Facebook 2013 Annual Report Download - page 20

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If we are not able to maintain and enhance our brand, or if events occur that damage our reputation and brand, our ability to
expand our base of users, developers, and marketers may be impaired, and our business and financial results may be harmed.
We believe that the Facebook brand has significantly contributed to the success of our business. We also believe that maintaining
and enhancing our brand is critical to expanding our base of users, developers, and marketers. Many of our new users are referred by
existing users. Maintaining and enhancing our brand will depend largely on our ability to continue to provide useful, reliable,
trustworthy, and innovative products, which we may not do successfully. We may introduce new products or terms of service that
users do not like, which may negatively affect our brand. Additionally, the actions of our developers may affect our brand if users do
not have a positive experience using third-party mobile and web applications integrated with Facebook. We have in the past experienced,
and we expect that in the future we will continue to experience, media, legislative, or regulatory scrutiny of our decisions regarding
user privacy or other issues, which may adversely affect our reputation and brand. We also may fail to provide adequate customer
service, which could erode confidence in our brand. Our brand may also be negatively affected by the actions of users that are deemed
to be hostile or inappropriate to other users, or by users acting under false or inauthentic identities, or by perceived or actual efforts
by governments to obtain access to user information for security-related purposes. Maintaining and enhancing our brand may require
us to make substantial investments and these investments may not be successful. If we fail to successfully promote and maintain the
Facebook brand or if we incur excessive expenses in this effort, our business and financial results may be adversely affected.
Improper access to or disclosure of user information, or violation of our terms of service or policies, could harm our reputation
and adversely affect our business.
Our Data Use Policy governs the collection and use of information we receive in connection with our services. Our efforts to
protect the information we receive may be unsuccessful due to the actions of third parties, software bugs or other technical malfunctions,
employee error or malfeasance, government surveillance, 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. Some of our developers or other partners, such as those that help us measure
the effectiveness of ads, may receive or store information provided by us or by our users through mobile or web applications integrated
with Facebook. If these third parties or 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, used, or disclosed.
Any incidents involving unauthorized access to or improper use of user information 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 actions 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, government surveillance, the actions of our developers
whose products are integrated with Facebook, the actions of our users, or the actions of other companies that provide similar services
to us, 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 and quality of ads shown to users;
• the pricing of our ads and other products;