Facebook 2013 Annual Report Download - page 6

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LIMITATIONS OF KEY METRICS AND OTHER DATA
The numbers for our key metrics, which include our daily active users (DAUs), mobile DAUs, monthly active users (MAUs),
mobile MAUs, and average revenue per user (ARPU), as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs,
are calculated using internal company data based on the activity of user accounts. While these numbers are based on what we believe to
be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of
our products across large online and mobile populations around the world. For example, there may be individuals who maintain one or
more Facebook accounts in violation of our terms of service. We estimate, for example, that "duplicate" accounts (an account that a user
maintains in addition to his or her principal account) may have represented between approximately 4.3% and 7.9% of our worldwide
MAUs in 2013. We also seek to identify "false" accounts, which we divide into two categories: (1) user-misclassified accounts, where
users have created personal profiles for a business, organization, or non-human entity such as a pet (such entities are permitted on Facebook
using a Page rather than a personal profile under our terms of service); and (2) undesirable accounts, which represent user profiles that
we determine are intended to be used for purposes that violate our terms of service, such as spamming. In 2013, for example, we estimate
user-misclassified accounts may have represented between approximately 0.8% and 2.1% of our worldwide MAUs and undesirable
accounts may have represented between approximately 0.4% and 1.2% of our worldwide MAUs. We believe the percentage of accounts
that are duplicate or false is meaningfully lower in developed markets such as the United States or United Kingdom and higher in
developing markets such as India and Turkey. However, these estimates are based on an internal review of a limited sample of accounts
and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that
appears inauthentic to the reviewers. As such, our estimation of duplicate or false accounts may not accurately represent the actual number
of such accounts. We are continually seeking to improve our ability to identify duplicate or false accounts and estimate the total number
of such accounts, and such estimates may change due to improvements or changes in our methodology. Due to inherent variability in
such estimates at particular dates of measurement, we disclose these estimates as a range over a recent period.
Our data limitations may affect our understanding of certain details of our business. For example, while user-provided data
indicates a decline in usage among younger users, this age data is unreliable because a disproportionate number of our younger users
register with an inaccurate age. In the third quarter of 2013, we worked with third parties to develop models to more accurately analyze
user data by age in the United States. These models suggested that usage by U.S. teens overall was stable, but that DAUs among younger
U.S. teens had declined. The data and models we are using are not precise and our understanding of usage by age group may not be
complete.
Some of our historical metrics through the second quarter of 2012 were also affected by applications on certain mobile devices
that automatically contact our servers for regular updates with no user action involved, and this activity can cause our system to count
the user associated with such a device as an active user on the day such contact occurs. For example, we estimate that less than 5% of
our estimated worldwide DAUs as of December 31, 2011 and 2010 resulted from this type of automatic mobile activity, and that this
type of activity had a substantially smaller effect on our estimate of worldwide MAUs and mobile MAUs. The impact of this automatic
activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, our data regarding
the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location.
These factors may not always accurately reflect the user's actual location. For example, a mobile-only user may appear to be accessing
Facebook from the location of the proxy server that the user connects to rather than from the user's actual location. The methodologies
used to measure user metrics may also be susceptible to algorithm or other technical errors. For example, in early June 2012, we discovered
an error in the algorithm we used to estimate the geographic location of our users that affected our attribution of certain user locations
for the period ended March 31, 2012. While this issue did not affect our overall worldwide DAU and MAU numbers, it did affect our
attribution of users across different geographic regions. We estimate that the number of MAUs as of March 31, 2012 for the United States
& Canada region was overstated as a result of the error by approximately 3% and this overstatement was offset by understatements in
other regions. The number of such users for the period ended March 31, 2012 disclosed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Trends in Our User Metrics" reflect the reclassification to more correctly attribute users
by geographic region. Our estimates for revenue by user location and revenue by user device are also affected by these factors. We
regularly review and may adjust our processes for calculating these metrics to improve their accuracy. In addition, our DAU and MAU
estimates will differ from estimates published by third parties due to differences in methodology. For example, some third parties are not
able to accurately measure mobile users or do not count mobile users for certain user groups or at all in their analyses.
The numbers of DAUs, mobile DAUs, MAUs, mobile MAUs, mobile-only DAUs and mobile-only MAUs discussed in this Annual
Report on Form 10-K, as well as ARPU, do not include users of Instagram unless they would otherwise qualify as such users, respectively,
based on their other activities on Facebook. In addition, other user engagement metrics included herein do not include Instagram unless
otherwise specifically stated.