Facebook Inc. (FB) primarily makes money by selling advertising space on its various social media platforms. Those platforms include websites and mobile applications that allow users the ability to connect and communicate with family and friends. The company's sites and apps include social networking site Facebook, photo- and video-sharing app Instagram, and messaging apps Messenger and WhatsApp. Facebook also provides an ecosystem that allows users to connect through its Oculus virtual reality products.

Facebook competes with other companies that sell advertising to marketers, as well as companies that provide platforms for communicating and sharing content among users’ various social networks. Major competitors include Apple Inc. (AAPL), Alphabet Inc.’s (GOOGL) Google and YouTube, Tencent Music Entertainment Group (TME), Amazon.com AMZN), and Twitter Inc. (TWTR).

Key Takeaways

  • Facebook sells ads on social media websites and mobile applications.
  • Ad sales are the primary source of Facebook's revenue.
  • Facebook is experiencing increasing demand for advertising amid an acceleration of the shift to online commerce spurred on by the COVID-19 pandemic.
  • On December 9, 2020 the FTC and 48 attorneys general filed antitrust suits against Facebook over its strategy of acquisitions.

Facebook's Financials

Facebook posted net income of $29.1 billion on $86.0 billion in total revenue for a net profit margin of 33.9% in FY 2020, which ended December 31, 2020. As much as 45% or $38.4 billion in revenue came from the U.S. and Canada. The other 55% came from other regions across the globe.

Annual revenue grew 21.6% in FY 2020, marking a deceleration from the 26.6% rise in revenue during FY 2019. Despite the deceleration, Facebook noted that while the second quarter was a low point for advertising revenue growth, growth improved in subsequent quarters, a development the company believes is linked to an acceleration of commerce from offline to online amid the COVID-19 pandemic. Annual net income rose 57.7% in FY 2020.

Facebook's Business Segments

Facebook breaks down its revenue into two separate segments: Advertising and Other revenue. The company does not do a separate breakdown for net income.


Facebook generates substantially all of its revenue from selling advertising to marketers. Ads are displayed on Facebook's main social-networking site, as well as Instagram, Messenger, and other third-party affiliated websites or mobile applications. Marketers pay for ads based on the number of impressions delivered or the number of actions, such as clicks, undertaken by users.

Facebook posted $84.2 billion in advertising revenue in FY 2020, comprising 98% of the company's total revenue. Ad revenue grew by 20.8% during the year.

Other revenue

Revenue from this segment is generated through the delivery of consumer hardware devices and net fees Facebook receives from developers using its payments infrastructure, as well as from various other sources.

Facebook posted $1.8 billion in other revenue in FY 2020, representing the remaining 2% of total revenue for the year. Revenue for the segment rose 72.4% in FY 2020.

Facebook's Recent Developments

On October 6, 2020, after a 16-month investigation into the business practices of tech behemoths Apple, Amazon, Facebook and Alphabet, the House Judiciary subcommittee on antitrust released its recommendations on how to reform laws to avoid the continued emergence of digital monopolies. The Democratic-majority staff presented a nearly 450-page report concluding that the four Big Tech companies dominate the industry in ways that affect the U.S. economy and democracy, suggesting Congress implement changes to antitrust laws that could result in parts of the businesses being separated.

On December 9, 2020, the Federal Trade Commission (FTC) and the attorneys general from 46 states, Washington, D.C., and Guam filed antitrust suits against Facebook, the culmination of a yearlong investigation. The suits allege that Facebook's acquisitions strategy has been designed to eliminate competition, specifically accusing Facebook's acquisitions of Instagram and WhatsApp as being illegal. The suits are also asking courts to prevent Facebook from acquiring anything worth over $10 million while the case is pending. A separate FTC lawsuit is trying to force Facebook to spin-off WhatsApp and Instagram.

Facebook was among a group of other social media companies that locked former U.S. Donald Trump's account its platform. The move was prompted by an attack that took place on January 6, 2021, on the U.S. Capitol by Trump supporters who had hopes of overturning the outcome of the 2020 presidential election, which many of them believed had been stolen from Trump. Five people were killed as a result of the attack.

Facebook and other social media companies justified their decision to silence Trump by citing rules that prohibit content inciting violence. Social media companies have come under increasing scrutiny in recent years due to their enormous influence over online discourse.

How Facebook Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Facebook and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Facebook releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Facebook discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Facebook breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Facebook Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
General Management ✔ (U.S. Only)      
Employees ✔ (U.S. Only)