Facebook 2012 Annual Report Download - page 26

Improper access to or disclosure of our users’ information, or violation of our terms of service or policies,
could harm our reputation and adversely affect our business.
Our efforts to protect the information that our users have chosen to share using Facebook may be
unsuccessful due to the actions of third parties, software bugs or other technical malfunctions, employee error or
malfeasance, or other factors. In addition, third parties may attempt to fraudulently induce employees or users to
disclose information in order to gain access to our data or our users’ data. If any of these events occur, our users’
information could be accessed or disclosed improperly. Our Data Use Policy governs the use of information that
users have chosen to share using Facebook and how that information may be used by us and third parties. Some
Platform developers may store information provided by our users through apps on the Facebook Platform or
websites integrated with Facebook. If these third parties or Platform developers fail to adopt or adhere to
adequate data security practices or fail to comply with our terms and policies, or in the event of a breach of their
networks, our users’ data may be improperly accessed or disclosed.
Any incidents involving unauthorized access to or improper use of the information of our users or incidents
involving violation of our terms of service or policies, including our Data Use Policy, could damage our
reputation and our brand and diminish our competitive position. In addition, the affected users or government
authorities could initiate legal or regulatory action against us in connection with such incidents, which could
cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our
business practices. Any of these events could have a material and adverse effect on our business, reputation, or
financial results.
Unfavorable media coverage could negatively affect our business.
We receive a high degree of media coverage around the world. Unfavorable publicity regarding, for
example, our privacy practices, product changes, product quality, litigation or regulatory activity, or the actions
of our Platform developers or our users, could adversely affect our reputation. Such negative publicity also could
have an adverse effect on the size, engagement, and loyalty of our user base and result in decreased revenue,
which could adversely affect our business and financial results.
Our financial results will fluctuate from quarter to quarter and are difficult to predict.
Our quarterly financial results have fluctuated in the past and will fluctuate in the future. Additionally, we
have a limited operating history with the current scale of our business, which makes it difficult to forecast our
future results. As a result, you should not rely upon our past quarterly financial results as indicators of future
performance. You should take into account the risks and uncertainties frequently encountered by companies in
rapidly evolving markets. Our financial results in any given quarter can be influenced by numerous factors, many
of which we are unable to predict or are outside of our control, including:
• our ability to maintain and grow our user base and user engagement;
• our ability to attract and retain marketers in a particular period;
• fluctuations in spending by our marketers due to seasonality, such as historically strong spending in the
fourth quarter of each year, or other factors;
• the number of ads shown to users;
• the pricing of our ads and other products;
• the rate of growth in mobile usage compared to usage through personal computers, and our ability to
monetize through our mobile products;
• our ability to maintain or increase Payments and other fees revenue;
• the diversification and growth of revenue sources beyond advertising and Payments;
• the development and introduction of new products or services by us or our competitors;
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