Good morning. Welcome and thanks for joining us at Facebook's Annual Meeting of Stockholders. I'm Dave Kling, Deputy General Counsel and Corporate Secretary of Facebook and Chairman of this Annual Meeting, which I now call to order. Let me run through today's agenda. 1st, we'll focus on the formal business set forth in our proxy statement.
Mark will then spend a few minutes talking about how Facebook is doing and then we'll conclude with a Q and A session. Before we begin with the formal business, I'd like to remind you to please turn off all mobile devices and of the rules of conduct that were provided to you when you entered the meeting, including the rule prohibiting photos or recording devices of any kind. To conduct an orderly meeting, we ask that participants abide by these rules. Thank you for your cooperation. Let me start by introducing the members of our Board of Directors who are here today.
Mark Zuckerberg, Sheryl Sandberg, Erskine Bowles and Sue Desmond Hellman. I would also like to introduce 2 more people who are in attendance. Alex Bender of Ernst and Young LLP, our independent registered public accounting firm and Chris Vico, who will act as Inspector of Election for the meeting and will tabulate the results of the voting. Ms. Vico has previously executed the oath of Inspector of Election.
Turning now to the formal business. I have a copy of the notice together with a declaration as to the mailing of the proxy statement made available to all Facebook stockholders of record as of April 29, 2016. I also have a list of stockholders entitled to vote at this meeting, which is available for inspection by any or by any proxy holder representing a stockholder and which list will be filed with the records of this meeting. I'm advised by the Inspector of Election that the holders of shares representing at least a majority of the voting power of the Class A common stock and Class B common stock voting together as a single class and the holders of shares representing at least a majority of the voting power of our Class B common stock voting as a separate class are present or represented by proxy here today and therefore the requisite quorum for each proposal is present. Accordingly, this meeting is authorized to transact the business set forth in our proxy statement.
We have 13 proposals to consider at this meeting, each of which is described in the proxy statement. We will discuss these proposals momentarily. First, however, I remind you that the voting today is by proxy and written ballot. If you have already sent in a proxy and do not intend to change your vote, There is no need for you to cast a ballot today. Your vote will be counted automatically without any action on your part.
Any stockholder present who has not returned to proxy or who wishes to All right. It is currently 11:0:5 a. M. And the polls are now open. You may vote at any time during our discussion of the proposals on the agenda.
Once you fill out your ballot, please raise your ballot in the air our volunteers will come and collect it. I will now review the proposals to be voted on at this meeting. The first item of business is to elect our Board of Directors to serve until our next Annual Meeting with Stockholders or until the earlier of their death, removal or resignation. The Director nominees are Mark Andresen, Erskine Bowles, Susan Desmond Hellman, Reed Hastings, Jan Koum, Sheryl Sandberg, Peter Thiel and Mark Zuckerberg. The qualifications of each proposed director are set forth in the proxy statement.
No other director nominees have been properly submitted for election pursuant to our bylaws or SEC rules. Therefore, no other nominations may be accepted at this time. The Board of Directors recommends a vote for the election of each of the nominated directors. The second item of business is to ratify the appointment of Ernst and Young LLP as our independent registered public accounting firm for the year ending December 31, 2016. The Board of Directors recommends a vote for this proposal.
The 3rd item of business is to hold a non binding advisory vote on the compensation program for our named executive officers as set forth in the proxy statement. The Board of Directors recommends a vote for this proposal. Next, We have 3 proposals related to director compensation. Proposal number 4 is to ratify our grant of restricted stock units to our non employee directors in 2013. Proposal number 5 is to ratify our grant of restricted stock units to our non employee directors in 2014 2015 and proposal number 6 to approve our annual compensation program for non employee directors on a go forward basis.
The Board of Directors recommends a vote for each of these three proposals. Next, we will ask you to approve the adoption of our amended and restated certificate of incorporation, which comprises 4 related proposals as set forth in our proxy statement. The Board of Directors recommends a vote for each of the 4 proposals that make up proposal number 7. The 8th item of business is to amend and restate our 2012 Equity Incentive Plan as described in our proxy statement. The Board of Directors recommends a vote for this proposal.
Finally, we received 5 stockholder proposals that complied with the requirements of our bylaws and SEC rules and are therefore eligible to be voted on
at this
meeting. Proposal 9 is a proposal regarding a change in stockholder voting. Proposal 10 is a proposal regarding an annual sustainability report. Proposal 11 is a proposal regarding a lobbying report. Proposal 12 is a proposal regarding an international public policy committee.
And finally, Proposal 13 is a proposal regarding a gender pay equity report. The Board of Directors recommends a vote against each of these proposals. The applicable proponent of each of the stockholder proposals may now make a statement in support of their proposal at this time. I will call you up 1 by 1. Please limit your statement to no more than 3 minutes.
First, with respect to Proposal 9, Christine Jantz, representing Northstar Asset Management. Ms. Jantz?
Thank you. Good morning. My name is Christine Jansz from Northstar Asset Management in Boston, the beneficial owner of over $5,400,000 common stock. I'm here to represent Resolution No. 9, a good governance proposal, which would give an equal share each vote share an equal vote and allow Outside shareholder votes will be reported the same as insider shareholder votes.
Before today's meeting, Facebook had 2 shares of Class A with 1 vote per share, Class B with an overwhelming 10 votes per share, which is closely held by management insiders. After today's meeting, during which time company insiders will likely vote in favor of creating a non voting class of stock, It will continue to be impossible for outside shareholders to have any meaningful input on company decisions. Mr. Zuckerberg has brought this company into fruition and let it into profitability. But the company's decision to offer common shares of the company on public exchanges, making Facebook a public company, brings with it a responsibility to shareholders to practice good governance.
And to shareholders, we are very concerned about the governance risks that come relying upon one person's vision and predictions of the future and that same person's ability to reduce threats to the company long term. This annual meeting itself has suffered from a lack of consideration for outside shareholders. Rather than releasing the proxy booklet 30 to 45 days before the annual meeting as a standard by most companies, Facebook held off until 18 days before the annual meeting. By releasing proxy voting materials with little time allowed for shareholders consider their votes, Facebook is discouraging shareholders from voting. Clearly, the creation of differently weighted voting classes is a result of insiders and management seeking to insulate the governance of the firm from shareholder oversight despite the risks that it brings to shareholder value.
Studies have shown that excessive voting control given to outsiders rather than enhancing performance can lead to poor performance over the long run. Another study reported that the more control that insiders have, the more they can pursue strategies that are at the expense of outside shareholders. Furthermore, these reports tell us that on average and over time, companies with multi class capital structures underperform those with 1 share, 1 vote standard, which owners' economic risk is commensurate with voting power. And as others point out, with few constraints placed upon them, managers holding a superclass stock can spin out of control. Given that part of our company's mission is to make the world more open, Limiting substantial shareholder input is wildly counterintuitive.
We believe that putting control of a company with market capitalization of $3,000,000,000,000 in the hand of a single individual is not the most responsible way to run our company. And so we urge you to vote for proxy item number 9.
Great. Thank you. Next with respect to Proposal 10, Conrad McCarron on behalf of the State of New York Office of the State Comptroller. Mr. McCarron?
Good morning, Mr. Chairman and my fellow shareholders. My name is Conrad McCarron and I am here today on behalf of The New York State Common Retirement Funds to introduce the Fund's resolution calling on Facebook to issue annual sustainability reports describing the environmental, social and governance policies and practices. Environmental, social and governance issues can pose significant risks to businesses and without proper disclosure, shareholders and analysts cannot determine whether the company is managing these risks properly. The majority of Fortune 500 and S and P 500 companies already recognize the value of sustainability reporting by regularly issuing such reports.
We believe that Facebook should join in that number and therefore on behalf of the New York State Common Retirement fund holders of 6,100,000 Facebook shares, I submit the resolution on sustainability reporting found in your proxy materials. Thank you. Thank you. Conrad McCarron is also representing with respect to Proposal Number 11 As you just mentioned, I am representing the City of Philadelphia Public Employees Retirement System on this next proposal number 11, which asks the company to disclose its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations. Transparency and accountability and corporate spending to influence public policy are in the best interests of our shareholders.
Our company spent more than $19,000,000 in 2014 2015 on federal lobbying, but there is incomplete disclosure about spending at the state level where our company also lobbies extensively. For example, Facebook spent more than 280,000 lobbying in California and Texas last year. Corporations contribute 1,000,000 of dollars to trade associations lobby indirectly on their behalf without specific disclosure or accountability. Our company provides a representative list of its trade association memberships, but it's Far from clear if this is comprehensive and Facebook does not disclose its trade association payments and the amounts used for lobbying. For example here, Facebook is a member of the U.
S. Chamber of Commerce. The Chamber has spent more than $1,200,000,000 on lobbying since 1998, making it the country's largest lobbying spender, but stockholders have no way to know how much of Facebook's trade association contributions are being used to lobby on its behalf as Facebook's level of funding for the Chamber is secret. For example, Facebook signed the American Business Act on Climate pledge and pledged to reduce its emissions and tackle climate change. Yet, as many of you know, the Chamber of Commerce has aggressively attacked EPA's clean power plant to address climate change.
How does an incongruity like this match our company's principles? Does Facebook support for the chamber pose a risk for our company's reputation given its position on climate change? Our company states that it is our responsibility to engage in political, legislative and regulatory processes to advance laws and policies that are in the best interests of our company, stockholders, the people who use our services and our partners. Our request for disclosure is simply asking Facebook to show this lobbying is being done For the company and stockholders' best interests, lobbying its stockholders' money that is being spent as our company stand behind its spending on lobbying. And if it does, then why won't it disclose trade association memberships and lobbying?
Proxy Advisor ISFS supports this proposal noting that Facebook neither provides information on trade association payments nor discloses the portion of such expenditures used for lobbying purposes. In conclusion, publicly available data does not provide a complete picture of Facebook's lobbying expenditures. Facebook's Board and its stockholders need a to be able to evaluate the use of corporate assets for lobbying and any risks this spending might pose. We therefore urge stockholders to vote for this proposal. Thank you.
Thank you. With respect to proposal 12, Jing Zhao, Mr. Zhao?
Thank you very much.
Our shareholders recommend Facebook established international public policy community to oversee our company's policies and practice As related to international public issues including human rights, corporate social responsibility, charity giving, public particular activities and expenditures and foreign government regulations that may affect our company's Operations performance and the expectations worldwide, I there's no need to read the entire supporting statement, but I want to say after I submitted my proposal half a year ago, There's many events happened relating to this proposal, especially Related to China, I'm myself a political refugee from China by the way. And as I said in the Proposer, so appealing to a foreign leader with a foreign language is very easy. Actually, English is my first language, By the way, but speaking out, a public policy to the Chinese government is very difficult. It's very hard. So for my case, I lost my freedom.
So that's the reason, especially we know our company has very difficult situation to how to do business in China and in the world, worldwide. So I urge Our company is to establish the public policy committee to oversee our company's beliefs and practices, And I would recommend our company to learn from Google. I submitted a proposal in 2010 and we appreciate that Google We changed its policy in 2010, and we hope our company to adopt the Better practice of public policy. Thank you very much.
Great. Thank you. Finally, with respect to Proposal 13, Leah Lam on behalf of Arjuna Capital. Ms. Lam?
Good morning, Mr. Chairman, members of the Board and fellow shareholders. My name is Leah Lam, and I'm here to move Proposal 13 filed on behalf of Arjuna Capital and Baldwin Brothers clients Michael Baldwin and Margarita Baldwin. Specifically, we are asking the Board to publish a report on the company's policies and goals to ensure gender pay equity. The median income for women working full time in the United States is reported to be 78% of that of her male counterparts and forecasts indicate that women will not reach pay parity until 2,058.
This issue is particularly salient to the technology industry, where men reportedly earn nearly $10,000 more than women on average and which struggles to attract, retain and move women into positions of leadership. Facebook has disclosed that 31% of our company's workforce is female and yet only 23% of our management team is female. Our company is best served by a proactive approach to address the structural biases, including pay inequities that prevent women from moving into positions of leadership. Gender pay disparity is not only one of the biggest social justice issues of our time, It poses a risk of company's performance, brand and investor returns. Research indicates gender diverse teams are more productive, innovative and drive better results.
So clearly, a failure to attract and retain qualified female employees is detrimental to Facebook's ability to innovate and compete. And while Facebook has said that they pay men and women the same, there remains a complete lack of transparency, quantitative and qualitative disclosures. For instance, does that statement apply to all components of compensation, include base, bonus and stock? Given the material business risks Gender Equity presents, investors expect transparent, honest disclosures, and employees expect a new level of structural support to address root causes and empower fair negotiation, promotion and ultimately equal pay. Facebook's current lack of meaningful disclosure only serves to perpetuate the black box surrounding gender biased compensation structures.
The good news is that many of Facebook's peers companies have made commitments to transparency, disclose and close the gender pay gap, including Intel, Apple, Amazon, Expedia, Microsoft and eBay. Facebook could and should commit to transparent disclosures on gender pay equity today. Proxy advisors institutional shareholder services agrees stating a vote for this resolution is warranted as Facebook lags its peers in addressing gender pay disparity. By not addressing this issue at the same level of its peers, Facebook is put at a competitive disadvantage in the recruitment of candidates and retention of employees. Thank you.
Great. Thank you. I believe I gentlemen had a question here just about you still have your ballot. Sounds like you still need a ballot there. Okay.
If we could have one of the volunteers maybe come over and see if we can get a new ballot for this gentleman. Great. Thanks everyone for your statements. So the company will not be providing responses at the meeting as the company's position on each proposal has already been set forth in the proxy statement. We'll now go ahead and collect any remaining ballots.
Please raise your ballots and our volunteers will come around to collect them if you've completed it. Just wait a second here. We got a couple of balance. Yes, we're going to have a separate Q and A session at the end of the meeting. We're going to complete the voting on the proposals and then
we're going to do a full Q and A session at
the end with the management team. All right. Has everyone completed their ballots? Does anyone need a ballot still? I see no hands.
Great. All votes have been cast on the proposals to be considered at this meeting. And as of, Call it 11.23. The polls are now closed. I will now confer with the Inspector of Election on the preliminary results of the meeting.
The vote required to approve Proposal 1 is a plurality of the voting power of the Class A common stock Class B common stock voting together as a single class, which is present in person or by proxy at this meeting, which means the 8 nominees receiving the highest number of affirmative votes will be elected to the Board of Directors. Based on the results tabulated by the Inspector of Election, each of the 8 nominees has been elected to the Board of Directors. The vote required to approve proposals 2 through 6 and proposals 8 through 13 is a majority of the voting power of our Class A common stock Class B common stock voting together as a single class. Based on the results tabulated by the Inspector of Election, each of Proposals 236 as well as Proposal 8 have been approved by at least the requisite majority of the votes cast. And each of Proposals 9 through 13 has been rejected by at least the requisite majority of the votes cast.
Finally, the vote required to approve each of the proposals under Proposal 7 Is a majority of the voting power of the outstanding Class A common stock and Class B common stock voting together as a single class and a majority of the voting power of our outstanding Class B common stock voting as a separate class. Each of the proposals comprising Proposal 7 cross conditioned on the approval of all of the proposals they're under. Based on the results tabulated by the Inspector of Election, each of the proposals comprising Proposal 7 has been approved by at least the requisite majorities. Therefore, Proposal 7 has been approved. Final results of the voting will be filed with the Securities and Exchange Commission on a Form 8 ks within 4 business days.
There are no other items of business on the agenda, so this concludes the formal part of our meeting. The Annual Meeting is now adjourned. Now before I ask Mark to come up on stage, I want to remind you that Mark's remarks and the Q and A that follows may contain forward looking statements regarding future events or our future financial performance. We caution you to consider the important risk factors that could cause actual results to differ materially from those in any forward looking statements. These risk factors are more fully detailed under the caption Risk Factors in our quarterly report on Form 10 Q filed with the SEC on April 28, 2016.
In addition, any forward looking statements we make today are based on assumptions as of this date. We undertake no obligation to update these statements as a result of new information or future
All right. So I'm going to give a quick update on our strategy
and what we're building here.
I'll talk for a few minutes and then we'll take some questions. So it's been a busy year. We've gotten a lot done, and we're off to a good start. As you guys know, our mission is to give people the power to share and make the world more open and connected. And what that means is Building products that give every person in the world a voice and the ability to share everything that they care about with the people they care about, whether that's just an individual they want a message to, small group like their family or small group of friends, large interest based communities, like the Warriors, which unfortunately did not win last night.
Sorry to bring that up. Or sometimes everyone in the world. So in 2016, we're off to a good start so far. We reported on our last earnings call that we now have more than 1,650,000,000 people using Facebook every month, including more than 1,000,000,000 people who use Facebook on mobile devices every single day. So, some good progress.
And so far in the year, more than $5,000,000,000 in revenue. I think that was in the last quarter. So good progress And a lot more opportunities ahead, but I'll talk about for a second and then we'll take questions. So when I'm thinking about our strategy, We think about it over 3 time horizon. What is going to make the biggest impact in the world over the next 3 years, over the next 5 years and then over the next 10 years.
And we have some projects that go on beyond that, but that's the majority of the investment are kind of investing over those three timeframes. So for the next 3 years, the biggest thing that we can do to help people and to grow the business is to focus On improving and expanding this already really dynamic and large community that we have using the Facebook app, right. It's a large community, the stats that I just shared, but we think that it can that we can serve a lot more people, because there are 7,000,000,000 people in the world. And from our perspective, you may look at it and say that 1,650,000,000 people are on it, that's a lot. I look at that and think we have 5,000,000,000 people left to connect.
So we have a lot of work to do there. And over the next few years, although we have a lot of more products that we're also working on, I think by far the biggest impact that we're going to have is by just continuing to improve this core Facebook experience. Over a 5 year period, some of the newer initiatives that we're working on, I think will start to not only become very large communities in their own right and some already are, but some of these new initiatives will also start to contribute meaningfully to our overall business. So I'm thinking about New apps that we're working on like Messenger and WhatsApp, which I think you could say are pretty meaningful communities at this point with WhatsApp more than a 1000000000 people and and Messenger is around 900,000,000 people, but we're really just getting started working on the business side of those. We think video is going to be a huge opportunity, Same thing with search and Instagram is really just starting to grow meaningfully as a business as well.
So over the 5 year time horizon, in addition to growing the core Facebook app and the community around that and serving our existing business partners that we have, I think we just have this great opportunity ahead of us with all these new products get an opportunity to build a business around as well. And then over the 10 year time horizon, what we're really focused on doing are making more fundamental changes in the world that will be required to achieve this mission of making the world more open and connected over the long term. So for example, if we're really serious about connecting everyone in the world, not just people who are on the Internet today, then we need to really focus on helping to sure that everyone is on the Internet. And today, there are less than half of people in the world are on the Internet. And we think that if we if this is something that we invest in as a company, It'll not only be very good for the world and for all these folks who will get access to all the opportunities of the Internet, but over the long term will be valuable for our business as well because we'll also be able to address and build a larger community.
We're making some long term investments in artificial intelligence, which I think are going to be very helpful and making it so people can interact with both their friends and computers through Messaging apps will help us show more relevant content and newsfeed by being able to rank all the content that's out there better and show you the very best stuff. And the 3rd big long term investment that we're making is in building the next generation of computing platforms. So every 10 or 15 years, A big new computing platform comes along, whether that was the desktop and then web and now mobile phones. And We want to make sure that the next big computing platform that comes along is fundamentally social and has people built in as kind of the base of that, because we think that that's how we're going to serve our community best over the long term. So we have these investments over 3, 5 10 year period.
We're Optimistic about how all of them are going to play out and excited to keep investing in them. We're excited about the progress that we've made so far in 2016 and we thank you guys all for your support. So now we should take some questions.
Great. Thanks, Mark. I'd now like to invite Sheryl Sandberg, Facebook's Chief Operating Officer Dave Wehner, Facebook CFO and Joel Kaplan, Facebook's Vice President of Global Public Policy to join Mark and answer some of your questions. We'll now open the floor for questions from the audience. We anticipate taking questions until approximately 12 noon.
So that we may answer questions for as many stockholders as possible, we request that you ask only one question and limit your question to no more than 1 minute. If you have a question, please line up at 1 of the microphones. We've got 3 here in the room. If you have a question but cannot get to a mic, please raise your hand and someone will bring one to you. As stated in the rules of conduct, stockholders should not address the meeting until recognized.
All right. We'll just Go back and forth across. We'll start in the center aisle, gentlemen.
One of the downsides of being successful in Rich is you create some resentment from people and a desire to pull you down. Having Lamborghinis in the parking lot and all that sort of thing is great, but I see your motivation. But how do you keep everybody on point in the game? And how do you make yourself warm and fuzzy and loved throughout the world?
He's warm and fuzzy.
So there are 2 different questions. How do you keep people motivated and how do you build a strong community? I mean, I think for both, whether you're focusing on building a Community inside a company to motivate towards doing something or externally. I believe strongly in self selection. So if you say clearly what you care about and how you're going to make decisions and what you're going to invest in, then people who want to be a part of that, opt in and choose to be a part of that and people who don't like it choose not to.
So in terms of building the company from the very beginning, from well before you would have considered us a successful company, that's always been an important part of what we've tried to do. We've been very unafraid to talk about what our values are and what our mission is. And I have no doubt that has made some people decide that this isn't for them. They want to be a part of a different company. But I do think that we've gotten the best people because of that, I believe very strongly that the best and most talented people want to be a part of something that's both successful and doing something important in the world.
And that's just the ethos that we've tried to build as a company. As we've grown, I've spent more time on external communication, because now we do have this community of more than a 1,500,000,000 people and that is a greater task to make sure that people around the world understand what we stand for, But that's our responsibility to make sure that we do that.
Same thing goes for jealous politicians throughout the world too.
I assume so.
Great. Thank you. We'll take a question now from the gentleman on the far column.
Hi, good morning. My name is Justin Danhof. I'm General Counsel with National Center For Public Policy Research. I have a quick comment and a question. First, I applaud the shareholders who rejected Proposal 11.
The proponent and the entire proposal is a fraud designed to limit Facebook speech. But my question is also about free speech and the issue of anti conservative bias. It's a multifaceted problem, but it boils down to one core issue, and I believe that that's transparency. I think that unless and until the company is transparent as to how it selects trending news items and why it removes certain posts, many conservative individuals and organizations will rightly feel that the company treated them unfairly. Even when you include a conservative story in the trending news section, for example, Facebook's bias is evident.
When pro life actress Patricia Heaton recently tweeted support of a crisis pregnancy center, Facebook's trending news curator somehow headlined the item, Patricia Heaton shares actress shares anti abortion message that says support life. That's an outrageous characterization. And this incident happened after your so called summit with conservative leaders, and I have dozens and dozens of more incidents that have happened after since that meeting. So whether you're willing to admit the company has a bias issue or that you think bias is merely a matter of perception, the fact is the perception is often reality for folks and Facebook has an extra duty now since former employees have called out the company for this action. So my question is this, what affirmative steps are in place to increase transparency regarding Facebook's News section and its removal of pages and posts and what do you have to say to conservative individuals and groups who either have been harmed or feel like they've been harmed by the company's bias actions?
Mark, why
don't I take that one? When the trending topic story that you referenced broke a couple of weeks ago, one of the things that was important to us was to understand what the concerns were and to make sure that we were addressing them because Facebook is a platform for all ideas. That's the vision that Mark has had for the company from the very beginning. And so when concerns were raised as to whether this particular feature in Facebook was living up to that value in that ideal, we wanted to make sure that we got to the bottom of it immediately. And so we undertook an investigation of the specific allegations and determined that there was no systemic bias in the product.
But we also wanted to make sure that we were having an open dialogue with conservatives because they had that concern and that was important to make sure that everybody felt like they were welcome on our platform. And so Mark invited a number of leading conservatives to come to Facebook to start that dialogue, so that we could hear directly from them as to what their experience was and what their concerns were and to make sure that we were addressing it both in the immediate context of the trending topics discussion and going forward. So we have made changes to trending topics notwithstanding the results of the investigation that found that there was no systemic bias to make sure that we're addressing any concerns that a significant part of our community has and the commitment that Mark and Sheryl and the executive team made in that meeting was to continue the discourse and when any issue comes up, we want to know about it and we want to try to address it quickly so that all the people who come on to Facebook and use it understand that it's a platform for them and for their ideas.
Thank you. Great. Thanks, Joel. Let's go over to the far aisle over here.
So Facebook is, as you said, it's
meant to be a platform to sort of bring people around the world together. And to some extent, I think it's been very successful. At the same time, I get this feeling that we also seem to have a like Also, maybe just the Internet in general, in more subtle ways also sort of tearing us apart as well. When I Watch my colleagues that are might be more conservative or liberal, the ads and everything that they see are only the ones that they're interested in on every site. So it's like they're all stuck in their own echo chamber in some way.
Are there things that Facebook is doing to maybe well, first of all, do you guys see this as a problem? And second of all, if you do, are there things you're working on to sort of bring us together so we're not stuck in our own little echo chambers?
This is something we care a great deal about. And what happens is that Facebook actually in many ways broadens the kind of views you hear and here's why. When you think about the connections you make on Facebook, People think about strong ties and reach ties. Strong ties are the 5 to 7 people you keep in touch with all day, your parents, your spouse, your partner, your best friend. Those people your interactions aren't really your interactions with them aren't really changed by Facebook because you're in constant touch with them.
What Facebook does is let us hear from more people on a daily basis, what you might call your weaker ties, the people you went to school with, the people not in your current company, but your last job, the people who used to be in your hometown. And so what you get are just more ability to keep in touch with more people and over time we believe more diverse viewpoint. We also are really encouraged by the amount of international connections that are coming. We're measuring it and more people are connected to someone outside their borders today than we're a year ago than we're a year before that. And that's another proof point that as we're able to create more human connection, We're able to connect with more people with more diverse voices.
Great. Thanks, Sheryl. Let's take a question from the center
line. Hi.
I'm very happy to be a Facebook shareholder and I want I hope to own Facebook shares for a long time to come. And my question to Mark is over the past year, you've announced that you're very much involved in charities and foundations and which is very admirable. But as a shareholder, do you plan to really have hands on running Facebook for decades to come, even though you're obviously going to be involved in charities? Or do you see yourself more graduating like a Bill Gates role where he's more involved with the charities than running his Microsoft?
Yes, to the original question, I plan on being involved in running Facebook for a very long time. That's very nice.
Terrific. Let's take a question over from our call.
My name is Jen, shareholder based in San Francisco. So my question is around virtual reality, augmented reality. So I got a chance to check out the Oculus Rift demos at Best Buy, which anybody can sign up for. So that was really interesting. One thing I realized since I'm not a gamer myself, I play Tetris or whatever, but I didn't particularly feel social or connected to people when I was using that device.
So I'm just kind of curious about and I know this is kind of 10 year out kind of technology thing, but how do you imagine bringing that to be more social and also, are you looking to like more augmented reality type stuff where you're not totally kind of immersed in an environment?
So was the one that you did, with the touch, the hands demo?
No, didn't have it. Yeah. It's just
Yeah. So later this year, We're coming out with we've already announced this, Oculus Touch, right? It's the hands, counterpart to the headset. And what that allows you to do is not just feel like you're in a space and look around and have an immersive experience, but also to change it, reach out and grab things. And So we have a handful of different experiences that some we built in house and some other developers have built that allow you to be in a space with another person and feel like you're physically there and interact with them physically, even if they're all the way across the world somewhere else.
And to me, that's what VR is really about is this feeling of presence, right, and that you're there with another person, often when you can actually be there with them in real life and sometimes experiencing something that would be very difficult or impossible to experience in real life. So We have this demo at Facebook where it's a ping pong demo. So you're in a different room, you're playing ping pong, you go in and you you have your control and you pick up a ping pong paddle and there's an infinite supply of balls because in VR there's always more balls. And And one of the things that you can do since you're playing ping pong and it's fun, and one of the things that you can do is actually turn up and down gravity in the room. So you can make it so that there's no gravity and it feels like you're playing ping pong in outer space or, you can make it anti gravity.
The default is things float up unless you hit them down and You're having this experience with someone else and you're in a completely different place, but you feel like you're there with them and you're hanging out. And it's a new kind of social experience, that Yes, I think it took some folks a few weeks to put together. So I'm really excited about how VR I think is going to bring people together in new ways and give you this feeling present like you're there with people who you might not have the opportunity to be there with in person in real life.
Great. Thank you. Let's go over here for
the gentleman. Just a very simple question regarding WhatsApp and Messenger. Can you share with us what your plans are for the 2 of them? It seems like they're both very good, very thriving. But is there any plans to inter work
Or just what can you tell us about that?
Yes. We're not planning on combining them. We think that the messaging space is incredibly important and very large. And what we're seeing is that even in, the countries where WhatsApp or Messenger are growing fastest, the other one is also typically growing, which suggests that it's not that they kind of compete for mind share, absolutely against each other. There's actually a lot of space for both of them to grow.
They represent somewhat different philosophies and utilities. So WhatsApp is much more utilitarian, right? It's very basic, it's focused on just speed and having a simple tool that people can use. And Messenger is much more focused on expression and giving you all these different tools to be able to express yourself in different ways. There are many more features in it.
So different people like different ones, and a lot of people use both for different things. And we think that the bigger opportunity to go after is to provide our community with both tools rather than trying to combine them together and just make one size fit all here.
Okay. Thank you. Great. Let's go on the
center aisle here.
Hi, my name is Jason
and I'm a shareholder. And I wanted to ask, do you ever see Facebook in China someday?
You're just in China.
I was in China yesterday. We've said that our mission is to connect everyone in the world and China is certainly part of everyone in the world. We're learning, we're studying about the Chinese market and we'll see what happens. We do have and it's in our reports as we do our earnings each quarter, A growing and increasingly important business in China, working with Chinese companies who are selling their products overseas. So when I was there this past week, I had a chance to meet with some of our top clients and talk to them about how they're able to use our product to market their services outside of China.
We had one great example with Air China. They opened up a new route to Mumbai. That's not something people would necessarily know that Air China was flying to Mumbai. And they used our advertising to specifically target ads to people who, let's say, were living in the United States, but had a relative in Mumbai and they did very well opening up that booth. So we're excited about the role we can play with Chinese companies now as they grow their global business.
All right. Let's go to the far aisle.
Hi. My name is Ashley. I'm a long term shareholder from South Africa. And the first thing I'd like to do is commend you and congratulate you on building an incredible company and an incredible community as part of that. Another company wasn't the focus initially.
I have two quick questions. The first is, how do you think about diversifying our revenue streams advertising in the future. And the second is around, you said there's like 3 areas of focus and the first being in the 3 year timeframe. And it sounded like a lot of that was making Facebook more compelling to people who may have access to Facebook already but don't use it. What do you think is the limiting factor on people not joining Facebook now that already could or using it long term?
Yes, you want to do the first
one and I can answer the second.
On the first one, the advertising business for us is a great business. We have enormous amount of time and attention from people all over the world. We have an ability to show people the right ad at the right time. And the shift to mobile has really benefited us because I think we have the most compelling mobile ad product anywhere in the world. We now also have the Facebook platform and the Instagram platform.
So for the very long run, I really believe that our monetization will be primarily advertising because that's really what we're set up to do well. We are also beginning to experiment a little bit with other forms of monetization looking at business to consumer connections and messenger and some e commerce stuff we've done. But thinking about our business as advertising base is the right way to think about it. And we think we're poised to really take advantage of the opportunities we have in front of us and the investments we can still make.
Yes. And just to add one point to that, I think people think about advertising as one thing, but It's a huge market. There are all these different use cases that people have, right? So some businesses are trying to tell an inspiring story through branding. Some small businesses have completely different needs often to try to attract new customers.
Those can be completely different products. And a lot of what we've done over the last several years is, I think built a very healthy and diverse ad business that covers all these different areas. So we're very happy with that. And I think there's a lot more to do. To your second question around, What do we need to do to continue growing the community around the Facebook app?
It's a handful of different things in different places. So and it's not just about the number of people using the app, it's also about the depth of engagement. And I know there's a big opportunity there as well, where there's so much content in the community that people are sharing that we are just so early still in being able to surface for you all the most I talked about AI a bit in the intro remarks I gave. And right now, the way that we rank newsfeed for people is We look at what your friends are posting and the pages that you follow, what they're posting and how many people have engaged with those posts and try to figure out what are going to be the most interesting things and show those to you first. But the reality is, I mean, there are millions of posts, right, that are available for you, that people have shared publicly every day.
And right now, we don't understand the meaning of those posts. And with AI in the future, we'll be able to have technology that can actually read the text or look at the video and understand what it means and whether that matches up to your interest and show that to you. And I think that's going to be very that's going to make it that you can see much more relevant and more content that you're interested in, I think should deepen engagement. If you look around the world, there are certain countries that were stronger than others. So, some of our opportunity for growing the community is not necessarily evenly spread around the world, but there's going to be very focused on succeeding in certain countries where we've grown less historically and should be growing more.
So it's a number of different things. But I think that there is no reason in my mind why we shouldn't be able to continue growing both the size and depth of the community and engagement over the next several years to come.
Great. Thanks. Thanks, Mark.
Let's bring it over here to this side of the room.
Hi, I'm Marlena Vicenci. First, I'd like to say to Mark, Happy Father's Day.
Thank you.
The question I have And
to all the dads there.
Yes, and all the dads. What would you hope your daughter would say about you And Facebook down the line in the future, because I also have a 5 year old that I have to talk to about what I'm doing at present day and how it would affect her endowment line in the future?
That's my favorite question that's ever been asked at any shareholder meeting for any company ever. What a great question. Thank you. You made my day.
Happy Mother's Day as well. It was just such a nice question.
I mean, it's interesting, but I'm not sure that how related that is to Facebook. I mean, I hope that I nurture for her, I guess similarly to our employees in our community, this desire to learn, right. And She's a bit early, right. I mean, she's about 6 months old. So I mean, it's not, so I read to her and all that, but I mean
She's poking it all in all already.
She's very focused.
But I think this is pretty deep in my personal philosophy and how I think about running the company too. I mean, we try to engineer the company to be a learning organization. I really believe that, the people and the companies that can learn the fastest succeed at whatever it is that they're trying to do. And so if I can inspire Max to do that, and if I can build that ethos into our company, then I am hopeful that both will reach their goals over time. Great.
Thanks. I you just got up on it.
These guys have been waiting a little while. I'm going to swing it back over here. So far side.
Hi, there. Alan Wolf from South Africa. Can you possibly shed light on what the monetization strategy for WhatsApp is, seeing it was quite a big acquisition?
Sure. So the way that we think about this is first you build up a Product that people love, right? That is the kernel of everything and you can't build anything valuable unless you have that. And part of the reason why I was so optimistic about us acquiring WhatsApp was That so many people around the world love it and use it so deeply, right. It's more than a 1000000000 people now are using it.
That's what We kind of forecasted when we made the acquisition, I think when we announced it was we thought that within a few years, it was going to get to 1,000,000,000 people using it, which is It now has. And basically every consumer product that has that kind of breadth and depth of engagement has the kernel to build into a strong business over time. So once you have that, then I think the next question is how do you broaden the behavior, So it's not just people interacting with their friends and people who they want to message, but also communicating with businesses. And The way that we have a playbook for doing this, that is what we've done with Facebook and what we've started doing with Instagram and it's off to a good start, Where first you build the consumer behavior, then you build what we call organic business behaviors, which are making it so that we provide tools for businesses to use our products for free to start engaging in the community, to create value for people who are using the product, But we don't start charging for that yet. So in Facebook, that analogy is pages.
We don't charge for pages. There are And what they're more than $50,000,000 is the last public stat on active business pages. So that's awesome, right. And that builds the foundation on top of the consumer behavior for now you have this active business community. And then the kind of the last step there is once you have all these businesses engaged and they're getting value from the platform, Then they kind of we get to a point where they come to us and ask, can we pay to just get more distribution or more reach with the tools that we're providing for free.
So and that's where it actually starts building revenue and profit. We're kind of starting stage 2 with WhatsApp and Messenger now in terms of starting to think about how we build a good organic business use case and that way people, in addition to messaging your friends and your family, Maybe you message a restaurant if you want to get a reservation, right? Or, you message a company if you have a question about how to use their product. And these are things that companies want and people don't typically want to be on the phone for customer support for half an hour at a time. If they can just send a message and then get a response back, Then, I think that's a good experience that both people and businesses are going to want to engage in, but that will be the foundation for building the business.
Great. Thank
you. Great. I'm going to bring it back here.
I think
we'll have just enough time to take the last three questions here.
Good morning. My name is Frank Weiss. My wife and I have been shareholder Since day 1. And I was really, really young when I first got my Facebook account. I think I was 65.
And I use it 3 or 4 times a day because I just love it to see what my in laws are doing and my kids and everything. But when my nieces and nephews find out and grandchildren find out that their uncle Frank or grandpa Frank is on Facebook, they have Even though he's as cool as can be, he's not young anymore. So we had a visitor in our house this morning, a young woman who's got a teenage girl. And she said that the teenage young girl does not even have a Facebook account and neither do her friends. They're all on all other magic names, WhatsApp and my wife can fill in.
They were all mentioned this morning. I'm sure the company has recognized that. And do you have any strategic plans in the future to bring the young people back in? Thank you.
I can take that just because I've had a haven't had a question So actually and we've said this in the past, Facebook has the Largest audience of global teams and teams remain very engaged on Facebook. And we're also, as Mark talked about, building lots of different social products. So messaging is incredibly important for all demographics, but especially for younger demographics. Instagram is very popular with younger users as well. We've got all sorts of different forms of sharing, for all sorts of different use cases and we think that's very important to serve the broadest possible audience for Facebook and for all of our properties.
Great. Thanks, Dave. Center Isle.
Following up on what you were
talking about earlier about Facebook learning organization. As a CEO, what are the areas where you feel like you need to learn to improve or the current 2 or 3 focus areas for you?
It's a
good question.
What do you think?
I mean, we have this really incredible Cultural learning, I think it's really set by Mark. Mark is a person who
Not an answer.
Well, no, let me get there. But Mark really sets out to learn every year. You set out these grand goals every year that and I think it inspires all of us. I think we're trying to learn a couple of things. One is we're trying to learn about the impact sharing can have and the impact the other platforms have.
So we know we enable 1,600,000,000 people around the world to learn And we increasingly learned from them about what that sharing means to them. So I was in Germany recently and I got to visit a non profit that's helping Syrian refugees living in Germany get jobs. And I went to the factory where they were making the furniture and they talked about how They were using Facebook to sell those products and also using Facebook to keep in touch with people back home. That's understanding how our product impacts people and it goes into the product design as we iterate. I think we also want to learn what happens when the next billion people or the next several billion people come online.
Because there are 4,000,000,000 people in the world who aren't connected, it's something we're really focused on. And we know that it's not just that they don't have the benefit of the access of data and learning from us, it's that we're missing the opportunity to learn from their voices. And so the work, Mark, has led to force our company to think through how do we learn how to connect people, how do we make data better, faster, cheaper, so anyone in the world can access it, how do we get more people onto the Facebook platform, is about learning how we do that so that we as human beings can learn from them.
Good. It's a better answer than I would
Great. All right. Thank you. All right. And thanks
for being so patient.
We'll take our last question from the gentleman in the far aisle.
Thank you. Overall, I'm Confident that Internet and Facebook have been tremendously beneficial to the world, but you do hear about the negatives. For instance, how ISIS uses Facebook to recruit or for more local crime how threats and counter threats that sometimes lead to shooting, sometimes are on Facebook. How are you working with the good guys to help solve to help reduce the way that Facebook can be negative in small but significant ways?
Why don't I take that one? So we have on Facebook, we have community standards about what sort of how people can communicate in a way that keeps our platform and our community safe. So we want people to come on and express themselves and share, But we know that they won't do that if they don't feel that we're providing them a safe environment in which to do that. So our community standards address things, the things that you talked about like terrorism content or hate speech or some of the things we see out in the world, that unfortunately people also come online to try to communicate. So for instance, with terrorism, we have very clear policies that terrorists there's no place for terrorist content or terrorists on Facebook.
And so When that type of content is reported to us, we take it down as quickly as we can. We also work very closely with law enforcement to be responsive to them when they have information about threats or if we see something on our platform that suggests imminent harm. We do the same with respect to all other types of speech on our platform like hate speech that violate our community standards. But the most important thing to recognize is that no matter how much speech we take down, there's going to be someone somewhere around the world who wants communicate a dangerous idea or a hateful idea. And so what we're trying to work on is encouraging people around the world to use our platform to combat that type of speech because the answer to hateful speech or negative speech is more speech than positive speech.
We're working with governments, we're working with civil society and organizations to train them on the best practices to use our platform to spread messages of moderation and tolerance. And we think over time, that's going to be the best answer is to use our platform and its ability to connect people to combat the hateful messages that are out there in society.
Great. Thanks, Joel. Okay. That concludes the Q and A session.