Facebook's 10 Most Serious Threats, According to Facebook

Predictable threat: People find a better product. Surprising weakness: Zynga accounts for one out of eight dollars of revenue for the (potentially $100 billion!) company.

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Facebook's blockbuster IPO filing includes 50 risks the company perceives to its business and public offering. Here are ten of the most interesting and important threats to the company that could be worth $100 billion, with quotes from Facebook's own S-1 document.

1) People stop using Facebook: Well, this one is obvious. "A decrease in user retention, growth, or engagement could render Facebook less attractive to developers and advertisers, which may have a material and adverse impact on our revenue, business, financial condition, and results of operations," Facebook states. Although annual revenue grew 154% between 2009/2010 and 88% between 2010/2011, it relied on user growth that will eventually have to slow due to higher market penetration rates, which is economic-speak for "we're running out of people."

2) Advertisers run away: Again, that's a straightforward concern. But the S-1 doc has some interesting stats, including: "In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue." Facebook finished 2011 with net income of $1 billion. That's impressive for a private company, but Facebook is valued by some at $100 billion. That number suggests many investors have big dreams for the company's ad potential.

3) Facebook runs out of ideas for monetizing the Facebook platform: In their own words: "We currently monetize the Facebook Platform in several ways, including ads on pages generated by apps on Facebook, direct advertising on Facebook purchased by Platform developers to drive traffic to their apps and websites, and fees from our Platform developers' use of our Payments infrastructure to sell virtual and digital goods to users. Apps built by developers of social games, particularly Zynga, are currently responsible for substantially all of our revenue derived from Payments."

4) Foreign "Facebooks" eat Facebook's lunch overseas: With 800 million users, Facebook considers itself one of the largest "nations" in the world. But one size doesn't fit all in social media. Various countries have different leading search engines and social apps that adhere tot the peculiar contours of the local culture. Those cultural differences don't seem to have stopped Facebook's growth, but if foreign social media networks create new features that mesh with large populations and resist acquisition by Facebook, Zuckerberg will have competition. From Facebook:  "We compete ... with other, largely regional, social networks that have strong positions in particular countries, including Cyworld in Korea, Mixi in Japan, Orkut (owned by Google) in Brazil and India, and vKontakte in Russia. We would also face competition from companies in China such as Renren, Sina, and Tencent in the event that we are able to access the market in China in the future."

5) Google eats Facebook's lunch: Facebook's biggest threat probably isn't some foreign network like Cyworld that you haven't heard of. It's probably the tech company you've heard of the most: Google. It already dominates search, has hundreds of millions of people signed up on a social media network, and owns a big slice of the smart phone market: "Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate including: by integrating competing social networking platforms or features into products they control such as search engines, web browsers, or mobile device operating systems; by making acquisitions; or by making access to Facebook more difficult."

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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