On Feb. 1, 2012, Facebook filed its S-1 Registration Statement with the United States Securities and Exchange Commission. As part of the paperwork, Facebook had 22 pages of risk factors for the future of their business. Here are some of those risks.
Facebook recognizes in their document that their new products and changes to old products may fail to attract new customers.
From the S-1 form:
"We face significant competition in almost every aspect of our business, including from companies such as Google, Microsoft, and Twitter..."
"Some of our current and potential competitors have significantly greater resources and better competitive positions on certain markets than we do."
The form also mentioned competition from foreign social network sites, like Cyworld in Korea and Mixi in Japan.
Facebook currently does not advertise on their mobile displays, meaning that revenue may decrease as mobile use increases.
Facebook is currently restricted in China and Iran, among other countries.
"If Facebook-integrated websites draw users away from our website, it may reduce or slow the growth of our user activity that generates advertising opportunities"
Changing laws could affect business.
"Our products incorporate software that is highly technical and complex. Our software has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities."
The issue of privacy is recognized by the company as a potential risk.
"Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results."
Zynga accounted for 12% of Facebook revenue in 2011. They make Facebook games and virtual goods.
Failure to maintain this relationship will hurt the business.