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From a Dorm to Silicon Valley: A History Lesson as Facebook Turns 15
From a Dorm to Silicon Valley: A History Lesson as Facebook Turns 15

History of Facebook: Facts and What's Happening

Whether or not you've seen "The Social Network," you probably know that Mark Zuckerberg founded Facebook in 2004. But, what's the history of Facebook, and what's happening now?

Facebook  (FB) , from its inception, has been fraught with controversy - from the debacle with the Winklevoss brothers over its founding to recent allegations of hacking and data harvesting. Still, as a social media site that more than 2 billion people use regularly, Facebook is more than likely an integral part of your online presence and daily routine. But, how did the social media empire start, and what's happening now? 

History of Facebook

Founded on February 4, 2004, by Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz and Chris Hughes in a Harvard dorm room, Facebook has rapidly become one of the biggest social networking sites in the world. Within the year, the social networking site accrued over 1 million users - which has since grown exponentially to hit over 2 billion in 2018. 

But how did this college startup become one of the world's largest companies, with a presence in dozens of countries worldwide? 

How Was Facebook Founded? 

In a legal battle that ended with a comfortable settlement of over $65 million, Facebook's parentage was a source of debate for years until Zuckerberg settled with the Winklevoss twins in 2008. 

According to Divya Narendra and Cameron and Tyler Winklevoss, Zuckerberg reneged on an agreement to help them build their own social media site at Harvard - and, instead, used the code and idea to inspire the creation of Facebook. And while the dispute was eventually settled in 2008, Facebook's inception was clouded in questions. 

But before there was Facebook, there was Facemash. 

In 2003, as a sophomore, Zuckerberg created a site that compared the pictures of different Harvard students' faces and allowed users to rate the attractiveness of those pictures - attracting 450 people to vote 22,000 times. However, because Zuckerberg violated the school's policy by hacking into the school's system to acquire photos for the site, it was shut down quickly by the university - within two days. Still, Zuckerberg avoided expulsion. However, Facemash's success sparked the idea for Facebook - a social networking site where students at Harvard could use their ".edu" email addresses and photos to connect with other students at the school.

Along with Moskovitz, Saverin, and Hughes, Zuckerberg created the address thefacebook.com in February of 2004, and it began to spread like wildfire at Harvard - and then Stanford, Yale, and Columbia by March of that year. 

Facebook Timeline

Let's break it down.

  • February 2004 - Facebook (then called "thefacebook") was founded by Zuckerberg, Moskovitz, Saverin, and Hughes.
  • March 2004 - Facebook spreads to three other college campuses - Yale, Columbia, and Stanford. 
  • June 2004 - Facebook moves its headquarters to Palo Alto, California. 
  • September 2004 - The site launches the now-infamous "wall" - which allows users to post things and receive messages on their own page. 
  • December 2004 - Facebook hits 1 million users. 
  • May 2005 - Facebook expands to over 800 college campuses. 
  • September 2005 - The site expands to high school networks. It also drops the "the" to become just "Facebook." 
  • October 2005 - Facebook adds photos and goes international.
  • December 2005 - Facebook has over 6 million users.
  • April 2006 - Facebook goes mobile.
  • September 2006 - Anyone can now join Facebook.
  • December 2006 - Membership increases to 12 million.
  • June 2007 - Video launches.
  • December 2007 - Membership increases to 58 million.
  • July 2008 - Launch of Facebook for iPhone. 
  • February 2009 - The "like" button is introduced.
  • July 2010 - Over 500 million users are active on Facebook.
  • August 2010 - Engineering center is opened in Seattle.
  • October 2010 - Groups are launched.
  • April 2011 - Data center opens in Prineville, Oregon. 
  • July 2011 - Video calling is launched.
  • April 2012 - Acquisition of Instagram is announced.
  • May 2012 - Facebook releases their IPO - which raised $16 billion and gave the company a $102.4 billion market value.
  • October 2012 - Membership hits the 1 billion mark.
  • February 2013 - Acquisition of Atlas is announced. 
  • June 2013 - Facebook's acquisition of Instagram launches video. 
  • February 2014 - Acquisition of WhatsApp is announced.
  • March 2014 - Acquisition of Oculus is announced.
  • November 2014 - Groups App is announced. 
  • April 2015 - Over 40 million small business pages are on Facebook.
  • June 2015 - Facebook's AI Research opens in Paris.
  • February 2016 - Facebook's Reactions launches. 
  • July 2016 - Over 1 billion users of Messenger a month.
  • October 2016 - Marketplace launches - allowing users to buy and sell products.
  • April 2017 - F8 developer's conference is held in San Jose by Facebook.
  • March 2018 - Facebook sued by shareholders following stock plummet.
  • April 2018 - Zuckerberg testifies before Congress regarding concerns over data and privacy breaches.
  • September 2018 - Facebook COO Sheryl Sandberg testifies before Congress alongside Twitter (TWTR) executives.

Facebook Acquires Instagram

In a competitive buy, Facebook acquired popular photo-sharing network Instagram (FB) for a cool $1 billion in 2012 (although the deal supposedly went down at around $715 million). 

At the time of its acquisition, Instagram had only around 30 million users, 13 full-time employees, and zero revenue. 

But since the acquisition, Instagram reportedly contributed a hefty $570 million in revenue in the first quarter of 2016 for Facebook - some 10% of their annual revenue that year. 

Instagram has racked up around 1 billion users. 

Facebook and FAANG

Facebook, providing the "F" in the acronym "FAANG" (or "FANG") to delineate the best-performing tech stocks Facebook, Amazon (AMZN) , Apple undefined , Netflix (NFLX) and Google (now Alphabet) (GOOG) , has long been a staple of the tech upper echelon. 

From the beginning, Facebook's powerhouse platform plowed through competition and secured its dominating market share (which it still holds today). 

The acronym "FAANG" was originally coined by TheStreet's founder Jim Cramer and has been widely used to discuss the top tech stocks in the world. And with Facebook's undeniable domination of social media networks over the years, it certainly belonged there. But, could this be changing?

According to Bloomberg this year, Amazon's move on increasing its ad market share has been at the expense of other members of "FAANG" - including Facebook. Additionally, the controversy surrounding data breaches and misuse of the platforms put Facebook and other social media network's values into question. 

Controversy

From the moment Facebook went online, the social media network has faced controversy after controversy. And, although no stranger to lawsuits, the social networking site has recently attracted heavy criticism from Congress and companies over data and privacy breaches.

And while there may very well be enough scandals to fill a book for Facebook, the major controversies have mainly revolved around data breaches and "fake news." 

Winklevoss Lawsuit 

Detailed in the 2010 hit film "The Social Network," Facebook was barely off the ground before it was hit with a lawsuit from the Winklevoss twins. 

Tyler and Cameron Winklevoss sued founder Zuckerberg over claims that he reneged on an agreement the three had made for Zuckerberg to help them build their own social website - and had used the agreement to inspire his project Facebook. 

The case was eventually settled in 2008, giving the Winklevoss twins $20 million-plus $45 million worth of Facebook stock - which is now worth exponentially more. 

Fake News?

A huge source of heated debate, Facebook has famously been accused of propagating and spreading so-called "fake news" - notably during the 2016 presidential election. 

According to Fortune, Facebook allegedly allowed fake Russian Facebook accounts to purchase over $100,000 in ads. This supposedly (or was intended to) contributed or influenced the outcome of the election, according to U.S. intelligence agencies. 

Furthermore, the "fake news" sites established a platform on Facebook. Zuckerberg addressed the scandal.

"The problems here are complex, both technically and philosophically," Zuckerberg wrote after the 2016 election. "We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content."

Still, Facebook hasn't quite quelled the fake news beast. 

According to recent reports, several biased or questionable sites and stories have gone viral on Facebook.

"We've seen some questionable, low-quality content going ultra-viral over the past few months," Gabriele Boland wrote in NewsWhip's August report. 

Data Harvesting Scandal

Notably, scandal engulfed the social networking giant in 2018 when it was determined that Cambridge Analytica, a data firm owned in part by the right-wing donor Robert Mercer, was improperly using data bought from Facebook. 

The site used the data to create psychological profiles of Facebook users for political use. This data was supposedly used to try and influence the 2016 presidential election. And, according to a The New York Times report, Cambridge Analytica along with a partner company was in cahoots with Lukoil - a Kremlin-linked oil giant - making the scandal of international import. 

The resulting explosion of media, political and international response led lawmakers in Washington to call for Zuckerberg to testify before Congress about Facebook's role  - even having the Federal Trade Commission investigate the allegations. The FTC was investigating Facebook on the basis of a possible violation of an agreement - a consent decree - between the agency and Facebook in 2011 over the data that apps and quizzes were able to obtain from users - which, Facebook allegedly misled users over.

Still, the alleged sale of data to Cambridge Analytica left Facebook in hot water.

According to Christopher Wylie, the whistle-blower of the case, the firm allegedly harvested the data of potentially 50 million Facebook users in an attempt to influence the 2016 presidential election in some way. And, Wylie had no qualms about calling Facebook out for their role in the data harvesting scandal.

"Facebook data ... was the foundational data set of the company," Wylie told members of the British Parliament. "That is how the algorithms were developed."

So while Facebook has certainly benefited from selling advertisements to users through personal data collection, the social networking giant's CEO seemed to issue a "mea culpa" before Congress in April.

"It's clear now that we didn't do enough to prevent these tools from being used for harm as well," Zuckerberg told Congress. "And that goes for 'fake news,' for foreign interference in elections and hate speech, as well as [for] developers and data privacy. It was my mistake, and I'm sorry." 

Still, concerns remain over the privacy of Facebook's users - largely regarding consent over the gathering and releasing data. 

As a result of the scandal - especially in reference to the question of consent and "fake news" - Congress seemed to suggest regulation - which Zuckerberg and other tech-heads seemed open to. 

But, regulation itself could be the source of its own controversy - as some have asserted that monitoring or censoring content on Facebook and other social media sites could be a slippery slope. And, in July, Facebook suspended well-known conspiracy theorist Alex Jones for violating community standards through bullying and hate speech related posts. Additionally, pages related to Infowars (Jones' website) were also threatened with removal. 

"Our Community Standards make it clear that we prohibit content that encourages physical harm [bullying], or attacks someone based on their religious affiliation or gender identity [hate speech]," a spokesperson for Facebook said in a statement. "We remove content that violates our standards as soon as we're aware of it."

Shortly after in September, Twitter also banned Jones. 

Hacking Scandal 2018

But the scandal was not over for Facebook.

In September of this year, Facebook reported a hack that affected at least some 50 million users, according to CNN. The hack was apparently the largest Facebook has ever experienced. And, it allegedly gave hackers access to data and accounts of these users and any apps they had logged into through Facebook.

Still, according to CNN, Facebook reported the incident to the FBI and other appropriate law enforcement and claimed they did not know where the attackers were based. As a precaution, Facebook required all the 50 million affected plus 40 million other users to log back into their accounts and sent a notification about the issue. 

"The reality here is we face constant attacks from people who want to take over accounts or steal information.... we need to do more to prevent this from happening in the first place," Zuckerberg told CNN reporters on the phone.