Facebook is a social networking service launched in February 2004, owned and operated by Facebook. It was founded by Mark Zuckerberg with his college roommates and fellow Harvard University students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes.[1] 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,[2] and gradually most universities in Canada and the United States,[3][4] corporations,[5] and by September 2006, to everyone of age 13 and older with a valid email address.[6][7]
On October 1, 2005, Facebook expanded to twenty-one universities in the United Kingdom, the Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) system in Mexico (around thirty campuses throughout the country at the time), the University of Puerto Rico and Interamerican University of Puerto Rico network in Puerto Rico, and the University of the Virgin Islands network in the U.S. Virgin Islands. Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step.[40] At that time, high school networks required an invitation to join.[41] Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft.[42] On December 11, 2005, universities in Australia and New Zealand were added to the Facebook network, bringing its size to 2,000+ colleges and 25,000 + high schools throughout the United States, Canada, Mexico, the United Kingdom, Australia, New Zealand, and Ireland. Facebook was then opened on September 26, 2006 to everyone ages 13 and older with a valid e-mail address.[6][7]
Late in 2007, Facebook had 100,000 business pages, allowing companies to attract potential customers and tell about themselves. These started as group pages, but a new concept called company pages was planned.[43]
In October 2008, Facebook announced that it would set up its international headquarters in Dublin, Ireland.[44]
In 2010, Facebook began to invite users to become beta testers after passing a question-and-answer-based selection process,[45] and a set of Facebook Engineering Puzzles where users would solve computational problems which gave them an opportunity to be hired by Facebook.[46]
As of February 2011, Facebook had become the largest online photo host, being cited by Facebook application and online photo aggregator Pixable as expecting to have 100 billion photos by summer 2011.[47] As of October 2011, over 350 million users accessed Facebook through their mobile phones, accounting for 33% of all Facebook traffic.[48]
On March 12, 2012, Yahoo! filed suit in a U.S. federal court against Facebook weeks before the scheduled Facebook initial public offering. In its court filing, Yahoo said that Facebook had infringed on ten of its patents covering advertising, privacy controls and social networking. Yahoo had threatened to sue Facebook a month before the filing, insisting that the social network license its patents. A spokesperson for Facebook issued a statement saying "We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation".[49] The lawsuit claims that Yahoo's patents cover basic social networking ideas such as customizing website users' experiences to their needs, adding that the patents cover ways of targeting ads to individual users.[50]
Facebook filed for an initial public offering (IPO) on February 1, 2012.[86] The preliminary prospectus stated that the company was seeking to raise $5 billion. The document announced that the company had 845 million active monthly users and its website featured 2.7 billion daily likes and comments.[87] After the IPO, Zuckerberg will retain a 22% ownership share in Facebook and will own 57% of the voting shares.[88]
Underwriters valued the shares at $38 each, pricing the company at $104 billion, the largest valuation to date for a newly public company.[89] On May 16, one day before the IPO, Facebook announced that it would sell 25% more shares than originally planned due to high demand.[90] The IPO raised $16 billion, making it the third largest in U.S. history (just ahead of AT&T Wireless and behind only General Motors and Visa Inc.).[91][92] The stock price left the company with a higher market capitalization than all but a few U.S. corporations – surpassing heavyweights such as Amazon.com, McDonald's, Disney, and Kraft Foods – and made Zuckerberg's stock worth $19 billion.[91][92] The New York Times stated that the offering overcame questions about Facebook's difficulties in attracting advertisers to transform the company into a "must-own stock". Jimmy Lee of JPMorgan Chase described it as "the next great blue-chip".[91] Writers at TechCrunch, on the other hand, expressed skepticism, stating, "That's a big multiple to live up to, and [Facebook] will likely need to add bold new revenue streams to justify the mammoth valuation".[93]
Trading in the stock, which began on May 18, was delayed that day due to technical problems with the NASDAQ exchange.[94] The stock struggled to stay above the IPO price for most of the day, forcing underwriters to buy back shares to support the price.[95] At closing bell, shares were valued at $38.23,[96] only $0.23 above the IPO price and down $3.82 from the opening bell value. The opening was widely described by the financial press as a disappointment.[97] The stock nonetheless set a new record for trading volume of an IPO.[98] On 25 May 2012, the stock ended its first full week of trading at $31.91, a 16.5% decline.[99]
On 22 May, regulators from Wall Street's Financial Industry Regulatory Authority announced that they had begun to investigate whether banks underwriting Facebook had improperly shared information only with select clients, rather than the general public. Massachusetts Secretary of State William Galvin subpeonaed Morgan Stanley over the same issue.[100] The allegations sparked "fury" among some investors and led to the immediate filing of several lawsuits, one of them a class action suit claiming more than $2.5 billion in losses due to the IPO.[101] Bloomberg estimated that retail investors may have lost approximately $630 million on Facebook stock since its debut.[102]
On October 1, 2005, Facebook expanded to twenty-one universities in the United Kingdom, the Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) system in Mexico (around thirty campuses throughout the country at the time), the University of Puerto Rico and Interamerican University of Puerto Rico network in Puerto Rico, and the University of the Virgin Islands network in the U.S. Virgin Islands. Facebook launched a high school version in September 2005, which Zuckerberg called the next logical step.[40] At that time, high school networks required an invitation to join.[41] Facebook later expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft.[42] On December 11, 2005, universities in Australia and New Zealand were added to the Facebook network, bringing its size to 2,000+ colleges and 25,000 + high schools throughout the United States, Canada, Mexico, the United Kingdom, Australia, New Zealand, and Ireland. Facebook was then opened on September 26, 2006 to everyone ages 13 and older with a valid e-mail address.[6][7]
Late in 2007, Facebook had 100,000 business pages, allowing companies to attract potential customers and tell about themselves. These started as group pages, but a new concept called company pages was planned.[43]
In October 2008, Facebook announced that it would set up its international headquarters in Dublin, Ireland.[44]
In 2010, Facebook began to invite users to become beta testers after passing a question-and-answer-based selection process,[45] and a set of Facebook Engineering Puzzles where users would solve computational problems which gave them an opportunity to be hired by Facebook.[46]
As of February 2011, Facebook had become the largest online photo host, being cited by Facebook application and online photo aggregator Pixable as expecting to have 100 billion photos by summer 2011.[47] As of October 2011, over 350 million users accessed Facebook through their mobile phones, accounting for 33% of all Facebook traffic.[48]
On March 12, 2012, Yahoo! filed suit in a U.S. federal court against Facebook weeks before the scheduled Facebook initial public offering. In its court filing, Yahoo said that Facebook had infringed on ten of its patents covering advertising, privacy controls and social networking. Yahoo had threatened to sue Facebook a month before the filing, insisting that the social network license its patents. A spokesperson for Facebook issued a statement saying "We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation".[49] The lawsuit claims that Yahoo's patents cover basic social networking ideas such as customizing website users' experiences to their needs, adding that the patents cover ways of targeting ads to individual users.[50]
Facebook filed for an initial public offering (IPO) on February 1, 2012.[86] The preliminary prospectus stated that the company was seeking to raise $5 billion. The document announced that the company had 845 million active monthly users and its website featured 2.7 billion daily likes and comments.[87] After the IPO, Zuckerberg will retain a 22% ownership share in Facebook and will own 57% of the voting shares.[88]
Underwriters valued the shares at $38 each, pricing the company at $104 billion, the largest valuation to date for a newly public company.[89] On May 16, one day before the IPO, Facebook announced that it would sell 25% more shares than originally planned due to high demand.[90] The IPO raised $16 billion, making it the third largest in U.S. history (just ahead of AT&T Wireless and behind only General Motors and Visa Inc.).[91][92] The stock price left the company with a higher market capitalization than all but a few U.S. corporations – surpassing heavyweights such as Amazon.com, McDonald's, Disney, and Kraft Foods – and made Zuckerberg's stock worth $19 billion.[91][92] The New York Times stated that the offering overcame questions about Facebook's difficulties in attracting advertisers to transform the company into a "must-own stock". Jimmy Lee of JPMorgan Chase described it as "the next great blue-chip".[91] Writers at TechCrunch, on the other hand, expressed skepticism, stating, "That's a big multiple to live up to, and [Facebook] will likely need to add bold new revenue streams to justify the mammoth valuation".[93]
Trading in the stock, which began on May 18, was delayed that day due to technical problems with the NASDAQ exchange.[94] The stock struggled to stay above the IPO price for most of the day, forcing underwriters to buy back shares to support the price.[95] At closing bell, shares were valued at $38.23,[96] only $0.23 above the IPO price and down $3.82 from the opening bell value. The opening was widely described by the financial press as a disappointment.[97] The stock nonetheless set a new record for trading volume of an IPO.[98] On 25 May 2012, the stock ended its first full week of trading at $31.91, a 16.5% decline.[99]
On 22 May, regulators from Wall Street's Financial Industry Regulatory Authority announced that they had begun to investigate whether banks underwriting Facebook had improperly shared information only with select clients, rather than the general public. Massachusetts Secretary of State William Galvin subpeonaed Morgan Stanley over the same issue.[100] The allegations sparked "fury" among some investors and led to the immediate filing of several lawsuits, one of them a class action suit claiming more than $2.5 billion in losses due to the IPO.[101] Bloomberg estimated that retail investors may have lost approximately $630 million on Facebook stock since its debut.[102]
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