Eight years after it was launched as a Harvard dorm room project, Facebook has declared that its social network is now being used by 1 billion people around the world every month – or one in seven of the global population.
Its founder and chief executive, Mark Zuckerberg, 28, is in need of good news after the company’s disappointing flotation in May. He took to his personal Facebook account to say that the milestone was “by far the thing I am most proud of in my life”.
He has achieved his stated ambition of reaching 1 billion active monthly users just two years and three months after the social network reached the half-billion mark. Facebook reached 900 million active monthly users in April.
With characteristic ambition, Zuckerberg talked of connecting “the rest of the world” – and the company launched a digital video commercial, directed by Alejandro González Iñárritu, whose film credits include Amores Perros and 21 Grams.
Although expected, the announcement will help divert attention from the company’s disastrous flotation. Facebook launched at $38 a share in May, only to drop steadily. This week shares were trading at around $21. As a result, Zuckerberg’s personal fortune has fallen by about $8bn.
Facebook’s shares slumped over fears that revenues would be hit by consumers increasingly accessing the internet via mobile devices, which are harder to generate advertising revenue from. About 600 million people use Facebook’s mobile platform, and one in 10 reportedly access the site only by phone.
Users of the social network have run up 1.13tn “likes” – the internet’s ubiquitous thumbs-up button – 140.3bn friend connections and 219bn shared photos since it launched in February 2004. More than 300m photos are uploaded every day and 62.6m songs played, demonstrating how fast the site has become part of people’s everyday experience.
Nevertheless, there are considerable hurdles to overcome if Facebook is to sign up another billion. In North America it is used by nearly 45% of the population, according to data from Socialbakers.com. However, the site has yet to reach more than 6% in Africa, where mobile phones – fast becoming Facebook’s achilles heel – are predominant, and 7% in Asia, where it competes with local sites.
Increasingly, Zuckerberg has taken to travelling the globe to help push the company in new territories. He visited the Russian prime minister, Dmitry Medvedev, in Moscow last week, taking part in a TV chatshow and surprising programmers at a local event.
The trip was an attempt to help the firm break into the significantRussian market, which is dominated by domestic social network VKontakte, which claims 100 million users. There are similar challenges for Facebook in China, where market rivals RenRen and Sina Weibo have 30 million and 300 million users respectively. It is offering a basic version of the site for users in developing countries including Cameroon, Qatar and Indonesia.
But while Facebook is also hoping to lure more subscribers, its real challenge is to raise turnover, even to match Wall Street’s reduced expectations. Richard Broughton, head of broadband at analysts Screen Digest, said Facebook is exploring multiple business models to try to boost mobile income.
Experiments to boost growth include launching paid posts for individual users, allowing them to pay about $7 (£4.30) to promote their news in their friends’ timelines, and discussions with the UK government over using Facebook identities to help citizens access public services.
Broughton added that Facebook was finding it harder to make money outside the US, average revenues per user being far higher, about $14, in the States than the $3 in the rest of the world. Facebook’s primary sources of income are advertising and payments for features including gaming – at the time of the float, the Farmville games company Zynga generated about 12% of its revenue.
Nevertheless, the analyst warned that growth is slowing: “When they were initially filing, there were a lot of comparisons to Google, but that was predicated on growth. Now Facebook is plateauing. Social networks are substitutable. You can afford, as a user, to be on several networks. That means there is a reasonably low entry barrier to a competitor coming in.”