Facebook 2014 Annual Report Download - page 7

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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 less than 5% of
our worldwide MAUs in 2014. 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 2014, for example, we estimate user-
misclassified and
undesirable accounts may have represented less than 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.
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.
Accordingly, our understanding of usage by age group may not be complete.
Some of our metrics have also been 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. 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. Our estimates for revenue by user location and revenue by user
device are also affected by these factors. We regularly review our processes for calculating these metrics, and from time to time we may discover
inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical
metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated. 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 or WhatsApp 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 or WhatsApp unless otherwise
specifically stated.
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