Facebook(1)
The subject of numerous controversies, Facebook has often been criticized over issues such as user privacy (as with the Cambridge Analytica data scandal), political manipulation (as with the 2016 U.S. elections) and mass surveillance.[11] Facebook has also been subject to criticism over psychological effects such as addiction and low self-esteem, and various controversies over content such as fake news, conspiracy theories, copyright infringement, and hate speech.[12] Commentators have accused Facebook of willingly facilitating the spread of such content, as well as exaggerating its number of users to appeal to advertisers.
History
2003–2006: Thefacebook, Thiel investment, and name change
Zuckerberg built a website called "Facemash" in 2003 while attending Harvard University. The site was comparable to Hot or Not and used "photos compiled from the online face books of nine Houses, placing two next to each other at a time and asking users to choose the 'hotter' person".[15] Facemash attracted 450 visitors and 22,000 photo-views in its first four hours.[16] The site was sent to several campus group listservs, but was shut down a few days later by Harvard administration. Zuckerberg faced expulsion and was charged with breaching security, violating copyrights and violating individual privacy. Ultimately, the charges were dropped.[15] Zuckerberg expanded on this project that semester by creating a social study tool. He uploaded art images, each accompanied by a comments section, to a website he shared with his classmates.[17]
A "face book" is a student directory featuring photos and personal information.[16] In 2003, Harvard had only a paper version[18] along with private online directories.[15][19] Zuckerberg told The Harvard Crimson, "Everyone's been talking a lot about a universal face book within Harvard. ... I think it's kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week."[19] In January 2004, Zuckerberg coded a new website, known as "TheFacebook", inspired by a Crimson editorial about Facemash, stating, "It is clear that the technology needed to create a centralized Website is readily available ... the benefits are many." Zuckerberg met with Harvard student Eduardo Saverin, and each of them agreed to invest $1,000 ($1,613 in 2023 dollars[20]) in the site.[21] On February 4, 2004, Zuckerberg launched "TheFacebook", originally located at thefacebook.com.
Six days after the site launched, Harvard seniors Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra accused Zuckerberg of intentionally misleading them into believing that he would help them build a social network called HarvardConnection.com. They claimed that he was instead using their ideas to build a competing product.[23] The three complained to the Crimson and the newspaper began an investigation. They later sued Zuckerberg, settling in 2008[24] for 1.2 million shares (worth $300 million at Facebook's IPO, or $398 million in 2023 dollars[20]).[25]
Membership was initially restricted to students of Harvard College. Within a month, more than half the undergraduates had registered.[26] Dustin Moskovitz, Andrew McCollum, and Chris Hughes joined Zuckerberg to help manage the growth of the website.[27] In March 2004, Facebook expanded to Columbia, Stanford and Yale.[28] It then became available to all Ivy League colleges, Boston University, NYU, MIT, and successively most universities in the United States and Canada.[29][30]
In mid-2004, Napster co-founder and entrepreneur Sean Parker—an informal advisor to Zuckerberg—became company president.[31] In June 2004, the company moved to Palo Alto, California.[32] Sean Parker called Reid Hoffman to fund Facebook. However, Reid Hoffman was too busy launching LinkedIn so he set Facebook up with PayPal co-founder Peter Thiel, who gave Facebook its first investment later that month.[33][34] In 2005, the company dropped "the" from its name after purchasing the domain name Facebook.com for US$200,000 ($312,012 in 2023 dollars[20]).[35] The domain had belonged to AboutFace Corporation.
In May 2005, Accel Partners invested $12.7 million ($19.8 million in 2023 dollars[20]) in Facebook, and Jim Breyer[36] added $1 million ($1.56 million in 2023 dollars[20]) of his own money. A high-school version of the site launched in September 2005.[37] Eligibility expanded to include employees of several companies, including Apple Inc. and Microsoft
Usmanov's USM Holdings on another occasion.[61][58] According to the New York Times in 2013, "Mr. Usmanov and other Russian investors at one point owned nearly 10 percent of Facebook, though precise details of their ownership stakes are difficult to assess."[61] It was later revealed in 2017 by the Paradise Papers that lending by Russian state-backed VTB Bank and Gazprom's investment vehicle partially financed these 2009 investments, although Milner was reportedly unaware at the time.[62][63]
In May 2009, Zuckerberg said of the $200 million Russian investment, "This investment is purely buffer for us. It is not something we needed to get to cash flow positive."[64] In September 2009, Facebook became cash flow positive ahead of schedule[65][66] after closing a roughly $200 million gap in operating profitability.[66]
In 2010, Facebook won the Crunchie "Best Overall Startup Or Product" award[67] for the third year in a row.[68]
The company announced 500 million users in July 2010.[69] Half of the site's membership used Facebook daily, for an average of 34 minutes, while 150 million users accessed the site from mobile devices. A company representative called the milestone a "quiet revolution".[70] In October 2010 groups were introduced.[71] In November 2010, based on SecondMarket Inc. (an exchange for privately held companies' shares), Facebook's value was $41 billion ($57.3 billion in 2023 dollars[20]). The company had slightly surpassed eBay to become the third largest American web company after Google and Amazon.com.[72][73]
In February 2011, Facebook announced plans to move its headquarters to the former Sun Microsystems campus in Menlo Park, California.[75][76] In March 2011, it was reported that Facebook was removing about 20,000 profiles daily for violations such as spam, graphic content and underage use, as part of its efforts to boost cyber security.[77] Statistics showed that Facebook reached one trillion page views in the month of June 2011, making it the most visited website tracked by DoubleClick.[78][79] According to a Nielsen study, Facebook had in 2011 become the second-most accessed website in the U.S. behind Google
2012–2013: IPO, lawsuits, and one billion active users
In March 2012, Facebook announced App Center, a store selling applications that operate via the website. The store was to be available on iPhones, Android devices, and for mobile web users
Facebook's initial public offering came on May 17, 2012, at a share price of US$38 ($50.00 in 2023 dollars[20]). The company was valued at $104 billion ($138 billion in 2023 dollars[20]), the largest valuation to that date.[83][84][85] The IPO raised $16 billion ($21.2 billion in 2023 dollars[20]), the third-largest in U.S. history, after Visa Inc. in 2008 and AT&T Wireless in 2000.[86][87] Based on its 2012 income of $5 billion ($6.64 billion in 2023 dollars[20]), Facebook joined the Fortune 500 list for the first time in May 2013, ranked 462.[88] The shares set a first-day record for trading volume of an IPO (460 million shares).[89] The IPO was controversial given the immediate price declines that followed,[90][91][92][93] and was the subject of lawsuits,[94] while SEC and FINRA both launched investigations.[95]
Zuckerberg announced at the start of October 2012 that Facebook had one billion monthly active users,[96] including 600 million mobile users, 219 billion photo uploads and 140 billion friend connections.[97]
On October 1, 2012, Zuckerberg visited Russian Prime Minister Dmitry Medvedev in Moscow to stimulate social media innovation in Russia and to boost Facebook's position in the Russian market
