Facebook IPO Filing Reveals What Could Kill Facebook

What Facebook is really worried about

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Facebook IPO Filing Reveals What Could Kill Facebook
[ Social Media]

As you probably know, Facebook has filed for its IPO. With that filing, a lot of new information about the company was revealed. Among the noteworthy tidbits of information: 845 million monthly active users, 483 million daily active users, and over 425 million monthly active users using Facebook’s mobile products. Interestingly enough, Facebook appears to consider growth in mobile use among the key risks to the company. I’m not sure this is the biggest risk, but it’s quite interesting that Facebook considers it to be one.

What do you think the number one thing is that could lead to Facebook’s downfall? Can anything kill it? Tell us what you think.

In its filing, Facebook lists “some” of the risks that could significantly harm its business. It doesn’t say, “We could become the next MySpace,” but here are the things it does list:

  • If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;
  • We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with facebook, could seriously harm our business;
  • Growth in use of facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;
  • Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control. ;
  • We may not be successful in our efforts to grow and further monetize the facebook Platform;
  • Our business is highly competitive, and competition presents an ongoing threat to the success of our business;
  • Improper access or disclosure of our users’ information could harm our reputation and adversely affect our business;
  • Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. May of these laws and regulation are subject to change and uncertain interpretation, and could harm our business;
  • Our CEO has control over key decision making as a result of his control of a majority of our voting stock;
  • The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;
  • We anticipate that we will expand substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;
  • The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price; and
  • Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.

You can view the filing in its entirety, as well as a letter from Mark Zuckerberg here.

I don’t think more people using Facebook’s mobile products will be the downfall of the company. People are increasingly using their phones (and tablets) to access the web. Increased mobile Facebook use should grow along with that. Facebook isn’t currently monetizing this use (with ads), but that is likely to change soon. Mobile ads are expected in the near future. That solves that problem.

Facebook’s mobile experience(s) are often criticized, and there’s no question that the desktop experience is better, but Facebook will continue to work on improving the mobile experience. The fact that they consider mobile such a risk factor only shows that this will be a significant emphasis. Expect more mobile-related acquisitions from the company, and better Facebook apps across mobile platforms.

I think the very first risk factor listed is really the one they should be most worried about. And essentially, this equates to “We could become the next MySpace.” The biggest challenge they have is to keep users interested, and other listed risk factors are an extension of this.

For one, don’t get shown up by competitors like Twitter and Google. Google, obviously a major force on the Internet should worry Facebook. It’s easy to brush off Google+ because maybe not many of your friends are using it. But how many of your friends use Google? That counts, because as Google has shown time and time again, everything they do is only going to become more integrated, and in the end, it’s really about where advertisers are spending their money.

Facebook has a healthy lead in display ads, but overall online advertising is another story, though Facebook is expected to surpass Microsoft and Yahoo this year. Google on the other hand doesn’t even have ads on Google+ yet. How long do you think that will last? Google is already showing a great deal of promise in the deals space as well (Google Offers), an area where Facebook hasn’t done incredibly well.

Beyond current competitors like Google and Twitter, however, there’s always the threat of the next big thing that comes out of nowhere. There is only so much time in the day. Every minute someone spends time on another site or another social network is a minute they’re not spending on Facebook.

Facebook’s reliability on third-parties raises concerns. As previously reported, Facebook is currently relying on Zynga for 12% of its revenue. Imagine if Zynga left Facebook, and took all of its Farmville, Cityville and Mafia Wars players with it.

Another very interesting entry in the list of risk factors is the part that says: “Improper access or disclosure of our users’ information could harm our reputation and adversely affect our business”.

Privacy concerns are pretty familiar territory for Facebook, and while this may have had some impact on the company’s reputation, it’s clearly done little to halt growth and use of the social network. It’s interesting that they seem to be acknowledging that issues could very possibly happen again.

In November, Facebook and the FTC announced their settlement over privacy issues, and the company agreed to third-party privacy audits for the next 20 years. Presumably, this will keep the company in line.

I think if the privacy thing was going to kill Facebook, it would have at least shown signs of doing so by now. What Facebook has to do more than anything else is stay fresh, and make sure users still have a reason to use it. Their most recent attempt at this would be the Timeline and the launch of the new open graph. We’ll see if it works.

Have you stopped using Facebook? Do you use it less than you did before? Why? Why do you care less about Facebook than you did before? Whatever that is could be what Facebook has to worry about the most. Let us know in the comments.

Note: Even MySpace isn’t really dead. So there’s that.

Facebook IPO Filing Reveals What Could Kill Facebook
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  • http://www.tutajua.net Solomon

    I have seen FaceBook transform into a more complex and better software each day as a user and no, I don’t think they risk losing the interest of users as long as they keep innovating.

  • http://www.last.fm/user/mcg1985/journal Nathan P

    I rarely use it these days, mostly due to the fact that I’m on a slow connection on a laptop with a small (7″) screen. Doesn’t help I use an old browser either (and more and more sites are kicking me away due to that fact… I sometimes hate how tech advances so fast!).

    When I do use it, I use it to communicate with friends and business acquaintances, and to promote my business and music. I usually refuse game/app requests because they are so slow in higher levels!

  • Tweetee Pieii Coore

    Facebook is cool in killing time… However, the privacy setting is not that secured, and your account can be hacked anytime… I plan to off from space of facebook soon.. Hopefully there is a tool saying “delete account” for personal security..

  • GreenMicroEnergy

    It is probably easier:

    (1) For Google (or Apple or the Microsoft/Bing/Skype/Hotmail/MSN current/former E-mpire, or Yahoo! or other entities) to reverse-engineer FaceBook’s features – existing & future (when introduced) – since their external manifestations are (and will be), in large part, visible to the public.


    (2) It is for FaceBook to reverse-engineer Google’s search algorithms (the inner details/workings of which are, in large part, NOT visible to the general public) and for FaceBook to reverse-engineer/duplicate Google Maps(including Google Transit)/Earth and Google’s accompanying geo-targetting/local success/lead and Google Books/Google’s lead in the PHYSICAL scanning/digitizing of humanity’s hard-copy inheritance.

    Leadership in Search, Maps/Earth and Books (as long as Google manages to retain it in the fickle, ever-REIGN-changing tech world), might be one among many other factors that give Google the long term advantage over FaceBook. Not to mention the spread of Chrome and Android (which is fast overtaking even the Apple Current E-mpire’s operating-systems/platforms) and Android Market.

    And, not to metion, further down the road, whatever tricks/aces up its sleeve Google has/might have with its purchase of the Motorola mobile hardware division.

    Plus, (pun intended) Google’s having an all-encompassing, holistic, already well-integrated (and continuing to get even more so) United Nations, You & I style U-n-I-Verse spanning across so many highly used/now necessary services/features as:
    Search/(page rank)/Maps/Earth/geo-targetting/local/Youtube.com/AdSense/AdWords/Google Wallet & Checkout/Google +/Plus/Google Talk/video-chat (which if Google really wanted to, could be developed/pushed to equal/overtake Skype in features and number of active users)/Docs, etc. (group editing/sharing, etc.)/Groups/Google Sites (No HTML knowledge required & Built-In, free commonly-used templates)/Books/Google Scholar/ Google Finance/Reader/Picasa/Orkut, etc.

    Plus, one single, tiny, very easy to implement act by Google has the potential to severely hurt FaceBook and it’s growth (and that of every other social media service):

    Merely putting the following short phrase on one of the top (and most ‘Sacred’ and under-utilized) potential advertising spots on the planet – the Mighty google.com home/search page:

    ” Go Social. Go Google+ Click here to Join. ”

    ( I realize that they already have the less self-explanatory ‘+You’ link stuck-up & stuck-left in a non-prominent area on the extreme top-left of the home/search page that takes the user to a ‘Join Google+‘ sign-up page ).

    Making the link more self-explanatory and placing it in a more prominent area of the page could help Google convert many of the hundreds of millions of ‘Search’ users (whether they have any Google U-n-I-Verse username & password or not).


    There might be more than a billion users of Google Search who do not have any Google U-n-I-Verse username and password and like-wise for other Google services/features (especially YouTube) that do NOT always require a sign-in). An ocean very ripe for the fishing.


    Maybe, Google will even include a Gmail ‘amount of storage avaiable’ style, real-time counter, in this case stating the number of +/Plus users. For example:

    ” 60 million + + Users + Counting. ”


    I realize that Mr. Page and Mr. Brin would have to MOVE VERY SLIGHTLY away from their desire to keep the home page un-cluttered & fast-loading and be willing to engage in this tiny bit of self-advertising on some of the most valuable digital real-estate in the world. If they feel there isn’t enough room . . .

    . . . They could just throw out the (highly ‘non-understood’ and ‘non-used’!):

    ” I’m feeling lucky! ”

    button ( :) )

    And replace it with an:

    ” I’m Feeling Social+l+! ”

    OR a:

    ” I’m Feely & Social! ” (Just kidding!)

    button/link to the +/Plus sign-up page.


  • http://www.wbpersonalsecurityproducts.com WILLIAM BOSIEN


  • Trespasser

    I have already requested deletion of my facebook account, it is becoming a pain trying to keep up with all the changes being made and the potential privacy flaws.

    There doesn’t seem to be much thought going into many of the so called “upgrades” recently and the diminishing control I have over my information that is being shared on facebook will almost guarantee that I do not return or reopen my account.

  • Pat

    1. The moment they charge.

    2. One too many revisions that make too many people think ‘ Why am I bothering, there are other alternatives’.

    3. Taking over the world. When people see that Facebook, like Google and Microsoft, who I despise for their ‘our way or piss off’ attitude, are seen to be ‘trying to run the world’, that will be the beginning of the end!

    Invest in Facebook and be prepared to lose your shirt.

  • http://www.picnicpantry.co.uk tony

    maybe they should first consider making the ‘like’ button w3c compatible?

  • http://www.howtosubliminal.com Andrew

    I’m not much using Facebook as it’s mostly a waste of time, and it’s not so useful for business or driving traffic. I think that the only one making money from Facebook is Facebook itself; 90 percent of the rest are just fables.

    I’m one of those thinking that it will go the way of MySpace, after having raised all the money it can. But given that I also think G will go the way of Yahoo my opinion is a bit biased probably.

  • David H

    Among the things that I have truly despised about Zuckerberg’s dweeby clan is how many normal websites and media sites have bought into this Facebook Login app as the default, defacto method of making a Comment or seeing more content!

    This is a big dog showing up at your back door that is going to bite you! Everytime you use this Facebook login you are a marked animal. And I am sure that a majority of users of such are still clueless how these comments follow them around forever. You may have wildly different opinions on many topics or issues but one remark made at an online site for fantasy stories will be entirely different than your comment at a site for a charitable cause. But now they all stream over to Facebook.

    Doesn’t anybody see the irony that Facebook has, with our delighted cooperation, become an Orwellian BIG BROTHER all by itself and with our fervent assistance?

    And whenever you use the Facebook Login at some other site than Facebook all of your activities once you are logged in are tracked in the minutest detail and reported back to Facebook and the advertisers and marketers who have paid for this info? The products you even look at, the articles you read, the subjects you bounce around to view, no matter how benign it may seem to you at the time, all of that data about YOU is linked inextricably to the REAL YOU via Facebook.

    And if you unknowingly have been linked by Friend of a Friend to a criminal Neo-Nazi Organization being tracked by Interpol and Homeland Security YOU, my “Friend”, are being investigated through “guilt by association”. Your FB Friends can be your worst enemies. And you have no notice that your activities are being monitored because the Friend who drops by to inanely tag pictures of your kids is a pedophile under investigation by the FBI.

    These dreamed up scenarios are not far-fetched and already have real life examples.

    For every friend “reunited” story that warms your heart through the media department of Facebook, there are also examples of suicides and lives made miserable or completely destroyed through, incredibly, this “social media” phenomenon.

    The truth is, unfortunately, that Facebook does not change innate human behaviors in the deepest core of our hearts. An evil person will use Facebook for evil even while feigning Friendship.

    Every smart, caring, loving parent knows that their children are naive, trusting, and need some protection from their own youthful ignorance about life and its consequences.

    Yet, these same parents, so many of us adults, have willingly and ignorantly waded deep into Facebook pools and have not recognized the deep undertow waiting and the perils that are down the road if we follow Facebook in lemming hordes to the edge of the cliff.

    May it indeed become another MySpace.

  • Joanne Thompson

    I have stopped using Facebook because I cannot take the day to day boring tit-bits about peoples life. Did the baby sleep through or what we had for dinner! It was fun for a while but the novelty has worn off. We have a large family business but we have absolutely no intention of dragging it on to Facebook.

  • http://www.write2profitonline.com/ Andy Gage

    I used to like Facebook, because it was easy to find things I wanted to know about, and interact with friends across the world. I think Timeline will complicate this original ease of use, and even now, before Timeline becomes active, it’s become more difficult to navigate around the site, and find what you’re looking for. Upcoming new social marketing sites will use Facebook as a benchmark, and then improve and simplify the whole idea (including mobile usage) and take over, in my opinion. Facebook is also trying to be a ‘monster, one size fits all’ system, which will also help its eventual demise, as new social media sites will be much more into developing niche markets within their own structure.

  • Fred

    I think a clever start-up could take the youth (under 25) market away from FB. If the start-up could make it cool and somehow exclude or alienate older people, I think the youth market is ready to not be on the same network with grandma.

  • Myra Saunders

    I cancelled my account yesterday. I wasn’t comfortable with timeline and began to research facebook. I discovered their many privacy breaches along with how my information is and (potentially)would be used in the future. This combined with the various investigations into their operation and numerous other issues finished me.

    It wasn’t all that easy to figure out the story either as there is lots of misinformation to dig through but if you look hard enough, the truth is there. Do the research and discover for yourself!
    Facebook has little to no concern for the privacy and protection of it’s users. User’s beware.

    The marketing data collected through facebook is pretty valuable stuff and big business will support its contination.The company will be around awhile yet as people are hooked on it but hopefully, the users will start to figure it out. They would probably figure it out quicker if they pondered the fact that it is free. It’s not free, the users pay everyday with their personal information.

  • http://www.utmb.edu Dr. Ricky Hernandez

    It’s too money hungry especially on the ZUNGA games. It gets one playing for no cost, but to continue to cost $$$$. It fills you email box with crap one does not want in their email. Plus it uploads more crap to your computer, with strings of crap running in the background. It slows one machines and allows nasty viruses to be passed along one person to another.

  • Ken

    I don’t use Facebook much; mostly for locating people. It’s annoying that Facebook keeps changing privacy standards; privacy is a big problem with facebook.

    I have two facebook sites, but they are not under my real name or my common email address, and I mark all the information as “private”. I don’t like nosy social networks.

    And finally, advertisements drive me away from a site. The more ads, the less time I will plan to spend there. That’s me: I keep my trash cans right next to my mailbox so I can throw out all the advertising before I bring my mail into my house.. and I treat online advertising the same way.

    I basically think Facebook is a fad of technology junkies, and will fade away in the future as better technologies emerge.

  • http://hislove.synthasite.com/ Apostle Rubie James

    I have been ‘weening’ myself away from FB as well as my followers and friends. Even now FB is too powerful and thinks it can do whatever it wants. They seem to forget that it is ‘we’ who made them. They have no viable means of contacting them for questions, concerns or viable answers to your questions as if to suggest that they are not interested in what we think! It controls your content and think it knows how to categorize your most intimate thoughts. It will lock your account shutting you down merely because you do not want to provide your phone number! Although their methods of regaining your account now does not depend upon your knowing who a person is from their choice from a list of photos that has been posted to your wall, mandating the use of your private phone number or a phone number is a bit much and more than I want to give. Their Site is becoming cluttered and sluggish just as My Space has. This leaves one unable to utilize their account efficiently. Therefore, why have an account? They were fun while they lasted…I do wish the young man luck in his ventures and thank him for FB.

  • http://CompassionateMarketing.com RS Mallory

    TimeLine is being force fed to all Facebook Users without an opt out feature. The Timeline is confusing, redundant and confusing. It appeals to those techie or 20 somethings and Facebook does not care what anybody thinks, they just force feed what THEY want to the entire user base. This is a big mistake, and people will migrate to other platforms that are easier to use and understand.

    I do not like The Timeline and will probably stop using my account when it is switched WITHOUT my permission or agreement to use it.

  • http://www.ipnostudio.com Andrea Hypno

    Facebook will fall shortly after the IPO and having raised all the money it can. Even partnering with Bing there is simply too much unuseful stuff on it, G is going the same way; at the end both are just interested in making money and not on providing a service. Think about the relevancy of G search results. They just want to push ads.

  • malcolum mugridge

    Who gives a rip what the general public things will kill facebook! Good grief. We are not knowledgable on that. What would we know. Its just opinion…

  • Birgir Gislason

    Consider this: What if Google+ starts offering it’s users share in their online ads revenues, just like having Adsense on your blog/website. How would Facebook react? Maybe that is a real threat to the Facebook business model which their lawyers did not mention in their IPO?

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    certainly like your web-site however you have to test the spelling on quite a few of your posts. Several of them are rife with spelling issues and I to find it very troublesome to inform the truth then again I’ll surely come again again.

  • http://adamssocialmedia.com Debbie Adams

    I believe that the mobile sector could be an issue for the many reasons they have listed.

    One thing that I have found to be an issue with my mobile facebook application is that I really do not have access to my account settings, privacy settings, etc. In order to make any changes, I need to have access by computer.

  • Danielle

    one word “greed”

  • May

    Facebook is a ripoff of MYSPACE and should be sued for a kazillion dollars. Besides they are asking you to join and sending you people you know or may know. Then they turn around and claim you are breaking their policies and LOCKED you ID and Tell you to F&^%$ off. And there are no one avail to listen to you and they took years to respond and of course their answers is to Get lost? They are Rich beyond your wildest dream and we do not need you. Besides they serve no purpose and offer Nothing in return. MySPACE was doing this years ago and DA… what does this Piece of Sh(*& offers that we already know and do with Hi5, MySpace and a host of other better products? This piece of crap appears out of nowhere and he was a thief, if you watch the movie and made this Copy, of MySpace, and I wondered where are the Lawyers to sue him for every drop of blood his stinking body offers and feed it to the worms. phewwwwwwwwwwwww

  • jamie

    1 – cannot go back and edit/delete info entered during a moment of insanity.
    2 – all too often we hear about peoples’ homes being broken into after someone informed THE WORLD in a chat when/where they would be OUT-OF-TOWN. dah.
    3 – far too much foul(porn) langage in this very public place. No wonder India and other countries are banning it.

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