Facebook Addresses Fake Accounts, Teen Users, WhatsApp And Oculus VR Closings In Form 10-Q

The social network said it expects the WhatsApp acquisition to close later in 2014, adding that in the event the transaction is not finalized by Aug. 19, it will pay a termination fee of $1 billion to WhatsApp, along with issuing the cross-platform mobile messaging company the equivalent of $1 billion in shares of Facebook class-A common stock. That deadline moves to Aug. 19, 2015, if all closing conditions have been met except for regulatory approvals.

As for Oculus VR, Facebook said it expects the deal to close sometime during the second quarter.

On the topic of duplicate or fake accounts, Facebook wrote in its Form 10-Q:

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 between approximately 4.3 percent and 7.9 percent of our worldwide MAUs (monthly active users) in 2013. We also seek to identify “false” accounts, which we divide into two categories: 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 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 2013, for example, we estimate that user-misclassified accounts may have represented between approximately 0.8 percent and 2.1 percent of our worldwide MAUs, and undesirable accounts may have represented between approximately 0.4 percent and 1.2 percent of our worldwide MAUs.

We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed markets such as the U.S. or U.K. 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. Due to inherent variability in such estimates at particular dates of measurement, we disclose these estimates as a range over a recent period.

On the subject of teen membership numbers, the social network wrote:

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. In the third quarter of 2013, we worked with third parties to develop models to more accurately analyze user data by age in the U.S. These models suggested that usage by U.S. teens overall was stable, but that DAUs (daily active users) among younger U.S. teens had declined. The data and models we are using are not precise, and our understanding of usage by age group may not be complete.

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