Facebook is a social network service and website launched in February 2004 that is operated and privately owned by Facebook, Inc. As of July 2010 Facebook has more than 500 million active users, which is about one person for every fourteen in the world. Users may create a personal profile, add other users as friends and exchange messages, including automatic notifications when they update their profile. Additionally, users may join common interest user groups, organized by workplace, school, or college, or other characteristics. The name of the service 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 to be at least 13 years old to become a registered user 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. 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, Syria, the People’s Republic of China, Vietnam, Iran, and North Korea. It has also been banned at many places of work to discourage employees from wasting time using the service. Facebook’s privacy has also been an issue, and the safety of their users has been compromised several times. Facebook settled a lawsuit regarding claims over source code and intellectual property. The site has also been involved in controversy over the sale of fans and friends.
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. 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. That the initial site mirrored people’s physical community—with their real identities—represented the key aspects of what later became Facebook.
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. 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. 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. On February 4, 2004, Zuckerberg launched “Thefacebook”, originally located at thefacebook.com.
Just six days after the site launched, three Harvard seniors, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, accused Zuckerberg of intentionally misleading them into believing he would help them build a social network called HarvardConnection.com, while he was instead using their ideas to build a competing product. The three complained to the Harvard Crimson and the newspaper began an investigation. The three later filed a lawsuit against Zuckerberg, later settling.
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. 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. This expansion continued when it opened to all Ivy League schools, Boston University, New York University, MIT, and gradually most universities in Canada and the United States.
Facebook incorporated in the summer of 2004 and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company’s president. In June 2004, Facebook moved its base of operations to Palo Alto, California. Facebook received its first investment later that month from PayPal co-founder Peter Thiel. The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.
Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step. At that time, high school networks required an invitation to join. Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft. Facebook was then opened on September 26, 2006, to everyone of ages 13 and older with a valid e-mail address.
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. Microsoft’s purchase included rights to place international ads on Facebook. In October 2008, Facebook announced that it was to set up its international headquarters in Dublin, Ireland. In September 2009, Facebook claimed that it had turned cash flow positive for the first time. In June 2010, an online marketplace for trading private company stock reflected a valuation of $11.5 billion.
Traffic to Facebook has increased exponentially since 2009. More people visited Facebook than Google for the week ending March 13, 2010. Facebook has also become the top social network across eight 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.
Most of Facebook’s revenues comes from advertising. Microsoft is Facebook’s exclusive partner for serving banner advertising, 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!. In 2010, the security team began expanding its efforts to counter threats and terrorism from users. 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. 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 firstadvertisement for search results an average of 8% of the time (80,000 clicks for every one million searches), Facebook’s users click on advertisements an average of 0.04% of the time (400 clicks for every one million pages).
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. 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.
On Pages for brands and products, however, some companies have reported CTR as high as 6.49% for Wall posts. 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. 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.
Facebook has approximately 1,400 employees and offices in eight countries. 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 and celebrities own less than 1% each, including Matt Cohler, Jeff Rothschild, California U.S. Senator Barbara Boxer, 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, undisclosed number of celebrities, and outside investors. 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.
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.
To allay concerns about privacy, Facebook enables users to choose their own privacy settings and choose who can see what parts of their profile. The website is free to users and generates revenue from advertising, such as banner ads. Facebook requires a user’s name and profile picture (if applicable) to be accessible by everyone. Users can control who sees other information they have shared, as well as who can find them in searches, through their privacy settings.
The media often compares Facebook to MySpace, but one significant difference between the two websites is the level of customization. Another difference is Facebook’s requirement that users utilize their true identity while MySpace does not. MySpace allows users to decorate their profiles using HTML and Cascading Style Sheets (CSS), while Facebook only allows plain text. 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;
Pokes, which allows users to send a virtual “poke” to each other (a notification then tells a user that they have been poked); Photos, where users can upload albums and photos; and Status, which allows users to inform their friends of their whereabouts and actions. 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.
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. 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. 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).
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. 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. The patent may encourage Facebook to pursue action against websites that violate the patent, which may potentially include websites such as Twitter.
One of the most popular applications on Facebook is the Photos application, where users can upload albums and photos. 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.
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.
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. During the week of April 7, 2008, Facebook released a Comet-based instant messaging application called “Chat” to several networks, 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. On May 14, 2007, Facebook launched Marketplace, which lets users post free classified ads. 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.
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. After initially giving users a choice to switch, Facebook began migrating all users to the new version beginning in September 2008. On December 11, 2008, it was announced that Facebook was testing a simpler signup process.
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. 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. More than 150 million active users access Facebook through mobile devices across 200 mobile operators in 60 countries.