Facebook 2013 Annual Report Download - page 12

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including content optimization and delivery, graph query, media storage and serving, large-scale data management, and
software performance.
• Large-Scale Systems and Scalable Infrastructure. Our products are built on a shared computing infrastructure. We use
a combination of off-the-shelf and custom software running on clusters of commodity computers to amass substantial
computing capability. Our infrastructure has enabled the storage and processing of large datasets and facilitated the
deployment of our products on a global scale. As our user base grows, and the level of engagement and sharing from our
users continues to increase, our computing needs continue to expand. We aim to provide our products rapidly and reliably
to all users around the world, including in countries where we do not expect significant short-term monetization.
• Mobile Technologies. In order to provide a high-quality experience on a wide variety of mobile devices and operating
systems, we invest in developing novel techniques and technologies including: custom graphics rendering, operating
system customizations, development tools, systems for customizing the user experience based on a variety of factors, and
systems for monitoring the behavior of the applications in the field.
• Advertising Technologies. We invest extensively in advertising technology capable of serving billions of ad impressions
every day while maximizing the relevance of each impression to selected users based upon the information that users
have chosen to share. Our system manages our entire set of ads, the selected audiences, and the marketers' bids to determine
which ads to show each person and how to display them for every page on Facebook. We use an advanced user action
prediction system that weighs many real-time updated features using automated learning techniques. Our technology
incorporates the estimated user action rate with both the marketer's bid and a user relevancy signal to select what we
believe to be the optimal ads to show.
Our research and development expenses were $1.4 billion in both 2013 and 2012 and $388 million in 2011. For information
about our research and development expenses, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations - Research and development" of this Annual Report on Form 10-K.
Sales and Operations
The majority of our marketers use our self-service ad platform to establish accounts and to launch and manage their advertising
campaigns. We also have a global sales force that is focused on attracting and retaining marketers and providing support to them
throughout the stages of the advertising campaign cycle from pre-purchase decision making to real-time optimizations to post-campaign
analytics. We work directly with marketers, through traditional advertising agencies, and with an ecosystem of agencies that have a
specialized focus on Facebook advertising. We currently operate more than 30 sales offices around the globe.
We have operations teams to provide support for our users, developers, and marketers in five regional centers located in Menlo
Park, California; Austin, Texas; Dublin, Ireland; Hyderabad, India; and Singapore. We also invest in and rely on self-service tools to
provide direct customer support to our users, developers, and marketers.
Marketing
To date, the Facebook user community has grown virally with users inviting their friends to connect with them, supported by
internal efforts to stimulate user awareness and interest. In addition we have invested and will continue to invest in marketing our
services to build our brand and user base around the world. We leverage the utility of our products and our social distribution channels
as our most effective marketing tools. In addition, we undertake various user acquisition efforts and regularly host events and
conferences to engage with developers and marketers.
Intellectual Property
To establish and protect our proprietary rights, we rely on a combination of patents, patent applications, trademarks, copyrights,
trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties,
employee disclosure and invention assignment agreements, and other contractual rights. In addition, to further protect our proprietary
rights, from time to time we have purchased patents and patent applications from third parties. We do not believe that our proprietary
technology is dependent on any single patent or copyright or groups of related patents or copyrights. We believe the duration of our
patents is adequate relative to the expected lives of our products.
Government Regulation
We are subject to a number of U.S. federal and state, and foreign laws and regulations that affect companies conducting business
on the Internet. Many of these laws and regulations are still evolving and being tested in courts, and could be interpreted in ways that
could harm our business. These may involve user privacy, rights of publicity, data protection, content, intellectual property, distribution,
electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment