Facebook 2014 Annual Report Download - page 17

If we are not able to maintain and enhance our brands, or if events occur that damage our reputation and brands, our ability to expand our base of
users, marketers, and developers may be impaired, and our business and financial results may be harmed.
We believe that our brands have significantly contributed to the success of our business. We also believe that maintaining and enhancing our
brands is critical to expanding our base of users, marketers, and developers. Many of our new users are referred by existing users. Maintaining and
enhancing our brands 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 or policies that users do not like, which may negatively affect our brands.
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 will also continue to experience media, legislative, or regulatory scrutiny of our decisions regarding user privacy and
other issues, which may adversely affect our reputation and brands. We also may fail to provide adequate customer service, which could erode
confidence in our brands. Our brands 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, by perceived or actual efforts by governments to obtain access to user information for security-
related purposes, or by the use of our products or services for illicit, objectionable, or illegal ends. Maintaining and enhancing our brands may require us
to make substantial investments and these investments may not be successful. Certain of our past actions have eroded confidence in our brands, and if
we fail to successfully promote and maintain our brands or if we incur excessive expenses in this effort, our business and financial results may be
adversely affected.
Security breaches and improper access to or disclosure of our data or user data, or other hacking and phishing attacks on our systems, could harm
our reputation and adversely affect our business.
Our industry is prone to cyber attacks, with third parties seeking unauthorized access to our data or users’ data.
Any failure to prevent or
mitigate security breaches and improper access to or disclosure of our data or user data could result in the loss or misuse of such data, which could harm
our business and reputation and diminish our competitive position. In addition, computer malware, viruses, and hacking and phishing attacks by third
parties have become more prevalent in our industry, have occurred on our systems in the past, and may occur on our systems in the future. As a result of
our prominence, we believe that we are a particularly attractive target for such breaches and attacks. Such attacks may cause interruptions to the services
we provide, degrade the user experience, or cause users to lose confidence in our products. Our efforts to protect our company data or the information
we receive may also be unsuccessful due to 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. Although we have developed systems and processes that are designed to protect our data and user data and to prevent data loss and
other security breaches, we cannot assure you that such measures will provide absolute security.
In addition, 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. We provide limited information to such third
parties based on the scope of services provided to us. However, if these third parties or developers fail to adopt or adhere to adequate data security
practices, or in the event of a breach of their networks, our users' data may be improperly accessed, used, or disclosed.
Affected users or government authorities could initiate legal or regulatory actions against us in connection with any security breaches, 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, terms of
service, product changes, product quality, litigation or regulatory activity, government surveillance, the actions of our developers whose products are
integrated with Facebook, the use of our products or services for illicit, objectionable, or illegal ends, 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:
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our ability to maintain and grow our user base and user engagement;