Facebook: 83 million fake accounts feed trolls, spammers and malicious users

Sunday, August 05, 2012 by: J. D. Heyes
Tags: Facebook, fake accounts, trolls

(NaturalNews) When Facebook announced earlier this year it would hold an initial public offering of stock, some early analyses of the social media giant speculated its value could reach as high as $100 billion.

In early May, the company set its share prices in the $28-35 range and announced it planned to offer 337.4 million shares. By the middle of the month, the share price range had climbed to the $34-38 range, which meant at the high end, the company could raise about $12 billion in cash and be valued in the $104 billion range. The day before the IPO, Facebook set its share price: $38.

On May 18, the trading day at Nasdaq opened with Facebook creator and CEO Mark Zuckerberg ringing the opening bell; a half-hour technical delay later, trading began and some 500 million shares changed hands. But by the end of the day, the stock's value was virtually unchanged, settling at $38.23 by the closing bell.

It's been downhill ever since for the social media behemoth. Today, the value of Facebook stock has fallen nearly 50 percent, from an IPO price of $38 to $20.04 by close of market Thursday. That means the company's first investors have lost nearly half their investment - so far.

More bad news

Now that Facebook is a publicly-traded company, it has certain financial and other reporting requirements it must make with the U.S. Securities and Exchange Commission, the agency that oversees Wall Street. In its most recent quarterly filing, the company released some more stock-price-dropping news - namely that, despite figures indicating a growth of global members in the April-June quarter, the company announced that as many as 83 million "may come from dubious sources -- duplicate accounts, pages for pets and those designed to send spam," Agence France Presse reported.

Overall, the company said users grew to 955 million over the quarterly reporting period, but nearly one in nine are bogus. In its filing with the SEC, the company said there are "inherent challenges" in identifying legitimate usage, "despite our efforts to detect and suppress such behavior."

Of that amount, 4.8 percent of users had duplicate accounts, 2.4 percent may be for a business, organization or "non-human entity such as a pet," and another 1.5 percent were likely "undesirable" accounts used for malicious purposes.

"We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed markets such as the United States or Australia and higher in developing markets such as Indonesia and Turkey," the company said.

"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 be affected by improvements or changes in our methodology."

Perception is reality when it comes to Facebook users

What do the numbers matter, really?

Well, the company bases its advertising rates on the amount of users it says it has. Fewer users means the company has less value to prospective advertisers.

That equation matters more now than ever because now, Facebook is owned, in large part, by stockholders.

Stockholders who, by the way, have been steadily losing money since the social site went public.

"We generate a substantial majority of our revenue from advertising," Facebook said in its filing.

"The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business."

Rory Cellan-Jones, a technology correspondent for the BBC, wrote, in reference to the amount of Facebook's bogus accounts, "A number of advertisers have been challenging Facebook to prove that the clicks they are receiving on their ads are 'real' - these figures will provide them with added ammunition."

Sources:

http://www.bbc.com/news/technology-19093078

http://ca.news.yahoo.com

http://www.businessweek.com