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Facebook, Inc.
Type of businessPrivate
Type of site
Social network service
Available inCatalan, Chinese (simplified), Chinese (Hong Kong), Chinese (Taiwan), Czech, Danish, Dutch, English (American), English (British), English (Pirate), Filipino, Finnish, French, German, Greek, Hungarian, Indonesian, Italian, Japanese, Korean, Malay, Norwegian (bokmål), Polish, Portuguese (Brazilian), Romanian, Russian, Slovene, Spanish (Castilian), Swedish, Thai, Turkish, Welsh
FoundedCambridge, Massachusetts
(February 4, 2004)[1]
HeadquartersPalo Alto, California
Dublin, Ireland (international headquarters for Europe, Africa, Middle East)
Key peopleMark Zuckerberg, Founder and CEO
Dustin Moskovitz, Co-founder
Sheryl Sandberg, COO
Matt Cohler, VP of Product Management
Chris Hughes, Co-founder
RevenueIncrease 300 million USD (2008 est.)[2]
Net incomeDecrease -50 million USD (2008 est.)[2]
Employees700 (November 2008)[3]
URLfacebook.com
AdvertisingBanner ads, Referral marketing
RegistrationRequired
LaunchedFebruary 2004
Current statusActive

Facebook is a social networking website launched on February 4, 2004.[1] The free-access website is privately owned and operated by Facebook, Inc. Users can join networks organized by city, workplace, school, and region to connect and interact with other people. People can also add friends and send them messages, and update their personal profile to notify friends about themselves. The website's name refers to the paper facebooks depicting members of a campus community that some US colleges and preparatory schools give to incoming students, faculty, and staff as a way to get to know other people on campus.

Mark Zuckerberg founded Facebook while he was a student at Harvard University.[4] Website membership was initially limited to Harvard students, but was expanded to other colleges in the Ivy League. It later expanded further to include any university student, then high school students, and, finally, to anyone aged 13 and over. The website currently has more than 120 million active users worldwide.[5]

Facebook has met with some controversy over the past few years. It has been blocked intermittently in several countries including Syria[6] and Iran.[7] It has also been banned at many places of work to increase productivity.[8] Privacy has also been an issue, and it has been compromised several times. It is also facing several lawsuits from a number of Zuckerberg's former classmates, who claim that Facebook had stolen their source code and other intellectual property.

History

Mark Zuckerberg founded "The Facebook", originally located at thefacebook.com, on February 4, 2004[9] while attending Harvard University as a sophomore.[1] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[10]

Membership was initially restricted to students of Harvard College, and within the first month, more than half the undergraduate population at Harvard were registered on the service.[11] 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.[12] This expansion continued when it opened to all Ivy League schools and gradually most universities in Canada and the United States.[13] In June 2004, Facebook moved its base of operations to Palo Alto, California.[12] In October 2008, Facebook announced that it was to set up its international headquarters in Dublin, Ireland. [14]

Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step.[15] At that time, high school networks required an invitation to join.[16] Facebook later expanded membership eligibility to employees of several companies including Apple Inc. and Microsoft.[17] Facebook was then opened to everyone of ages 13 and older with a valid e-mail address on September 26, 2006.[18][19]

BusinessWeek has confirmed that Facebook, beginning in Autumn 2008, will allow its employees to sell stock at no more than a $3.75 billion valuation.[20]

Funding

Facebook headquarters in Palo Alto, California

Facebook received its first investment of US$500,000 in June 2004 from PayPal co-founder Peter Thiel.[21] This was followed a year later by $12.7 million in venture capital from Accel Partners, and then $27.5 million more from Greylock Partners.[21][22] A cash flow statement was leaked, showing that during the 2005 fiscal year, Facebook had a net loss of $3.63 million.[23] Microsoft approached Facebook in September 2007, proposing an investment in return for a 5% stake in the company. Microsoft would pay an estimated $300–500 million for the share.[24] Microsoft announced on October 24, 2007 that it purchased a 1.6% share of Facebook for $246 million.[25] On November 30, 2007, Hong Kong billionaire Li Ka-shing invested $60 million in Facebook.[26]

BusinessWeek reported on March 28, 2006 that a potential acquisition of the website was under negotiation. Facebook reportedly declined an offer of $750 million from an unknown bidder, and it was rumored the asking price rose as high as $2 billion.[27] With the sale of social networking website MySpace to News Corp on July 19, 2005, rumors surfaced about the possible sale of Facebook to a larger media company.[28] Zuckerberg had already said he did not want to sell the company and denied rumors to the contrary.[29] In late September, serious talks between Facebook and Yahoo! took place concerning acquisition of the social network, with prices reaching as high as $1 billion.[30] Thiel, by then a board member of Facebook, indicated that Facebook's internal valuation was around $8 billion based on their projected revenues of $1 billion by 2015, comparable to Viacom's MTV brand, a company with a shared target demographic audience.[31] Other companies, including Google, expressed interest in September 2007 to buy a portion of Facebook.[32] Amid the rumors, Zuckerberg claimed that selling Facebook was unlikely because he wanted to keep it independent, stating on July 17, 2007, "We're not really looking to sell the company. [...] We're not looking to IPO anytime soon. It's just not the core focus of the company."[33]

Website

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

Facebook users may choose to join one or more networks, organized by city, workplace, school, and region.[34] These networks help users connect with members of the same network. Users can also connect with friends, giving them access to their friends' profiles.[35]

The website is free to users, but generates revenue from advertising. This includes banner ads.[36] Users can create profiles including photos and lists of personal interests, exchange private or public messages, and join groups of friends.[37] The viewing of detailed profile data is restricted to users from the same network or confirmed friends only when the appropriate Privacy settings have been altered. Without altering the Privacy settings a Facebook profile is viewable by anybody on Facebook.

Microsoft is Facebook's exclusive partner for serving banner advertising,[38] 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! when compared with other web companies.[39]

Features

Main article: Facebook features

The media often compares Facebook to MySpace, but one significant difference between the two websites is the level of customization.[40] MySpace allows users to decorate their profiles using HTML and Cascading Style Sheets (CSS), while Facebook only allows plain text.[41]

Facebook has a number of features for users to interact with. They include the Wall, a space on every user's profile page that allows friends to post messages for the user to see,[42] Pokes, which allows users to send a virtual "poke" to each other (a notification that tells a user that they have been poked),[43] Photos, where users can upload albums and photos,[44] and Status, which allows users to inform their friends of their whereabouts and actions.[45] A user's Wall is visible to anyone who is able to see that user's profile, which depends on their privacy settings. In July 2007, Facebook began allowing users to post attachments to the Wall, whereas the Wall was previously limited to textual content only.[42]

Over time, Facebook has added several new 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 related to the user's friends.[46] 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).[47] 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 different types of activities, including profile changes, Wall posts, and newly added friends.[48]

One of the most popular applications on Facebook is the Photos application, where users can upload albums and photos.[49] 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. However, users are limited to 60 photos per album. 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 applications 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.[50]

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.[18] During the week of April 7, 2008, Facebook released a Comet-based[51] instant messaging application called "Chat" to several networks,[52] 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.[53][54] On May 14, 2007, Facebook launched Marketplace, which lets users post free classified ads.[55] 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.[56]

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.[57] After initially giving users a choice to switch, Facebook began migrating all users to the new version beginning September, 2008.[58]

Platform

Facebook launched the Facebook Platform on May 24, 2007, providing a framework for software developers to create applications that interact with core Facebook features.[59][60] A markup language called Facebook Markup Language was introduced simultaneously; it is used to customize the "look and feel" of applications that developers create. Using the Platform, Facebook launched several new applications,[59][60] including Gifts, allowing users to send virtual gifts to each other, Marketplace, allowing users to post free classified ads, Events, giving users a method of informing their friends about upcoming events, and Video, letting users share homemade videos with one another.[61][62]

Applications that have been created on the Platform include chess and Scrabble, which both allow users to play games with their friends.[63][64] These games are asynchronous, meaning that a user's moves are saved on the website, allowing the next move to be made at any time rather than immediately after the previous move.[65]

By November 3, 2007, seven thousand applications had been developed on the Facebook Platform, with another hundred created everyday.[66] By the second annual f8 developers conference on July 23, 2008, the number of applications had grown to 33,000,[67] and the number of registered developers had exceeded 400,000.[68]

Within a few months of launching the Facebook Platform, issues arose regarding "application spam", which involves Facebook applications "spamming" users to request it be installed.[69] Application spam has been considered one of the possible causes to the drop in visitors to Facebook starting from the beginning of 2008, when its growth had fallen from December 2007 to January 2008, its first drop since its launch in 2004.

Reception and popularity

According to comScore, Facebook is the leading social networking site based on monthly unique visitors, having overtaken main competitor MySpace in April 2008.[70] ComScore reports that Facebook attracted 132.1 million unique visitors in June 2008, compared to MySpace, which attracted 117.6 million.[71]

According to Alexa, the website's ranking among all websites increased from 60th to 7th in terms of worldwide traffic, from September 2006 to September 2007, and is currently 5th.[72] Quantcast ranks the website 15th in US in terms of traffic,[73] and Compete.com ranks it 14th in US.[74] The website is the most popular for uploading photos, with 14 million uploaded daily.[75]

Facebook is the most popular social networking site in several English-speaking countries, including Canada[76] and the United Kingdom.[77] However, in the United States, it has only 36 million users compared to MySpace's 73 million.[78] The website has won awards such as placement into the "Top 100 Classic Websites" by PC Magazine in 2007,[79] and winning the "People's Voice Award" from the Webby Awards in 2008.[80] 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.[81]

Potential future film

Sony Pictures, and The West Wing creator Aaron Sorkin, have confirmed they are in the process of developing a movie "about the founders of social networking site Facebook." Sorkin has set up his own account on the site, stating, "I honestly don't know how this works, which is why I'm here." The film so far, is untitled, and will be produced by Scott Rudin.[82] According to the Telegraph, the film is expected to focus on Zuckerberg, and 2,500 Facebook users have joined the movies group associated with Sorkin's film, suggesting "plot pointers, offering to help or even asking for a role in the film."[83] Sony was quick to refute suggestions that the film is a hoax (especially after musings that it might be a fake Sorkin account of which there are a number already),[82] with Steve Elzer saying, "We are developing the film that has been reported".[84] However, a spokesperson for Facebook said that, "We are routinely approached by writers and filmmakers interested in telling the Facebook story... At this point, we have not agreed to cooperate with any film project, but we are flattered by the interest."[85]

Controversy

See also: Criticism of Facebook and Use of social network websites in investigations

Facebook has met with some controversy over the past few years. In October 2005, the University of New Mexico blocked access to Facebook from its campus computers and networks.[86] It cited a violation of the university's Acceptable Use Policy for abusing computer resources as the reason, stating the website forces use of the university's credentials for activity not related to the university. The school later unblocked Facebook after the website rectified the situation by displaying a notice on the login page stating the credentials used on the website are separate from the ones used for their school accounts.[87] The Ontario government also blocked access to Facebook for its employees in May 2007, stating the website was "not directly related to the workplace".[88]

A notable ancillary effect of social networking websites like Facebook is the ability for participants to mourn publicly for a deceased individual. On January 1, 2008, a memorial group on Facebook posted the identity of murdered Toronto teenager Stefanie Rengel, whose family had not yet given the Toronto Police Service their consent to release her name to the media, as well as the identities of her accused killers — despite the fact that under Canada's Youth Criminal Justice Act, it is illegal to publish the name of an underage criminal.[89] While police and Facebook staff attempted to comply with the privacy regulations by deleting posts mentioning her name, they noted it was difficult to effectively police individual users who repeatedly republished the deleted information.[90]

Due to the open nature of Facebook, several countries have banned access to it including Syria and Iran.[91][92] The Syrian government cited the ban was on the premise that the website promoted attacks on authorities.[91][93] The government also feared Israeli infiltration of Syrian social networks on Facebook.[91] Facebook was also used by Syrian citizens to criticize the government, and public criticism of the Syrian government is punishable by imprisonment.[91] In Iran, the website was banned because of fears that opposition movements were being organized on the website.[92]

Beacon

Main article: Facebook Beacon

Facebook announced Facebook Beacon on November 7, 2007, a marketing initiative that allows websites to publish a user's activities to their Facebook profile as "Social Ads" and promote products.[94] When launching Beacon, Facebook stated "no personally identifiable information is shared with an advertiser in creating a Social Ad", and that "Facebook users will only see Social Ads to the extent their friends are sharing information with them."[95] After Facebook was criticized for collecting more user information for advertisers than was previously stated, Zuckerberg publicly apologized on December 5, 2007 for the way Facebook launched Beacon, saying, "The problem with our initial approach of making it an opt-out system instead of opt-in was that if someone forgot to decline to share something, Beacon still went ahead and shared it with their friends."[96][97]

Privacy

Several concerns have emerged regarding the use of Facebook as a means of surveillance and data mining.[98] Two MIT students were able to download over 70,000 Facebook profiles from four schools (MIT, New York University, the University of Oklahoma, and Harvard University) using an automated shell script, as part of a research project on Facebook privacy published on December 14, 2005.[99] The possibility of data mining remains open, as evidenced in May 2008, when the BBC technology program "Click" demonstrated that personal details of Facebook users and their friends could be stolen by submitting malicious applications.[100]

Privacy proponents have criticized the site's privacy agreement, which states: "We may use information about you that we collect from other sources, including but not limited to newspapers and Internet sources such as blogs, instant messaging services, Facebook Platform developers and other users of Facebook, to supplement your profile."[101] Another clause that received criticism concerned Facebook's right to sell a user's data to private companies, stating: "We may share your information with third parties, including responsible companies with which we have a relationship."[102] This concern was addressed by Facebook spokesman Chris Hughes who said, "Simply put, we have never provided our users' information to third party companies, nor do we intend to."[103]

Concerns have also been raised regarding the difficulty of deleting user accounts. Previously, Facebook only allowed users to "deactivate" their accounts so that their profile was no longer visible. However, any information the user had entered into the website and on their profile remained on the website's servers. This outraged many users who wished to remove their accounts permanently, citing reasons such as the inability to erase "embarrassing or overly-personal online profiles from their student days as they entered the job market, for fear employers would locate the profiles".[104] Facebook changed its account deletion policies on February 29, 2008, allowing users to contact the website to request that their accounts be permanently deleted.[105]

Litigation

ConnectU

Main article: Criticism of Facebook § Connectu.com lawsuit

In 2004 ConnectU, a company founded by classmates of Zuckerberg filed a lawsuit against Facebook, claiming that Zuckerberg had broken an oral contract for them to build the Facebook site, copied their idea,[106] and used source code that belonged to them.[107][108][109][110] The parties reached a confidential settlement agreement in February, 2008.[111] In 2008 they attempted unsuccessfully to rescind the settlement, claiming that Facebook had understated its valuation in connection with its settlement negotiations.[112][113][114][115][116]

StudiVZ

On July 18, 2008, Facebook sued Studivz in a California federal court, alleging that Studivz copied its look, feel, features and services. StudiVZ denied the claims, and asked for declaratory judgment at the District Court in Stuttgart, Germany.[117]

Grant Raphael

On July 24, 2008 the High Court in London ordered Grant Raphael to pay GBP £22,000 (about USD $44,000 at July 2008 exchange rates) for breach of privacy and libel. Raphael had posted a fake Facebook page purporting to be that of a former schoolfriend and business colleague, Mathew Firsht, with whom Raphael had fallen out in 2000. The fake page claimed that Firscht was homosexual and untrustworthy. The case is believed to be the first successful invasion of privacy and defamation verdict against someone over an entry on a social networking site.[118][119][120][121][122][123]

Adam Guerbuez

Facebook won a lawsuit against Canadian Adam Guerbuez, of Montreal, worth $873 million dollars. Guerbuez had spammed the website with various advertisements including penis enhancements and marijuana. Guerguez founded Atlantis Blue Capital[124].

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