Facebook 2014 Annual Report Download - page 9

We generate revenue from developers who use our Payments infrastructure to sell virtual and digital goods to people who use Facebook on
personal computers. We also generate revenue from developers who choose to purchase ads from us, and we receive a portion of the revenue from
developers who show ads from Facebook advertisers in their applications within our Audience Network.
Competition
Our business is characterized by innovation, rapid change, and disruptive technologies. We face significant competition in every aspect of our
business, including from companies that provide tools to facilitate the sharing of information, companies that enable marketers to display advertising,
and companies that provide development platforms for application developers. We compete to attract, engage, and retain people, to attract and retain
marketers, to attract and retain developers to build compelling mobile and web applications that integrate with Facebook, and to attract and retain highly
talented individuals, especially software engineers, designers, and product managers.
We compete with the following:
As we introduce new products, as our existing products evolve, or as other companies introduce new products and services, we may become
subject to additional competition.
Technology
Our product development philosophy is centered on continuous innovation in creating and improving products that are social by design, which
means that our products are designed to place people and their social interactions at the core of the product experience. As our user base grows, and the
level of engagement from the people who use Facebook continues to increase, including on mobile devices, our computing needs continue to expand.
We make significant investments in technology both to improve our existing products and services and to develop new ones for people who use
Facebook, and for our marketers and developers.
Our research and development expenses were $2.67 billion , $1.42 billion , and $1.40 billion in 2014
, 2013, and 2012, respectively. 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 people, marketers and developers 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
people, marketers, and developers.
We have data centers in the United States, including data center facilities that we own in Iowa, North Carolina, and Oregon and leased data center
facilities in California and Virginia. We also own a data center facility in Lulea, Sweden.
Marketing
To date, the Facebook community has grown virally with people inviting their friends to connect with them, supported by internal efforts to
stimulate awareness and interest. In addition we have invested and will continue to invest in marketing our products
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• Companies that offer full-
featured products that replicate the range of communications and related capabilities we provide. These offerings
include, for example, Google+, which Google has integrated with certain of its products, including search and Android, as well as other,
largely regional, social networks that have strong positions in particular countries.
•
Companies that develop applications, particularly mobile applications, that provide social or other communications functionality, such as
messaging, photo- and video-sharing, and micro-blogging.
• Companies that provide web- and mobile-
based information and entertainment products and services that are designed to engage people and
capture time spent online and on mobile devices.
•
Traditional, online, and mobile businesses that provide media for marketers to reach their audiences and/or develop tools and systems for
managing and optimizing advertising campaigns.