Facebook believes there are more than 83 million fake profiles on its social network, according to a filing made earlier this week.
It said that 8.7 percent of its 955 million active users could be fake, a revelation that is unlikely to inspire confidence in investors of the social network, which relies on advertising as its main source of revenue.
Yesterday, the company’s share price slumped to a record low as it lost 6.4 percent of its value, meaning that it has lost 40 percent of its value in total since its Initial Public Offering (IPO) earlier this year.
‘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” made up 1.5 percent of the total.
This is a significant blow for the company, which has struggled to convince investors of its business model. A recent BBC investigation questioned the value of advertising on Facebook and highlighted the disproportionate response that some of the advertisers receive from supposedly fake accounts.
“We enable advertisers to engage with more than 950 million monthly active users (MAUs) on Facebook or subsets of our users based on information they have chosen to share with us, such as their age, location, gender or interests,” said Facebook in the filing. “We offer advertisers a unique combination of reach, relevance, social context and engagement to enhance the value of their ads.”
“We generate a substantial majority of our revenue from advertising,” it added. “The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business.”
Facebook was forced to pay £6.4 million to charity to settle a lawsuit that accused the social network of violating users’ rights to control the use of their own names, photographs and likeness, as defined by Californian law. The case came after concerns were raised about the way Facebook showed users’ ‘likes’ on sponsored stories without giving them the chance to opt out.
Chief operating officer Sheryl Sandberg has said the value of a sponsored story was worth at least twice and up to three times the value of a standard Facebook advert without an endorsement.
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Another reason not to believe Facebook's recent earnings results. That number is much MUCH higher - probably around 200 million.
http://mankabros.com/blogs/onmedea/2012/07/24/should-we-believe-facebooks-earnings/