When Facebook filed its $5 billion initial public offering (IPO) last month, the company revealed it had 845 million monthly active users (MAUs) and 425 million monthly active mobile users as of December 31, 2011. In the social networking giant's updated IPO filing yesterday, the company disclosed it estimates 5 to 6 percent of these accounts are false or duplicate.
This would mean somewhere between 42.25 million and 50.70 million Facebook accounts are fake, according to the company's own estimates. A year ago, Facebook said it bans at least 20,000 accounts daily, although this number was specifically for underage kids, not fake accounts. When I asked, Facebook would not disclose how many false and/or duplicate accounts it removes on a regular basis.
Here's the relevant excerpt from the updated prospectus:
Certain of our user metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business. The numbers of our MAUs and daily active users (DAUs) are calculated using internal company data. While we believe these numbers are 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 have multiple Facebook accounts in violation of our terms of service, despite our efforts to detect and suppress such behavior. We estimate that false or duplicate accounts may have represented approximately 5-6% of our MAUs as of December 31, 2011. However, this estimate is 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 false or duplicate accounts may not accurately represent the actual number of such accounts.
On average in December 2011, Facebook saw 483 million daily active users. Yesterday, the company admitted that less than 5 percent of these may be being affected by possible inaccuracies when measuring signals from mobile devices. Such inaccuracies would of course be lower for monthly active users:
Our metrics are also 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. We estimate that less than 5% of our estimated worldwide DAUs as of December 31, 2011 and 2010 resulted from this type of automatic mobile activity, and that this type of activity had a substantially smaller effect on our estimate of worldwide MAUs and mobile MAUs. 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 IP address, which may not always accurately reflect the user’s actual location. If advertisers, developers, or investors do not perceive our user metrics to be accurate representations of our user base, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and advertisers and developers may be less willing to allocate their budgets or resources to Facebook, which could negatively affect our business and financial results.
It's also worth noting that an active Facebook user does not necessarily mean accessing facebook.com. It just means using your Facebook account somewhere on the Internet. Nevertheless, Facebook is much better at reporting the number of users that its service sees, while other companies purposefully bloat their numbers with inactive accounts.
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