reduce the prices they are willing to pay to advertise with us o

111、r the budgets they are willing to commit to us,if we do not deliver ads in an effective manner,or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives.Our advertising revenue could also be adversely affected by a number

112、 of other factors,including:decreases in user engagement,including time spent on our products;our inability to continue to increase user access to and engagement with our mobile products;product changes or inventory management decisions we may make that change the size,format,frequency,or relative p

113、rominence of ads displayed on our products or of other unpaid content shared by marketers on our products;our inability to maintain or increase marketer demand,the pricing of our ads,or both;our inability to maintain or increase the quantity or quality of ads shown to users;changes to third-party po

114、licies that limit our ability to deliver or target advertising on mobile devices;the availability,accuracy,and utility of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers,or our ability to further improve such tools;loss of adverti

115、sing market share to our competitors,including if prices for purchasing ads on Facebook increase or if competitors offer lower priced or more integrated products;adverse legal developments relating to advertising,including legislative and regulatory developments and developments in litigation;decisi

116、ons by marketers to reduce their advertising as a result of adverse media reports or other negative publicity involving us,content on our products,developers with mobile and web applications that are integrated with our products,or other companies in our industry;the degree to which users opt out of

117、 certain types of ad targeting;the degree to which users cease or reduce the number of times they click on our ads;10 changes in the way advertising on mobile devices or on personal computers is measured or priced;and the impact of macroeconomic conditions,whether in the advertising industry in gene

118、ral,or among specific types of marketers or within particular geographies.The occurrence of any of these or other factors could result in a reduction in demand for our ads,which may reduce the prices we receive for our ads,or cause marketers to stop advertising with us altogether,either of which wou

119、ld negatively affect our revenue and financial results.Our user growth,engagement,and monetization on mobile devices depend upon effective operation with mobile operating systems,networks,and standards that we do not control.There is no guarantee that popular mobile devices will continue to feature

120、Facebook or our other products,or that mobile device users will continue to use our products rather than competing products.We are dependent on the interoperability of Facebook and our other products with popular mobile operating systems,networks,and standards that we do not control,such as the Andr

121、oid and iOS operating systems.Any changes in such systems,or changes in our relationships with mobile operating system partners,handset manufacturers,or mobile carriers,or in their terms of service or policies that degrade our products functionality,reduce or eliminate our ability to distribute our

122、products,give preferential treatment to competitive products,limit our ability to deliver,target,or measure the effectiveness of ads,or charge fees related to the distribution of our products or our delivery of ads could adversely affect the usage of Facebook or our other products and monetization o

123、n mobile devices.Additionally,in order to deliver high quality mobile products,it is important that our products work well with a range of mobile technologies,systems,networks,and standards that we do not control,and that we have good relationships with handset manufacturers and mobile carriers.We m

124、ay not be successful in maintaining or developing relationships with key participants in the mobile 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 or our

125、 other products on their mobile devices,or if our users choose not to access or use Facebook or our other products on their mobile devices or use mobile products that do not offer access to Facebook or our other products,our user growth and user engagement could be harmed.From time to time,we may al

126、so take actions regarding the distribution of our products or the operation of our business based on what we believe to be in our long-term best interests.Such actions may adversely affect our users and our relationships with the operators of mobile operating systems,handset manufacturers,mobile car

127、riers,or other business partners,and there is no assurance that these actions will result in the anticipated long-term benefits.In the event that our users are adversely affected by these actions or if our relationships with such third parties deteriorate,our user growth,engagement,and monetization

128、could be adversely affected and our business 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 companies that provide tools to facilitate communicatio

129、n and the sharing of information,companies that enable marketers to display advertising and companies that provide development platforms for applications developers.We compete with companies that offer products that replicate the full range of capabilities we provide.For example,Google has integrate

130、d social functionality into a number of its products,including search and Android,as well as other,largely regional,social networks that have strong positions in particular countries.We also compete with companies that develop applications,particularly mobile applications,that provide social or othe

131、r communications functionality,such as messaging,photo-and video-sharing,and micro-blogging,and companies that provide web-and mobile-based information and entertainment products and services that are designed to engage users and capture time spent on mobile devices and online.In addition,we face co

132、mpetition from traditional,online,and mobile businesses that provide media for marketers to reach their audiences and/ordevelop tools and systems for managing and optimizing advertising campaigns.Some of our current and potential competitors may have significantly greater resources or better competi

133、tive positions in certain product segments,geographic regions or user demographics than we do.These factors may allow our competitors to respond more effectively than us to new or emerging technologies and changes in market conditions.We believe that some of our users,particularly our younger users,

134、are aware of and actively engaging with other products and services similar to,or as a substitute for,Facebook products and services,and we believe that some of our users have reduced their engagement with Facebook in favor of increased engagement with these other products and services.In the event

135、that our users increasingly engage with other products and services,we may experience a decline in user engagement in key user demographics or more broadly,in which case our business would likely be harmed.Our competitors may develop products,features,or services that are similar to ours or that ach

136、ieve greater acceptance,may undertake more far-reaching and successful product development efforts or marketing campaigns,or may adopt more aggressive pricing policies.In addition,developers whose mobile and web applications are integrated with Facebook may use information shared by our users throug

137、h Facebook 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 gain competitive advantage against us in areas where we operate,including:by integrating competing platforms,applications,or

138、features into products they control such as mobile device operating 11systems,search engines,or web browsers;by making acquisitions;by limiting or denying our access to advertising measurement or delivery systems;by limiting our ability to deliver,target,or measure the effectiveness of ads;by imposi

139、ng fees or other charges related to our delivery of ads;by making access to our products more difficult;or by making it more difficult to communicate with our users.As a result,our competitors may acquire and engage users or generate advertising or other revenue at the expense of our own efforts,whi

140、ch may negatively affect our business and financial results.In addition,from time to time,we may take actions in response to competitive threats,but we cannot assure you that these actions will be successful or that they will not negatively affect our business and financial results.We believe that o

141、ur ability to compete effectively depends upon many factors both within and beyond our control,including:the popularity,usefulness,ease of use,performance,and reliability of our products compared to our competitors products,particularly with respect to mobile products;the size and composition of our

142、 user base;the engagement of our users with our products and competing products;the timing and market acceptance of products,including developments and enhancements to our or our competitors products;our ability to distribute our products to new and existing users;our ability to monetize our product

143、s;the frequency,size,format,quality,and relative prominence of the ads displayed by us or our competitors;customer service and support efforts;marketing and selling efforts,including our ability to measure the effectiveness of our ads and to provide marketers with a compelling return on their invest

144、ments;our ability to establish and maintain developers interest in building mobile and web applications that integrate with Facebook and our other products;our ability to establish and maintain publisher interest in integrating their content with Facebook and our other products;changes mandated by l

145、egislation,regulatory authorities,or litigation,including settlements and consent decrees,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 emplo

146、yees,particularly software engineers,designers,and product managers;our ability to cost-effectively manage and grow our operations;and our reputation and brand strength relative to those of our competitors.If we are not able to compete effectively,our user base and level of user engagement may decre

147、ase,we may become less attractive to developers and marketers,and our revenue and results of operations may be materially and adversely affected.Action by governments to restrict access to Facebook or our other products in their countries could substantially harm our business and financial results.I

148、t is possible that governments of one or more countries may seek to censor content available on Facebook or our other products in their country,restrict access to our products from their country entirely,or impose other restrictions that may affect the accessibility of our products in their country

149、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,and North Korea.In addition,government authorities in other countries may seek to restrict access to our products if they consider us to be in violation

150、 of their laws.In the event that content shown on Facebook or our other products is subject to censorship,access to our products is restricted,in whole or in part,in one or more countries,or other restrictions are imposed on our products,or our competitors are able to successfully penetrate new geog

151、raphic markets or capture a greater share of existing geographic markets that we cannot access or where we face other restrictions,our ability to retain or increase our user base and user engagement may be adversely affected,we may not be able to maintain or grow our revenue as anticipated,and our f

152、inancial results could be adversely affected.12Our new products and changes to existing products could fail to attract or retain users or generate revenue and profits.Our ability to retain,increase,and engage our user base and to increase our revenue depends heavily on our ability to create successf

153、ul new products,both independently and in conjunction with developers or other third parties.We may introduce significant changes to our existing products,or acquire or introduce new and unproven products,including using technologies with which we have little or no prior development or operating exp

154、erience.For example,in July 2014 we acquired Oculus VR,Inc.(Oculus),a company developing virtual reality technology.We do not have prior experience with consumer hardware products or virtual reality technology,which may adversely affect our ability to successfully develop and market Oculus products

155、or technology,and we will incur increased costs in connection with the development and marketing of such products and technology.In addition,in October 2014,we acquired WhatsApp Inc.(WhatsApp),and we have also invested significant resources in growing Messenger.We have historically monetized messagi

156、ng in only a very limited fashion,and we may not be successful in our efforts to generate meaningful revenue from messaging over the long term.If these or other new or enhanced products fail to engage users,marketers,or developers,or if we are unsuccessful in our monetization efforts,we may fail to

157、attract or retain users or to generate sufficient revenue,operating margin,or other value to justify our investments,and our business may be adversely affected.We make product and investment decisions that may not prioritize short-term financial results.We frequently make product and investment deci

158、sions that may not prioritize short-term financial results if we believe that the decisions are consistent with our mission and benefit the aggregate user experience and will thereby improve our financial performance over the long term.For example,from time to time we may change the size,frequency,o

159、r relative prominence of ads in order to improve ad quality and overall user experience.Similarly,from time to time we update our News Feed ranking algorithm to deliver the most relevant content to our users,which may adversely affect the distribution of content of marketers and developers and could

160、 reduce their incentive to invest in their development and marketing efforts on Facebook.We also may introduce changes to existing products,or introduce new stand-alone products,that direct users away from properties where we have a proven means of monetization.For example,we have taken action to re

161、direct users who send messages from within the Facebook application to our stand-alone Messenger application,although we do not monetize the stand-alone Messenger application in any significant manner.In addition,we plan to continue focusing on growing the user base for WhatsApp and potentially othe

162、r stand-alone applications that may have limited or no near-term monetization,and it is possible that these efforts may reduce engagement with the core Facebook application.We also may take steps that result in limiting distribution of mobile products and services in the short term in order to attem

163、pt to ensure the availability of our products and services to users over the long term.These decisions may not produce the long-term benefits that we expect,in which case our user growth and engagement,our relationships with marketers and developers,and our business and results of operations could b

164、e harmed.If we are not able to maintain and enhance our brands,or if events occur that damage our reputation and brands,our ability to expand our base of users,marketers,and developers may be impaired,and our business and financial results may be harmed.We believe that our brands have significantly

165、contributed to the success of our business.We also believe that maintaining and enhancing our brands is critical to expanding our base of users,marketers,and developers.Many of our new users are referred by existing users.Maintaining and enhancing our brands will depend largely on our ability to con

166、tinue to provide useful,reliable,trustworthy,and innovative products,which we may not do successfully.We may introduce new products or terms of service or policies that users do not like,which may negatively affect our brands.Additionally,the actions of our developers may affect our brands if users

167、do not have a positive experience using third-party mobile and web applications integrated with Facebook.We will also continue to experience media,legislative,or regulatory scrutiny of our decisions regarding user privacy and other issues,which may adversely affect our reputation and brands.We also

168、may fail to provide adequate customer service,which could erode confidence in our brands.Our brands may also be negatively affected by the actions of users that are deemed to be hostile or inappropriate to other users,or by users acting under false or inauthentic identities,by perceived or actual ef

169、forts by governments to obtain access to user information for security-related purposes,or by the use of our products or services for illicit,objectionable,or illegal ends.Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful.

170、Certain of our past actions have eroded confidence in our brands,and if we fail to successfully promote and maintain our brands or if we incur excessive expenses in this effort,our business and financial results may be adversely affected.Security breaches and improper access to or disclosure of our

171、data or user data,or other hacking and phishing attacks on our systems,could harm our reputation and adversely affect our business.Our industry is prone to cyber attacks,with third parties seeking unauthorized access to our data or users data.Any failure to prevent or mitigate security breaches and

172、improper access to or disclosure of our data or user data could result in the loss or misuse of such data,which could harm our business and reputation and diminish our competitive position.In addition,computer malware,viruses,and hacking and phishing attacks by third parties have become more prevale

173、nt in our industry,have occurred on our systems in the past,and may occur on our systems in the future.As a result of our prominence,we believe that we are a particularly attractive target for such breaches and attacks.Such attacks may cause interruptions to the services we provide,degrade the user

174、experience,13cause users to lose confidence in our products,or result in financial harm to us.Our efforts to protect our company data or the information we receive may also be unsuccessful due to software bugs or other technical malfunctions,employee error or malfeasance,government surveillance,or o

175、ther factors.In addition,third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data or our users data.Although we have developed systems and processes that are designed to protect our data and user data and to prevent data loss and

176、 other security breaches,we cannot assure you that such measures will provide absolute security.In addition,some of our developers or other partners,such as those that help us measure the effectiveness of ads,may receive or store information provided by us or by our users through mobile or web appli

177、cations integrated with Facebook.We provide limited information to such third parties based on the scope of services provided to us.However,if these third parties or developers fail to adopt or adhere to adequate data security practices,or in the event of a breach of their networks,our data or our u

178、sers data may be improperly accessed,used,or disclosed.Affected users or government authorities could initiate legal or regulatory actions against us in connection with any security breaches or improper disclosure of data,which could cause us to incur significant expense and liability or result in o

179、rders or consent decrees forcing us to modify our business practices.Any of these events could have a material and adverse effect on our business,reputation,or financial results.Unfavorable media coverage could negatively affect our business.We receive a high degree of media coverage around the worl

180、d.Unfavorable publicity regarding,for example,our privacy practices,terms of service,product changes,product quality,litigation or regulatory activity,government surveillance,the actions of our developers whose products are integrated with our products,the use of our products or services for illicit

181、,objectionable,or illegal ends,the actions of our users,or the actions of other companies that provide similar services to us,could adversely affect our reputation.Such negative publicity also could have an adverse effect on the size,engagement,and loyalty of our user base and result in decreased re

182、venue,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 fluctuated in the past and will fluctuate in the future.Additionally,we have a limited operating histor

183、y with the current scale of our business,which makes it difficult to forecast our future results.As a result,you should not rely upon our past quarterly financial results as indicators of future performance.You should take into account the risks and uncertainties frequently encountered by companies

184、in rapidly evolving markets.Our financial results in any given quarter can be influenced by numerous factors,many of which we are unable to predict or are outside of our control,including:our ability to maintain and grow our user base and user engagement;our ability to attract and retain marketers i

185、n a particular period;fluctuations in spending by our marketers due to seasonality,such as historically strong spending in the fourth quarter of each year,or other factors;the frequency,prominence,size,format,and quality of ads shown to users;the pricing of our ads and other products;our ability to

186、maintain or increase Payments and other fees revenue;the diversification and growth of revenue sources beyond advertising on Facebook;the development and introduction of new products or services by us or our competitors;increases in marketing,sales,and other operating expenses that we will incur to

187、grow and expand our operations and to remain competitive;our ability to maintain gross margins and operating margins;costs related to acquisitions,including costs associated with amortization and additional investments to develop the acquired technologies;charges associated with impairment of any as

188、sets on our balance sheet;our ability to obtain equipment and components for our data centers and other technical infrastructure in a timely and 14cost-effective manner;system failures or outages,which could prevent us from serving ads for any period of time;breaches of security or privacy,and the c

189、osts associated with any such breaches and remediation;changes in the manner in which we distribute our products or inaccessibility of our products due to third-party actions;fees paid to third parties for content or the distribution of our products;share-based compensation expense,including acquisi

190、tion-related expense;adverse litigation judgments,settlements,or other litigation-related costs;changes in the legislative or regulatory environment,including with respect to privacy and data protection,or enforcement by government regulators,including fines,orders,or consent decrees;the overall tax

191、 rate for our business,which may be affected by a number of factors,including the financial results of our international subsidiaries and the timing,size,and integration of acquisitions we may make from time to time;tax obligations that may arise from changes in laws or resolutions of tax examinatio

192、ns that materially differ from the amounts we have anticipated;fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;fluctuations in the market values of our portfolio investments and in interest rates;changes in U.S.gener

193、ally accepted accounting principles;and changes in global business or macroeconomic conditions.We expect our rates of growth to decline in the future.We expect that our user growth and revenue growth rates will decline over time as the size of our active user base increases and as we achieve greater

194、 market penetration.For example,the growth rate of our revenue declined from 58%from 2013 to 2014,to 44%from 2014 to 2015.We expect our revenue growth rate will generally decline over time as our revenue increases to higher levels.As our growth rates decline,investors perceptions of our business may

195、 be adversely affected and the trading price of our Class A common stock could decline.Our costs are continuing to grow,which could harm our business and profitability.Operating our business is costly,and we expect our expenses to continue to increase in the future as we broaden our user base,as use

196、rs increase the amount of content they consume and the data they share with us,as we develop and implement new products,and as we continue to hire additional employees to support our expanding operations.We expect to continue to invest in our global connectivity efforts,which may not have a clear pa

197、th to monetization.We may also be subject to increased costs in order to obtain and attract third-party content or to facilitate the distribution of our products.In addition,we will incur increased costs in connection with the development and marketing of our Oculus products.Any such investments may

198、 not be successful,and any such increases in our costs may adversely affect our business and profitability.Our business is subject to complex and evolving U.S.and foreign laws and regulations regarding privacy,data protection,and other matters.Many of these laws and regulations are subject to change

199、 and uncertain interpretation,and could result in claims,changes to our business practices,monetary penalties,increased cost 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

200、involve matters central to our business,including privacy and data protection,rights of publicity,content,intellectual property,advertising,marketing,distribution,data security,data retention and deletion,personal information,electronic contracts and other communications,competition,protection of mi

201、nors,consumer protection,telecommunications,product liability,taxation,economic or other trade prohibitions or sanctions,securities law compliance,and online payment services.The introduction of new products or expansion of our activities in certain jurisdictions may subject us to additional laws an

202、d regulations.In addition,foreign data protection,privacy,and other laws and regulations can be more restrictive than those in the United States.15These U.S.federal and state and foreign laws and regulations,which in some cases can be enforced by private parties in addition to government entities,ar

203、e constantly evolving and can be subject to significant change.As a result,the application,interpretation,and enforcement of these laws and regulations are often uncertain,particularly in the new and rapidly evolving industry in which we operate,and may be interpreted and applied inconsistently from

204、 country to country and inconsistently with our current policies and practices.For example,regulatory or legislative actions affecting the manner in which we display content to our users could adversely affect user growth and engagement.Such actions could affect the manner in which we provide our se

205、rvices or adversely affect our financial results.We are also subject to laws and regulations that dictate whether,how,and under what circumstances we can transfer,process and/or receive transnational data that is critical to our operations,including data relating to users,customers,or partners outsi

206、de the United States,and those laws and regulations are uncertain and subject to change.For example,in October 2015,the European Court of Justice invalidated the European Commissions 2000 Safe Harbour Decision as a legitimate basis on which Facebook could rely for the transfer of data from the Europ

207、ean Union to the United States.In addition,the other bases on which Facebook relies are likely to be subject to regulatory or judicial scrutiny.If Facebook is unable to transfer data between and among countries and regions in which it operates,it could affect the manner in which we provide our servi

208、ces or adversely affect our financial results.Proposed legislation and regulations could also significantly affect our business.There currently are a number of proposals pending before federal,state,and foreign legislative and regulatory bodies,including a data protection regulation that is pending

209、final approval by the European legislature that may include operational requirements for companies that receive or process personal data that are different than those currently in place in the European Union,and that will include significant penalties for non-compliance.Similarly,there are a number

210、of legislative proposals in the United States,at both the federal and state level,that could impose new obligations in areas affecting our business,such as liability for copyright infringement by third parties.In addition,some countries are considering or have passed legislation implementing data pr

211、otection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.These existing and proposed laws and regulations,as well as any associated inquiries,investigations,or actions,can be costly to compl

212、y with and can delay or impede the development of new products,result in negative publicity,increase our operating costs,require significant management time and attention,and subject us to remedies that may harm our business,including fines or demands or orders that we modify or cease existing busin

213、ess practices.We have been subject to regulatory investigations and settlements and we expect to continue to be subject to such proceedings and other inquires in the future,which could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse t

214、o our business.From time to time,we receive formal and informal inquiries from government authorities and regulators regarding our compliance with laws and regulations,many of which are evolving and subject to interpretation.We are and expect to continue to be the subject of investigations,inquiries

215、,actions,and audits in the United States,Europe,and around the world,particularly in the areas of consumer and data protection,as we continue to grow and expand our operations.For example,several data protection authorities in Europe have initiated actions seeking to assert jurisdiction over Faceboo

216、k Inc.and our subsidiaries and to restrict the ways in which we collect and use information,and other data protection authorities may do the same.Orders issued by,or inquiries or enforcement actions initiated by,government or regulatory authorities could cause us to incur substantial costs,expose us

217、 to unanticipated civil and criminal liability or penalties(including substantial monetary fines),or require us to change our business practices in a manner materially adverse to our business.16If we are unable to protect our intellectual property,the value of our brands and other intangible assets

218、may be diminished,and our business may be adversely affected.We rely and expect to continue to rely on a combination of confidentiality,assignment,and license agreements with our employees,consultants,and third parties with whom we have relationships,as well as trademark,copyright,patent,trade secre

219、t,and domain name protection laws,to protect our proprietary rights.In the United States and internationally,we have filed various applications for protection of certain aspects of our intellectual property,and we currently hold a number of issued patents in multiple jurisdictions and have acquired

220、patents and patent applications from third parties.In addition,in the future we may acquire additional patents or patent portfolios,which could require significant cash expenditures.Third parties may knowingly or unknowingly infringe our proprietary rights,third parties may challenge proprietary rig

221、hts held by us,and pending and future trademark and patent applications may not be approved.In addition,effective intellectual property protection may not be available in every country in which we operate or intend to operate our business.In any or all of these cases,we may be required to expend sig

222、nificant time and expense in order to prevent infringement or to enforce our rights.Although we have generally taken measures to protect our proprietary rights,there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our busine

223、ss.In addition,we regularly contribute software source code under open source licenses and have made other technology we developed available under other open licenses,and we include open source software in our products.For example,we have contributed certain specifications and designs related to our

224、 data center equipment to the Open Compute Project Foundation,a non-profit entity that shares and develops such information with the technology community,under the Open Web Foundation License.As a result of our open source contributions and the use of open source in our products,we may license or be

225、 required to license or disclose code and/or innovations that turn out to be material to our business and may also be exposed to increased litigation risk.If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties,the value of our brands a

226、nd other intangible assets may be diminished and competitors may be able to more effectively mimic our products,services,and methods of operations.Any of these events could have an adverse effect on our business and financial results.We are currently,and expect to be in the future,party to patent la

227、wsuits and other intellectual property rights claims that are expensive and time consuming,and,if resolved adversely,could have a significant impact on our business,financial condition,or results of operations.Companies in the Internet,technology,and media industries own large numbers of patents,cop

228、yrights,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-practicing entities that own patents and other intellectual property rights often attem

229、pt to aggressively assert their rights in order to extract value from technology companies.Furthermore,from time to time we may introduce or acquire new products,including in areas where we historically have not competed,which could increase our exposure to patent and other intellectual property cla

230、ims from competitors and non-practicing entities.From time to time,we receive notice letters from patent holders alleging that certain of our products and services infringe their patent rights.We presently are involved in a number of intellectual property lawsuits,and as we face increasing competiti

231、on and gain an increasingly high profile,we expect the number of patent and other intellectual property claims against us to grow.Defending patent and other intellectual property litigation is costly and can impose a significant burden on management and employees,and there can be no assurances that

232、favorable final outcomes will be obtained in all cases.In addition,plaintiffs may seek,and we may become subject to,preliminary or provisional rulings in the course of any such litigation,including potential preliminary injunctions requiring us to cease some or all of our operations.We may decide to

233、 settle such lawsuits and disputes on terms that are unfavorable to us.Similarly,if any litigation to which we are a party is resolved adversely,we may be subject to an unfavorable judgment that may not be reversed upon appeal.The terms of such a settlement or judgment may require us to cease some o

234、r all of our operations or pay substantial amounts to the other party.In addition,we may have to seek a license to continue practices found to be in violation of a third partys rights,which may not be available on reasonable terms,or at all,and may significantly increase our operating costs and expe

235、nses.As a result,we may also be required to develop alternative non-infringing technology or practices or discontinue the practices.The development of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible.Our business,financial conditi

236、on,and results of operations could be adversely affected as a result of an unfavorable resolution of the disputes and litigation referred to above.We are involved in numerous class action lawsuits and other litigation matters that are expensive and time consuming,and,if resolved adversely,could harm

237、 our business,financial condition,or results of operations.In addition to intellectual property claims,we are also involved in numerous other lawsuits,including putative class action lawsuits,many of which claim statutory damages and/or seek significant changes to our business operations,and we anti

238、cipate that we will continue to be a target for numerous lawsuits in the future.Because of the scale of our user base,the plaintiffs in class action cases filed against us typically claim enormous monetary damages even if the alleged per-user harm is small or non-existent.In addition,we may be subje

239、ct to additional class action lawsuits based on product performance or other claims related to the use of consumer hardware and software,as well as virtual reality technology and products,which are new and unproven.Any negative 17outcome from any such lawsuits could result in payments of substantial

240、 monetary damages or fines,or undesirable changes to our products or business practices,and accordingly our business,financial condition,or results of operations could be materially and adversely affected.Although the results of such lawsuits and claims cannot be predicted with certainty,we do not b

241、elieve that the final outcome of those matters relating to our products that we currently face will have a material adverse effect on our business,financial condition,or results of operations.In addition,we are currently the subject of stockholder class action suits in connection with our IPO.We bel

242、ieve these lawsuits are without merit and are vigorously defending these lawsuits.There can be no assurances that a favorable final outcome will be obtained in all our cases,and defending any lawsuit is costly and can impose a significant burden on management and employees.Any litigation to which we

243、 are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal or in payments of substantial monetary damages or fines,or we may decide to settle lawsuits on similarly unfavorable terms,which could adversely affect our business,financial conditions,or results of o

244、perations.We may incur liability as a result of information retrieved from or transmitted over the Internet or published using our products or as a result of claims related to our products.We have faced,currently face,and will continue to face claims relating to information that is published or made

245、 available on our products.In particular,the nature of our business exposes us to claims related to defamation,intellectual property rights,rights of publicity and privacy,and personal injury torts.This risk is enhanced in certain jurisdictions outside the United States where our protection from lia

246、bility for third-party actions may be unclear and where we may be less protected under local laws than we are in the United States.We could incur significant costs investigating and defending such claims and,if we are found liable,significant damages.If any of these events occur,our business and fin

247、ancial results could be adversely affected.Our CEO has control over key decision making as a result of his control of a majority of our voting stock.Mark Zuckerberg,our founder,Chairman,and CEO,is able to exercise voting rights with respect to a majority of the voting power of our outstanding capita

248、l stock and therefore has the ability to control the outcome of matters submitted to our stockholders for approval,including the election of directors and any merger,consolidation,or sale of all or substantially all of our assets.This concentrated control could delay,defer,or prevent a change of con

249、trol,merger,consolidation,or sale of all or substantially all of our assets that our other stockholders support,or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support.This concentrated control could also discourage a

250、potential investor from acquiring our Class A common stock due to the limited voting power of such stock relative to the Class B common stock and might harm the trading price of our Class A common stock.In addition,Mr.Zuckerberg has the ability to control the management and major strategic investmen

251、ts of our company as a result of his position as our CEO and his ability to control the election or replacement of our directors.In the event of his death,the shares of our capital stock that Mr.Zuckerberg owns will be transferred to the persons or entities that he has designated.As a board member a

252、nd officer,Mr.Zuckerberg owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders.As a stockholder,even a controlling stockholder,Mr.Zuckerberg is entitled to vote his shares,and shares over which he has v

253、oting control as governed by a voting agreement,in his own interests,which may not always be in the interests of our stockholders generally.We plan to continue to make acquisitions,which could harm our financial condition or results of operations and may adversely affect the price of our common stoc

254、k.As part of our business strategy,we have made and intend to continue to make acquisitions to add specialized employees and complementary companies,products,or technologies.We may not be able to find suitable acquisition candidates,and we may not be able to complete acquisitions on favorable terms,

255、if at all.In some cases,the costs of such acquisitions may be substantial.For example,in 2014 we paid approximately$4.6 billion in cash and issued 178 million shares of our Class A common stock in connection with our acquisition of WhatsApp,and we paid approximately$400 million in cash and issued 23

256、 million shares of our Class B common stock in connection with our acquisition of Oculus.We also issued a substantial number of RSUs to help retain the employees of these companies.There is no assurance that we will receive a favorable return on investment for these or other acquisitions.In the futu

257、re,we may pay substantial amounts of cash or incur debt to pay for acquisitions,which could adversely affect our liquidity.The incurrence of indebtedness would also result in increased fixed obligations,increased interest expense,and could also include covenants or other restrictions that would impe

258、de our ability to manage our operations.We may also issue equity securities to pay for acquisitions and we regularly grant RSUs to retain the employees of acquired companies,which could increase our expenses,adversely affect our financial results,and result in dilution to our stockholders.In additio

259、n,any acquisitions we announce could be viewed negatively by users,marketers,developers,or investors,which may adversely affect our business or the price of our common stock.18We may also discover liabilities or deficiencies associated with the companies or assets we acquire that were not identified

260、 in advance,which may result in significant unanticipated costs.The effectiveness of our due diligence review and our ability to evaluate the results of such due diligence are dependent upon the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire

261、 or their representatives,as well as the limited amount of time in which acquisitions are executed.In addition,we may fail to accurately forecast the financial impact of an acquisition transaction,including tax and accounting charges.Acquisitions may also result in our recording of significant addit

262、ional expenses to our results of operations and recording of substantial finite-lived intangible assets on our balance sheet upon closing.Any of these factors may adversely affect our financial condition or results of operations.We may not be able to successfully integrate our acquisitions,and we ma

263、y incur significant costs to integrate and support the companies we acquire.The integration of acquisitions requires significant time and resources,and we may not manage these processes successfully.Our ability to successfully integrate complex acquisitions is unproven,particularly with respect to c

264、ompanies that have significant operations or that develop products where we do not have prior experience.For example,Oculus and WhatsApp are larger and more complex than companies we have historically acquired.In particular,Oculus builds technology and products that are new to Facebook and with whic

265、h we did not have significant experience or structure in place to support prior to the acquisition.We are making substantial investments of resources to support these acquisitions,which will result in significant ongoing operating expenses and may divert resources and management attention from other

266、 areas of our business.We cannot assure you that these investments will be successful.If we fail to successfully integrate the companies we acquire,we may not realize the benefits expected from the transaction and our business may be harmed.If our goodwill or finite-lived intangible assets become im

267、paired,we may be required to record a significant charge to earnings.We review our finite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable,such as a decline in stock price and market capitalization.We test goodwill for

268、impairment at least annually.If such goodwill or finite-lived intangible assets are deemed to be impaired,an impairment loss equal to the amount by which the carrying amount exceeds the fair value of the assets would be recognized.We may be required to record a significant charge in our financial st

269、atements during the period in which any impairment of our goodwill or finite-lived intangible assets is determined,which would negatively affect our results of operations.Our business is dependent on our ability to maintain and scale our technical infrastructure,and any significant disruption in our

270、 service could damage our reputation,result in a potential loss of users and engagement,and adversely affect our financial results.Our reputation and ability to attract,retain,and serve our users is dependent upon the reliable performance of our products and our underlying technical infrastructure.O

271、ur systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business.If our products are unavailable when users attempt to access them,or if they do not load as quickly as expected,users may not use our p

272、roducts as often in the future,or at all,and our ability to serve ads may be disrupted.As our user base and engagement continue to grow,and the amount and types of information shared on Facebook and our other products continue to grow and evolve,such as increased engagement with video,we will need a

273、n increasing amount of technical infrastructure,including network capacity and computing power,to continue to satisfy the needs of our users.It is possible that we may fail to effectively scale and grow our technical infrastructure to accommodate these increased demands.In addition,our business may

274、be subject to interruptions,delays,or failures resulting from earthquakes,adverse weather conditions,other natural disasters,power loss,terrorism,or other catastrophic events.If such an event were to occur,users may be subject to service disruptions or outages and we may not be able to recover our t

275、echnical infrastructure and user data in a timely manner to restart or provide our services,which may adversely affect our financial results.A substantial portion of our network infrastructure is provided by third parties.Any disruption or failure in the services we receive from these providers coul

276、d harm our ability to handle existing or increased traffic and could significantly harm our business.Any financial or other difficulties these providers face may adversely affect our business,and we exercise little control over these providers,which increases our vulnerability to problems with the s

277、ervices they provide.We could experience unforeseen difficulties in building and operating key portions of our technical infrastructure.We have designed and built our own data centers and key portions of our technical infrastructure through which we serve our products,and we plan to continue to sign

278、ificantly expand the size of our infrastructure primarily through data centers and other projects.The infrastructure expansion we are undertaking is complex,and unanticipated delays in the completion of these projects or availability of components may lead to increased project costs,operational inef

279、ficiencies,or interruptions in the delivery or degradation of the quality of our products.In addition,there may be issues related to this infrastructure that are not identified during the testing phases of design and implementation,which may only become evident after we have started to fully utilize

280、 the underlying equipment,that could further degrade the user experience or increase our costs.19Our products and internal systems rely on software that is highly technical,and if it contains undetected errors or vulnerabilities,our business could be adversely affected.Our products and internal syst

281、ems rely on software,including software developed or maintained internally and/or by third parties,that is highly technical and complex.In addition,our products and internal systems depend on the ability of such software to store,retrieve,process,and manage immense amounts of data.The software on wh

282、ich we rely has contained,and may now or in the future contain,undetected errors,bugs,or vulnerabilities.Some errors may only be discovered after the code has been released for external or internal use.Errors,vulnerabilities,or other design defects within the software on which we rely may result in

283、a negative experience for users and marketers who use our products,delay product introductions or enhancements,result in measurement or billing errors,compromise our ability to protect the data of our users and/or our intellectual property or lead to reductions in our ability to provide some or all

284、of our services.For example,social games on Facebook rely on Adobe Flash,which games are currently responsible for substantially all of our Payments revenue.In July 2015,certain vulnerabilities discovered in Flash led to temporary interruption of support for Flash by popular web browsers.If similar

285、interruptions occur in the future and disrupt our ability to provide social games to some or all of our users,our ability to generate Payments revenue would be harmed.Any errors,bugs,vulnerabilities,or defects discovered in the software on which we rely,and any associated degradations or interruptio

286、ns of service,could result in damage to our reputation,loss of users,loss of revenue,or liability for damages,any of which could adversely affect our business and financial results.Technologies have been developed that can block the display of our ads,which could adversely affect our financial resul

287、ts.Technologies have been developed,and will likely continue to be developed,that can block the display of our ads,particularly advertising displayed on personal computers.We generate substantially all of our revenue from advertising,including revenue resulting from the display of ads on personal co

288、mputers.Revenue generated from the display of ads on personal computers has been impacted by these technologies from time to time.As a result,these technologies have had an adverse effect on our financial results and,if such technologies continue to proliferate,in particular with respect to mobile p

289、latforms,our future financial results may be harmed.Certain of our user metrics are subject to inherent challenges in measurement,and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.The numbers for our key metrics,which include our DAUs,mobil

290、e DAUs,MAUs,mobile MAUs,and average revenue per user(ARPU),as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs,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 o

291、ur user base for the applicable period of measurement,there are inherent challenges in measuring usage of our products across large online and mobile populations around the world.For example,there may be individuals who maintain one or more Facebook accounts in violation of our terms of service.We e

292、stimate,for example,that duplicate accounts(an account that a user maintains in addition to his or her principal account)may have represented less than 5%of our worldwide MAUs in 2015.We also seek to identify false accounts,which we divide into two categories:(1)user-misclassified accounts,where use

293、rs have created personal profiles for a business,organization,or non-human entity such as a pet(such entities are permitted on Facebook using a Page rather than a personal profile under our terms of service);and(2)undesirable accounts,which represent user profiles that we determine are intended to b

294、e used for purposes that violate our terms of service,such as spamming.In 2015,for example,we estimate that such user-misclassified and undesirable accounts may have represented less than 2%our worldwide MAUs.We believe the percentage of accounts that are duplicate or false is meaningfully lower in

295、developed markets such as the United States or United Kingdom and higher in developing markets such as India and Turkey.However,these estimates are based on an internal review of a limited sample of accounts and we apply significant judgment in making this determination,such as identifying names tha

296、t appear to be fake or other behavior that appears inauthentic to the reviewers.As such,our estimation of duplicate or false accounts may not accurately represent the actual number of such accounts.We are continually seeking to improve our ability to identify duplicate or false accounts and estimate

297、 the total number of such accounts,and such estimates may change due to improvements or changes in our methodology.Our data limitations may affect our understanding of certain details of our business.For example,while user-provided data indicates a decline in usage among younger users,this age data

298、is unreliable because a disproportionate number of our younger users register with an inaccurate age.Accordingly,our understanding of usage by age group may not be complete.Some of our metrics have also been affected by applications on certain mobile devices that automatically contact our servers fo

299、r regular updates with no user action involved,and this activity can cause our system to count the user associated with such a device as an active user on the day such contact occurs.The impact of this automatic activity on our metrics varied by geography because mobile usage varies in different reg

300、ions of the world.In addition,our data regarding the geographic location of our users is estimated based on a number of factors,such as the users IP address and self-disclosed location.These factors may not always accurately reflect the users actual location.For example,a mobile-only user may appear

301、 to be accessing Facebook from the location of the proxy server that the user connects to rather than from the users actual location.The methodologies used to measure user metrics may also be 20susceptible to algorithm or other technical errors.Our estimates for revenue by user location and revenue

302、by user device are also affected by these factors.We regularly review our processes for calculating these metrics,and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy,including adjustments that may result in the recalculation of our historic

303、al metrics.We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated.In addition,our DAU and MAU estimates will differ from estimates published by third parties due to differences in methodology.For example,some third parties are not able to accurately measure mobil

304、e users or do not count mobile users for certain user groups or at all in their analyses.If marketers,developers,or investors do not perceive our user metrics to be accurate representations of our user base,or if we discover material inaccuracies in our user metrics,our reputation may be harmed and

305、marketers and developers may be less willing to allocate their budgets or resources to Facebook,which could negatively affect our business and financial results.We cannot assure you that we will effectively manage our growth.Our employee headcount and the scope and complexity of our business have in

306、creased significantly,with the number of employees increasing to 12,691 as of December 31,2015 from 9,199 as of December 31,2014,and we expect headcount growth to continue for the foreseeable future.The growth and expansion of our business and products create significant challenges for our managemen

307、t,operational,and financial resources,including managing multiple relations with users,marketers,developers,and other third parties.In the event of continued growth of our operations or in the number of our third-party relationships,our information technology systems or our internal controls and pro

308、cedures may not be adequate to support our operations.In addition,some members of our management do not have significant experience managing a large global business operation,so our management may not be able to manage such growth effectively.To effectively manage our growth,we must continue to impr

309、ove our operational,financial,and management processes and systems and to effectively expand,train,and manage our employee base.As our organization continues to grow,and we are required to implement more complex organizational management structures,we may find it increasingly difficult to maintain t

310、he benefits of our corporate culture,including our ability to quickly develop and launch new and innovative products.This could negatively affect our business performance.The loss of one or more of our key personnel,or our failure to attract and retain other highly qualified personnel in the future,

311、could harm our business.We currently depend on the continued services and performance of our key personnel,including Mark Zuckerberg and Sheryl K.Sandberg.Although we have entered into employment agreements with Mr.Zuckerberg and Ms.Sandberg,the agreements have no specific duration and constitute at

312、-will employment.In addition,many of our key technologies and systems are custom-made for our business by our personnel.The loss of key personnel,including members of management as well as key engineering,product development,marketing,and sales personnel,could disrupt our operations and have an adve

313、rse effect on our business.As we continue to grow,we cannot guarantee we will continue to attract the personnel we need to maintain our competitive position.In particular,we intend to continue to hire a significant number of technical personnel in the foreseeable future,and we expect to face signifi

314、cant competition from other companies in hiring such personnel,particularly in the San Francisco Bay Area,where our headquarters are located and where the cost of living is high.As we mature,the incentives to attract,retain,and motivate employees provided by our equity awards or by future arrangemen

315、ts may not be as effective as in the past,and if we issue significant equity to attract additional employees,the ownership of our existing stockholders may be further diluted.Our ability to attract,retain,and motivate employees may also be adversely affected by stock price volatility.Additionally,we

316、 have a number of current employees whose equity ownership in our company has provided them a substantial amount of personal wealth,which could affect their decisions about whether or not to continue to work for us.As a result of these factors,it may be difficult for us to continue to retain and mot

317、ivate our employees.If we do not succeed in attracting,hiring,and integrating excellent personnel,or retaining and motivating existing personnel,we may be unable to grow effectively.21We may not be able to continue to successfully grow usage of and engagement with mobile and web applications that in

318、tegrate with Facebook and our other products.We have made and are continuing to make investments to enable developers to build,grow,and monetize mobile and web applications that integrate with Facebook and our other products.Such existing and prospective developers may not be successful in building,

319、growing,or monetizing mobile and/or web applications that create and maintain user engagement.Additionally,developers may choose to build on other platforms,including mobile platforms controlled by third parties,rather than building products that integrate with Facebook and our other products.We are

320、 continuously seeking to balance the distribution objectives of our developers with our desire to provide an optimal user experience,and we may not be successful in achieving a balance that continues to attract and retain such developers.For example,from time to time,we have taken actions to reduce

321、the volume of communications from these developers to users on Facebook and our other products with the objective of enhancing the user experience,and such actions have reduced distribution from,user engagement with,and our monetization opportunities from,mobile and web applications integrated with

322、our products.In some instances,these actions,as well as other actions to enforce our policies applicable to developers,have adversely affected our relationships with such developers.If we are not successful in our efforts to continue to grow the number of developers that choose to build products tha

323、t integrate with Facebook and our other products or if we are unable to continue to build and maintain good relations with such developers,our user growth and user engagement and our financial results may be adversely affected.We currently generate all of our Payments revenue from developers that us

324、e Facebook on personal computers,and we expect that our Payments revenue will continue to decline in the future as usage of Facebook on personal computers continues to decline.We currently generate all of our Payments revenue from developers that use Facebook on personal computers.Specifically,appli

325、cations built by developers of social games are currently responsible for substantially all of our revenue derived from Payments,and the majority of the revenue from these applications has historically been generated by a limited number of the most popular games.We have experienced and expect to see

326、 the continued decline in usage of Facebook on personal computers for the foreseeable future,which we expect will result in a continuing decline in Payments revenue.In addition,a relatively small percentage of our users have transacted with Facebook Payments.If the Facebook-integrated applications f

327、ail to grow or maintain their users and engagement,whether as a result of the continued decline in the usage of Facebook on personal computers or otherwise,if developers do not continue to introduce new applications that attract users and create engagement on Facebook,or if Facebook-integrated appli

328、cations outside of social games do not gain popularity and generate significant revenue for us,our financial performance could be adversely affected.Payment transactions may subject us to additional regulatory requirements and other risks that could be costly and difficult to comply with or that cou

329、ld harm our business.Our users can purchase virtual and digital goods from developers that offer applications using our Payments infrastructure on the Facebook website.In addition,certain of our users can use our Payments infrastructure for other activities,such as sending money to other users and m

330、aking donations to certain charitable organizations.We are subject to a variety of laws and regulations in the United States,Europe,and elsewhere,including those governing anti-money laundering and counter-terrorist financing,money transmission,gift cards and other prepaid access instruments,electro

331、nic funds transfer,charitable fundraising,and import and export restrictions.Depending on how our Payments product evolves,we may also be subject to other laws and regulations including those governing gambling,banking,and lending.In some jurisdictions,the application or interpretation of these laws

332、 and regulations is not clear.To increase flexibility in how our use of Payments may evolve and to mitigate regulatory uncertainty,we have received certain money transmitter licenses in the United States and are applying for certain regulatory licenses in Europe,which will generally require us to de

333、monstrate compliance with many domestic and foreign laws in these areas.Our efforts to comply with these laws and regulations could be costly and result in diversion of management time and effort and may still not guarantee compliance.In the event that we are found to be in violation of any such legal or regulatory requirements,we may be subject to monetary fines or other penalties such as a cease