To get a sense of just how important infrastructure is to Facebook, check out the numbers from the S-1:
Why all the spending? My colleague Barb Darrow already covered the user experience aspect. Long story short: If Facebook doesn’t provide the best-possible user experience, its users might start looking at competitive services. In theory, better infrastructure, better architectures and better software mean a better experience. You can’t handle the activity of 800 million users or store (or ingest) 100 petabytes of user photos and videos without dropping some cash.
And while Facebook hasn’t gone into great detail about exactly what technologies power its ad-targeting systems or other analytic efforts, we do know it maintains a Hadoop cluster that currently weighs in at 30 petabytes. At least a part of this volume is for a massive data warehouse the company uses for web analytics.
In the short term, this is bad news for some shareholders and users, because Facebook isn’t about to slow down on infrastructure, R&D, targeted advertising, analytics or infrastructure for targeted advertising and analytics. For shareholders, that means earnings are put right back into improving its IT system instead of creating dividends — something Facebook warns them about. Amazon (s amzn) and Google (s goog) have similar approaches, and shareholders aren’t always happy about it.
For users, it likely means their privacy concerns aren’t going anywhere. Don’t want Facebook using your data to roll out new, possibly creepy features? Tough. That’s how it keeps ahead of the competition. Don’t want Facebook using your data to appease advertisers? Tough. That’s how it pays the bills. And it will have to drum up even more money every year if it is going to keep spending like crazy on infrastructure.
But if Facebook ends up even partially as successful as Amazon or Google, those complaints will never get too loud. Investors will ultimately relish their highly valued stock, users will gladly sacrifice some privacy for an increasingly social experience, and techies will continue to marvel at the cutting-edge infrastructure that makes it all happen.
Feature image courtesy of Facebook/Chuck Goolsbee.