Facebook

Facebook, Inc.
Type Private
Founded Cambridge, Massachusetts[1] (2004)
Founder Mark Zuckerberg
Chris Hughes
Dustin Moskovitz
Eduardo Saverin
Headquarters Palo Alto, California, U.S.
Dublin, Ireland (headquarters for Europe, Africa, Middle East)
Seoul, South Korea (headquarters for Asia)
Wellington, New Zealand (headquarters for Oceania)
Area served Worldwide
Key people Mark Zuckerberg (CEO)
Chris Cox (VP of Product)
Sheryl Sandberg (COO)
Revenue increase US$800 million (2009 est.)[2]
Employees 1400 (2010)[3]
Website facebook.com
Alexa rank steady 2 (August 2010)[4]
Type of site Social network service
Advertising Banner ads, referral marketing, Casual games
Registration Required
Users 500 million[5] (active in Jul. 2010)[N 1]
Available in Multilingual
Launched February 4, 2004
Current status Active

Facebook is a social networking website launched in February 2004 that is operated and privately owned by Facebook, Inc.,[1] with more than 500 million[5] active users in July 2010.[6][N 1] Users can add people as friends and send them messages, and update their personal profiles to notify friends about themselves. Additionally, users can join networks organized by workplace, school, or college. The website's name stems from the colloquial name of books given to students at the start of the academic year by university administrations in the US with the intention of helping students to get to know each other better. Facebook allows anyone who declares themselves to be aged 13 or older to become a member of the website.

Facebook was founded by Mark Zuckerberg with his college roommates and fellow computer science students Eduardo Saverin, Dustin Moskovitz and Chris Hughes.[7] The website's membership was initially limited by the founders to Harvard students, but was expanded to other colleges in the Boston area, the Ivy League, and Stanford University. It gradually added support for students at various other universities before opening to high school students, and, finally, to anyone aged 13 and over.

Facebook has met with some controversy. It has been blocked intermittently in several countries including Pakistan,[8] Syria,[9] People's Republic of China,[10] Vietnam,[11] and Iran.[12] It has also been banned at many places of work to discourage employees from wasting time using the service.[13] Privacy has also been an issue, and it has been compromised several times. Facebook settled a lawsuit regarding claims over source code and intellectual property.[14] The site has also been involved in controversy over the sale of fans and friends.[15]

A January 2009 Compete.com study ranked Facebook as the most used social network by worldwide monthly active users, followed by MySpace.[16] Entertainment Weekly put it on its end-of-the-decade 'best-of' list, saying, "How on earth did we stalk our exes, remember our co-workers' birthdays, bug our friends, and play a rousing game of Scrabulous before Facebook?"[17]

Contents

History

Mark Zuckerberg created Facebook in his Harvard dorm room.

Mark Zuckerberg wrote Facemash, the predecessor to Facebook, on October 28, 2003, while attending Harvard as a sophomore. The site represented a Harvard University version of Hot or Not, according to the Harvard Crimson.[18] According to The Harvard Crimson, Facemash "used photos compiled from the online facebooks of nine Houses, placing two next to each other at a time and asking users to choose the 'hotter' person". To accomplish this, Zuckerberg hacked into the protected areas of Harvard's computer network and copied the houses' private dormitory ID images. Harvard at that time did not have a student directory with photos, and basic information and the initial site generated 450 visitors and 22,000 photo-views in its first four hours online.[19] That the initial site mirrored people’s physical community—with their real identities—represented the key aspects of what later became Facebook.[20]

The site was quickly forwarded to several campus group list-servers but was shut down a few days later by the Harvard administration. Zuckerberg was charged by the administration with breach of security, violating copyrights, and violating individual privacy, and faced expulsion, but ultimately the charges were dropped.[21] Zuckerberg expanded on this initial project that semester by creating a social study tool ahead of an art history final by uploading 500 Augustan images to a website, with one image per page along with a comment section.[20] He opened the site up to his classmates and people started sharing their notes. The following semester, Zuckerberg began writing code for a new website in January 2004. He was inspired, he said, by an editorial in The Harvard Crimson about the Facemash incident.[22] On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.[23]

Total active users[N 1] (in millions)
Date Users Days later Monthly growth[N 2]
02008-08-26 August 26, 2008 &0000000000000100000000100[24] &00000000000016650000001,665 178.38%
02009-04-08 April 8, 2009 &0000000000000200000000200[25] &0000000000000225000000225 13.33%
02009-09-15 September 15, 2009 &0000000000000300000000300[26] &0000000000000150000000150 10%
02010-02-05 February 5, 2010 &0000000000000400000000400[27] &0000000000000143000000143 6.99%
02010-07-21 July 21, 2010 &0000000000000500000000500[5] &0000000000000166000000166 4.52%
— &0000000000000600000000600 &0000000000000208000000208 (ongoing) —

Membership was initially restricted to students of Harvard College, and within the first month, more than half the undergraduate population at Harvard was registered on the service.[28] Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes soon joined Zuckerberg to help promote the website. In March 2004, Facebook expanded to Stanford, Columbia, and Yale.[29] This expansion continued when it opened to all Ivy League schools, New York University, MIT, and gradually most universities in Canada and the United States.[30][31] Facebook incorporated in the summer of 2004 and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president.[32] In June 2004, Facebook moved its base of operations to Palo Alto, California.[29] Facebook received its first investment later that month from PayPal co-founder Peter Thiel.[33] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[34]

Entrance to Facebook's current headquarters in the Stanford Research Park, Palo Alto, California.

Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step.[35] At that time, high school networks required an invitation to join.[36] Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft.[37] Facebook was then opened on September 26, 2006, to everyone of ages 13 and older with a valid e-mail address.[38][39] On October 24, 2007, Microsoft announced that it had purchased a 1.6% share of Facebook for $240 million, giving Facebook a total implied value of around $15 billion.[40] Microsoft's purchase included rights to place international ads on Facebook.[41] In October 2008, Facebook announced that it was to set up its international headquarters in Dublin, Ireland.[42] In September 2009, Facebook claimed that it had turned cash flow positive for the first time.[43] In June 2010, an online marketplace for trading private company stock reflected a valuation of $11.5 billion.[44]

Traffic to Facebook has increased exponentially since 2009. More people visited Facebook than Google for the week ending March 13, 2010.[45] Facebook has also become the top social network across eight of individual markets in the region, Philippines, Australia, Indonesia, Malaysia, Singapore, New Zealand, Hong Kong and Vietnam, while other brands commanded the top positions in certain markets, including Google-owned Orkut in India, Mixi.jp in Japan, CyWorld in South Korea and Yahoo!’s Wretch.cc in Taiwan.

Company

Revenues
(estimated, in millions US$)
Year Revenue Growth
2006 $&000000000000005200000052[46] —
2007 $&0000000000000150000000150[47] 188%
2008 $&0000000000000280000000280[48] 87%
2009 $&0000000000000800000000800[2] 186%
2010[N 3] $&00000000000011000000001,100[49] 38%

Most of Facebook's revenues comes from Credits, and advertisements that are served from the website's Flyers application. Microsoft is Facebook's exclusive partner for serving banner advertising,[50] and as such Facebook only serves advertisements that exist in Microsoft's advertisement inventory. According to comScore, an internet marketing research company, Facebook collects as much data from its visitors as Google and Microsoft, but considerably less than Yahoo!.[51] In 2010, the security team began expanding its efforts to counter threats and terrorism from users.[52] On November 6, 2007, Facebook launched Facebook Beacon, which was an ultimately failed attempt to advertise to friends of users using the knowledge of what purchases friends made.

Facebook generally has a lower clickthrough rate (CTR) for advertisements than most major websites. For banner advertisements, they have generally received one-fifth the number of clicks on Facebook compared to the Web as a whole.[53] This means that a smaller percentage of Facebook's users click on advertisements than many other large websites. For example, while Google users click on the first advertisement for search results an average of 8% of the time (80,000 clicks for every one million searches),[54] Facebook's users click on advertisements an average of 0.04% of the time (400 clicks for every one million pages).[55] Sarah Smith, who was Facebook's Online Sales Operations Manager, confirmed that successful advertising campaigns can have clickthrough rates as low as 0.05% to 0.04%, and that CTR for ads tend to fall within two weeks.[56] Competing social network MySpace's CTR, in comparison, is about 0.1%, 2.5 times better than Facebook's but still low compared to many other websites. Explanations for Facebook's low CTR include the fact that Facebook's users are more technologically savvy and therefore use ad blocking software to hide advertisements, the users are younger and therefore are better at ignoring advertising messages, and that on MySpace, users spend more time browsing through content while on Facebook, users spend their time communicating with friends and therefore have their attention diverted away from advertisements.[57]

On Pages for brands and products, however, some companies have reported CTR as high as 6.49% for Wall posts.[58] Involver, a social marketing platform, announced in July 2008 that it managed to attain a CTR of 0.7% on Facebook (over 10 times the typical CTR for Facebook ad campaigns) for its first client, Serena Software, managing to convert 1.1 million views into 8000 visitors to their website.[59] A study found that for video advertisements on Facebook, over 40% of users who viewed the videos viewed the entire video, while the industry average was 25% for in-banner video ads.[60]

As of December 2007, Facebook had approximately 800 employees—35% of whom work virtually—and had offices in 18 countries.[61] Regarding Facebook ownership, Mark Zuckerberg owns 24% of the company, Accel Partners owns 10%, Dustin Moskovitz owns 6%, Digital Sky Technologies owns 5%, Eduardo Saverin owns 5%, Sean Parker owns 4%, Peter Thiel owns 3%, Greylock Partners and Meritech Capital Partners own between 1 to 2% each, Microsoft owns 1.3%, Li Ka-shing owns 0.75%, the Interpublic Group owns less than 0.5%, a small group of current and former employees own less than 1% each, including Matt Cohler, Jeff Rothschild, Chris Hughes, and Owen Van Natta, while Reid Hoffman and Mark Pincus have sizable holdings of the company, and the remaining 30% or so are owned by employees and outside investors.[62] Adam D'Angelo, chief technology officer and friend of Zuckerberg, resigned in May 2008. Reports claimed that he and Zuckerberg began quarreling, and that he was no longer interested in partial ownership of the company.[63]

Website

Facebook's homepage features a login form on the top right for existing users and a registration form directly underneath for new visitors.

Users can create profiles with photos, lists of personal interests, contact information and other personal information. Communicating with friends and other users can be done through private or public messages or a chat feature. Users can also create and join interest groups and "like pages" (formerly called "fan pages" until April 19, 2010), some of which are maintained by organizations as a means of advertising.[64] To allay concerns about privacy, Facebook enables users to choose their own privacy settings and choose who can see what parts of their profile.[65] The website is free to users and generates revenue from advertising, such as banner ads.[66] By default, the viewing of detailed profile data is restricted to users from the same network and "reasonable community limitations".[67]

Profile shown on Thefacebook in 2005

The media often compares Facebook to MySpace, but one significant difference between the two websites is the level of customization.[68] MySpace allows users to decorate their profiles using HTML and Cascading Style Sheets (CSS), while Facebook only allows plain text.[69] Facebook has a number of features with which users may interact. They include the Wall, a space on every user's profile page that allows friends to post messages for the user to see;[70] Pokes, which allows users to send a virtual "poke" to each other (a notification then tells a user that they have been poked);[71] Photos, where users can upload albums and photos;[72] and Status, which allows users to inform their friends of their whereabouts and actions.[73] Depending on privacy settings, anyone who can see a user's profile can also view that user's Wall. In July 2007, Facebook began allowing users to post attachments to the Wall, whereas the Wall was previously limited to textual content only.[70]

Over time, Facebook has added features to its website. On September 6, 2006, a News Feed was announced, which appears on every user's homepage and highlights information including profile changes, upcoming events, and birthdays of the user's friends.[74] This has enabled spammers and other users to manipulate these features by creating illegitimate events or posting fake birthdays to attract attention to their profile or cause.[75] Initially, the News Feed caused dissatisfaction among Facebook users; some complained it was too cluttered and full of undesired information, while others were concerned it made it too easy for other people to track down individual activities (such as changes in relationship status, events, and conversations with other users).[76] In response to this dissatisfaction, Zuckerberg issued an apology for the site's failure to include appropriate customizable privacy features. Since then, users have been able to control what types of information are shared automatically with friends. Users are now able to prevent friends from seeing updates about certain types of activities, including profile changes, Wall posts, and newly added friends.[77] On February 23, 2010, Facebook was granted US patent 7669123 on certain aspects of their News Feed. The patent covers News Feeds where links are provided so that one user can participate in the same activity of another user.[78] The patent may encourage Facebook to pursue action against websites that violate the patent, which may potentially include websites such as Twitter.[79]

Facebook profile shown in 2007

One of the most popular applications on Facebook is the Photos application, where users can upload albums and photos.[80] Facebook allows users to upload an unlimited number of photos, compared with other image hosting services such as Photobucket and Flickr, which apply limits to the number of photos that a user is allowed to upload. During the first years, Facebook users were limited to 60 photos per album. As of May 2009, this limit has been increased to 200 photos per album.[81][82][83][84] Privacy settings can be set for individual albums, limiting the groups of users that can see an album. For example, the privacy of an album can be set so that only the user's friends can see the album, while the privacy of another album can be set so that all Facebook users can see it. Another feature of the Photos application is the ability to "tag", or label users in a photo. For instance, if a photo contains a user's friend, then the user can tag the friend in the photo. This sends a notification to the friend that they have been tagged, and provides them a link to see the photo.[85]

Facebook mobile graphical user interface

Facebook Notes was introduced on August 22, 2006, a blogging feature that allowed tags and embeddable images. Users were later able to import blogs from Xanga, LiveJournal, Blogger, and other blogging services.[38] During the week of April 7, 2008, Facebook released a Comet-based[86] instant messaging application called "Chat" to several networks,[87] which allows users to communicate with friends and is similar in functionality to desktop-based instant messengers. Facebook launched Gifts on February 8, 2007, which allows users to send virtual gifts to their friends that appear on the recipient's profile. Gifts cost $1.00 each to purchase, and a personalized message can be attached to each gift.[88][89] On May 14, 2007, Facebook launched Marketplace, which lets users post free classified ads.[90] Marketplace has been compared to Craigslist by CNET, which points out that the major difference between the two is that listings posted by a user on Marketplace are only seen by users that are in the same network as that user, whereas listings posted on Craigslist can be seen by anyone.[91]

On July 20, 2008, Facebook introduced "Facebook Beta", a significant redesign of its user interface on selected networks. The Mini-Feed and Wall were consolidated, profiles were separated into tabbed sections, and an effort was made to create a "cleaner" look.[92] After initially giving users a choice to switch, Facebook began migrating all users to the new version beginning in September 2008.[93] On December 11, 2008, it was announced that Facebook was testing a simpler signup process.[94] On June 13, 2009, Facebook introduced a "Usernames" feature, whereby pages can be linked with simpler URLs such as http://www.facebook.com/facebook as opposed to http://www.facebook.com/profile.php?id=20531316728.[95] Many new smartphones offer access to the Facebook services either through their web-browsers or applications. An official Facebook application is available for the iPhone OS, the Android OS, and the WebOS. Nokia and Research in Motion both provide Facebook applications for their own mobile devices.

Reception

According to comScore, Facebook is the leading social networking site based on monthly unique visitors, having overtaken main competitor MySpace in April 2008.[96] ComScore reports that Facebook attracted 132.1 million unique visitors in June 2008, compared to MySpace, which attracted 117.6 million.[97] According to Alexa, the website's ranking among all websites increased from 60th to 7th in worldwide traffic, from September 2006 to September 2007, and is currently 2nd.[98] Quantcast ranks the website 4th in the U.S. in traffic,[99] and Compete.com ranks it 2nd in the U.S.[100] The website is the most popular for uploading photos, with 14 million uploaded daily.[101] In 2010, Sophos's "Security Threat Report 2010" polled over 500 firms, 60% of which responded that they believed that Facebook was the social network that posed the biggest threat to security, well ahead of MySpace, Twitter, and Linkedln.[52]

Facebook is the most popular social networking site in several English-speaking countries, including Canada,[102] the United Kingdom,[103] and the United States.[104][105][106][107] The website has won awards such as placement into the "Top 100 Classic Websites" by PC Magazine in 2007,[108] and winning the "People's Voice Award" from the Webby Awards in 2008.[109] In a 2006 study conducted by Student Monitor, a New Jersey-based company specializing in research concerning the college student market, Facebook was named the second most popular thing among undergraduates, tied with beer and only ranked lower than the iPod.[110] In 2010, Facebook won the Crunchie “Best Overall Startup Or Product” the third year in a row[111] and was recognized as one of the "Hottest Silicon Valley Companies" by Lead411.[112] However, in a July 2010 survey performed by the American Customer Satisfaction Index, Facebook received a score of 64 out of 100, placing it in the bottom 5% of all private sector companies in terms of customer satisfaction, alongside industries such as the IRS e-file system, airlines, and cable companies. Reasons for why Facebook scored so poorly include privacy problems, frequent changes to the website's interface, the results returned by the News Feed, and spam.[113]

In December 2008, the Supreme Court of the Australian Capital Territory ruled that Facebook is a valid protocol to serve court notices to defendants. It is believed to be the world's first legal judgement that defines a summons posted on Facebook as legally binding.[114] In March 2009, the New Zealand High Court associate justice David Glendall allowed for the serving of legal papers on Craig Axe by the company Axe Market Garden via Facebook.[115] Employers (such as Virgin Atlantic Airways) have also used Facebook as a means to keep tabs on their employees and have even been known to fire them over posts they have made.[116]

By 2005, the use of Facebook had already become so ubiquitous that the generic verb "facebooking" had come into use to describe the process of browsing others' profiles or updating one's own.[117] In 2008, Collins English Dictionary declared "Facebook" as their new Word of the Year.[118] In December 2009, the New Oxford American Dictionary declared their word of the year to be the verb "unfriend", defined as "To remove someone as a "friend" on a social networking site such as Facebook. As in, “I decided to unfriend my roommate on Facebook after we had a fight.”"[119]

As of April 2010, according to The New York Times, countries with most Facebook users are the United States, the United Kingdom and Indonesia.[120] Also in early 2010, Openbook was established, an avowed parody website (and privacy advocacy website)[121] that enables text-based searches of those Wall posts that are available to "Everyone," i.e. to everyone on the Internet.

Impact

The stage at the Facebook – Saint Anselm College debates in 2008

Facebook's effect on the American political system became clear in January 2008, shortly before the New Hampshire primary, when Facebook teamed up with ABC and Saint Anselm College to allow users to give live feedback about the "back to back" January 5 Republican and Democratic debates.[122][123][124] Charles Gibson moderated both debates, held at the Dana Center for the Humanities at Saint Anselm College. Facebook users took part in debate groups organized around specific topics, register to vote, and message questions.[125] Over 1,000,000 people installed the Facebook application 'US politics' in order to take part, and the application measured users' responses to specific comments made by the debating candidates.[126] This debate showed the broader community what many young students had already experienced: Facebook was an extremely popular and powerful new way to interact and voice opinions. An article written by Michelle Sullivan of Uwire.com illustrates how the "facebook effect" has affected youth voting rates, support by youth of political candidates, and general involvement by the youth population in the 2008 election.[127]

In February 2008, a Facebook group called "One Million Voices Against FARC" organized an event that saw hundreds of thousands of Colombians march in protest against the Revolutionary Armed Forces of Colombia, better known as the FARC (from the group's Spanish name).[128] In August 2010, one of North Korea's official government websites, Uriminzokkiri, joined Facebook.[129]

In media

American author Ben Mezrich published a book in July 2009 about Mark Zuckerberg and the founding of Facebook, titled The Accidental Billionaires: The Founding Of Facebook, A Tale of Sex, Money, Genius, and Betrayal.[130] Due to the Everybody Draw Mohammed Day controversy and the ban of the website in Pakistan, an Islamic version of the website was created, called MillatFacebook.[131]

Facebook, and social networking sites in general, have been parodied in the British sitcom The IT Crowd in their December 2008 episode "FriendFace".[132] Facebook has also been directly parodied in the American animated comedy series South Park in their "You Have 0 Friends" episode of April 2010.[133]

The Social Network, an upcoming comedy-drama film directed by David Fincher about the founding of Facebook, is set to be released October 1, 2010.[134] The film features an ensemble cast consisting of Jesse Eisenberg as Mark Zuckerberg, Justin Timberlake as Sean Parker, Brenda Song as Joanna Simmons, Andrew Garfield as Eduardo Saverin, Rooney Mara as Erica, and Armie Hammer as Cameron Winklevoss. The film is written by Aaron Sorkin and adapted from Ben Mezrich's 2009 book The Accidental Billionaires: The Founding Of Facebook, A Tale of Sex, Money, Genius, and Betrayal. The film will be distributed by Columbia Pictures. None of the Facebook staff, including Zuckerberg, are involved with the project. One of the co-founders, Eduardo Saverin, was a consultant for Mezrich's book.

At the age of 102, Ivy Bean of Bradford, England joined Facebook in 2008, making her one of the oldest people ever on Facebook. An inspiration to other residents,[135] she quickly became more widely known, and several fan pages were made in her honour. She visited Prime Minister Gordon Brown and his wife Sarah in Downing Street early in 2010.[136] Some time after creating her Facebook page, Bean also joined Twitter, when she passed the maximum number of friends allowed by Facebook. She became the oldest person to ever use the Twitter website. At the time of her death in July 2010, she had 4,962 friends on Facebook and more than 56,000 followers on Twitter. Her death was widely reported in the media and she received tributes from several notable media personalities.[137]

See also

Notes

  1. ↑ 1.0 1.1 1.2 "Total active users" is defined by Facebook as a user who has visited the website in the last 30 days.
  2. ↑ "Monthly growth" is the average percentage growth rate at which the total number of active users grows each month over the specified period.
  3. ↑ Projected revenue for 2010

References

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  2. ↑ 2.0 2.1 "Facebook '09 revenue neared $800 mn". The Economic Times. http://economictimes.indiatimes.com/infotech/internet/Facebook-09-revenue-neared-800-mn-Sources/articleshow/6063819.cms. Retrieved 18 Jun 2010. 
  3. ↑ "Press Info", Facebook. Retrieved May 27, 2010.
  4. ↑ Facebook.com – Traffic Details from Alexa. Alexa Internet, Inc. http://www.alexa.com/siteinfo/facebook.com. Retrieved 2010-08-21 
  5. ↑ 5.0 5.1 5.2 Zuckerberg, Mark (2010-07-21). "500 Million Stories". Facebook. http://blog.facebook.com/blog.php?post=409753352130. Retrieved 2010-07-21. 
  6. ↑ "Facebook Statistics". http://www.facebook.com/press/info.php?statistics. Retrieved July 21, 2010. 
  7. ↑ Carlson, Nicholas (2010-03-05). "At Last – The Full Story Of How Facebook Was Founded". Business Insider. http://www.businessinsider.com/how-facebook-was-founded-2010-3#we-can-talk-about-that-after-i-get-all-the-basic-functionality-up-tomorrow-night-1. 
  8. ↑ Cooper, Charles (2010-05-19). "Pakistan Bans Facebook Over Muhammad Caricature Row – Tech Talk". CBS News. http://www.cbsnews.com/8301-501465_162-20005388-501465.html. Retrieved 2010-06-26. 
  9. ↑ "Red lines that cannot be crossed". The Economist. July 24, 2008. http://www.economist.com/world/mideast-africa/displaystory.cfm?story_id=11792330. Retrieved August 17, 2008. 
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  25. ↑ "Blog post". http://blog.facebook.com/blog.php?post=72353897130. Retrieved 2010-06-26. 
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