Facebook is one of the largest and most influential social media companies in the world. As of October 2022, Facebook has over 2.96 billion monthly active users across its family of apps, which include Facebook, Instagram, WhatsApp, and Messenger. This makes Facebook the biggest social media platform globally in terms of user base.
Facebook was founded in 2004 by Mark Zuckerberg along with fellow Harvard students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. Initially launched as TheFacebook.com from Zuckerberg’s dorm room, Facebook has grown exponentially over the last 18 years to become a multinational technology conglomerate.
Given Facebook’s size and influence, the identity and stake of its majority shareholder is a topic of much interest and discussion. So who exactly is the majority owner of Facebook? Let’s take a closer look.
Facebook’s History and Ownership Structure
Facebook was founded in February 2004 and initially funded by co-founder Eduardo Saverin with an initial investment of $19,000. Zuckerberg, Saverin and Moskovitz all had equal ownership of the company when it was first incorporated.
In April 2005, Facebook received $500,000 in angel investment from Peter Thiel. This investment valued Facebook at $5 million at the time. As part of this deal, Thiel acquired a 10.2% stake in the company. This allowed Facebook to hire more engineers and fuel its initial growth.
In May 2005, Accel Partners invested $12.7 million in Facebook for a 15% stake in the company. This investment valued Facebook at around $98 million then.
By the end of 2005, Facebook was valued at around $100 million. At this point, Zuckerberg had a 40% stake, Moskovitz had 7.6%, Saverin had 5.1%, Thiel had 10.2%, and Accel had 15% of the company. The remaining 22.1% was owned by early employees and investors.
Over the next few years, Facebook continued to raise funding from investors like Greylock Partners, Meritech Capital Partners, Microsoft, and Li Ka-shing. This steadily diluted the ownership stakes of early founders and employees.
In October 2007, Microsoft invested $240 million for a 1.6% stake in Facebook. This valued Facebook at $15 billion at the time.
By April 2011, Goldman Sachs and Russian investment firm DST Global had each acquired stakes of about 2% in Facebook for a total valuation of $50 billion. At this point, Zuckerberg’s stake in the company had diluted to 28.4%. Other early investors like Thiel and Accel Partners saw their stakes diluted as well.
Facebook’s IPO
Facebook held its initial public offering (IPO) on May 18, 2012. The company sold 421 million shares at $38 per share for a total valuation of over $104 billion. This was the largest technology IPO at the time.
Following the IPO, Zuckerberg still maintained a controlling stake in the company. Per Facebook’s S-1 filing with the SEC, here is the company’s ownership breakdown after the IPO:
- Mark Zuckerberg: 28.2% of shares
- Digital Sky Technologies: 10.3% of shares
- Other directors and executive officers: 2.1% of shares
- Accel Partners: 11.4% of shares
- Mail.ru Group: 5.4% of shares
- Greylock Partners: 7.9% of shares
- T. Rowe Price Associates: 5.4% of shares
- Other 5%+ institutional shareholders: 18.3% of shares
- Remaining investors: 11.0% of shares
So while Zuckerberg did not hold a true majority stake of over 50% after the IPO, he still maintained effective control through his 28.2% ownership, his position as CEO and his Class B shares that carried more voting power.
Additional Funding Rounds
Even after going public, Facebook has occasionally raised additional large funding rounds from investors:
- In December 2015, Facebook raised $6 billion at a $281 billion valuation from Microsoft, Li Ka-shing and Prince Alwaleed bin Talal.
- In April 2016, Facebook raised another $3 billion at a $293 billion valuation from Goldman Sachs, Prince Alwaleed bin Talal and Fernando Siccardi.
- In November 2019, Facebook raised $5.7 billion in funding from public market investors Silver Lake, Temasek Holdings and others.
These large funding rounds allowed Facebook to continue its growth and acquisitions without taking on debt or diluting Zuckerberg’s control too much.
Current Majority Shareholder
Given this history, Facebook’s current ownership structure stands as follows:
- Mark Zuckerberg: 13.6% of total shares outstanding
- Institutional investors: Top 5 are Vanguard Group (7.2%), Fidelity Investments (4.4%), T. Rowe Price (3.4%), BlackRock (2.5%) and State Street Global Advisors (1.9%)
- Remaining public shareholders: 67% of total shares
So while institutional investors and public shareholders own a majority of Facebook shares combined, Mark Zuckerberg remains the single largest individual shareholder with 13.6% ownership.
More importantly, Zuckerberg still maintains over 50% of voting power due to Facebook’s dual-class share structure with Class A and Class B shares. This ensures Zuckerberg retains effective control over the company despite having only a 13.6% economic stake.
Therefore, the majority shareholder of Facebook is still its co-founder and CEO Mark Zuckerberg. Through his Class B super-voting shares, he has majority voting control and the ability to elect board members and make key decisions about Facebook’s future. No other single investor owns more than 7.2% of Facebook shares.
Zuckerberg’s Control of Facebook
Let’s take a closer look at why and how Zuckerberg maintains effective control over Facebook:
- Dual-class shares: Facebook has Class A and Class B shares. Class B shares have 10 votes per share compared to 1 vote per share for Class A. Zuckerberg owns less than 14% of outstanding shares but over 50% of voting power.
- Super-majority clause: For any significant changes, Facebook requires a 66% super-majority vote. This prevents majority public shareholders from diluting Zuckerberg’s control.
- Sunset clause delay: Facebook’s dual-class share structure has a sunset clause to eventually transition to 1 share 1 vote. But this is not set to occur until Zuckerberg’s passing.
- Board control: Zuckerberg can nominate the majority of Facebook’s board seats to retain board control.
- Special founder shares: If Zuckerberg sells or transfers his shares, his Class B shares get converted to Class A. This disincentivizes him from relinquishing control.
Through these special clauses, arrangements and share structures, Zuckerberg has retained decisive control over Facebook since its founding despite now being a public company with thousands of shareholders.
This level of founder control is rare for large public companies. But other tech companies like Google, Snap and Spotify have also adopted similar mechanisms like dual-class shares to allow founders to retain voting control.
Implications of Zuckerberg’s Control
Mark Zuckerberg having majority voting control over Facebook as a public company has several implications:
Strategic Direction
Zuckerberg can set the overall vision and strategy for Facebook and its family of apps like Instagram without requiring shareholder approval. This provides continuity of leadership and prevents volatile changes in strategy that some public companies experience.
Focus on Long-Term
Since Zuckerberg does not face pressure from public shareholders looking for short-term returns, he can focus Facebook’s strategy on long-term results. This may contribute to the large investments Facebook makes in research and new products.
Acquisitions and Investments
Zuckerberg can unilaterally decide on acquisition targets like WhatsApp and investments like Oculus VR without shareholder votes. Facebook has acquired over 90 companies with just Zuckerberg’s approval.
Public Perception
Zuckerberg’s unilateral control has faced scrutiny from media and regulators concerned about lack of checks and balances. This perception has grown as controversies like Cambridge Analytica have hit Facebook.
Succession Planning
Since Zuckerberg has no co-founder with equal control, Facebook’s future leadership transition remains unclear and dependent on Zuckerberg’s personal planning.
In summary, Zuckerberg’s voting control provides strong strategic alignment and flexibility but also centralized power with associated accounttability. The implications of his long-term control on Facebook remain complex.
Could Zuckerberg Lose Control?
Given his commanding position, are there any plausible scenarios under which Zuckerberg could lose control over Facebook? A few possibilities:
- Government regulation forcing changes to dual-class shares or imposing restrictions on acquisitions and investments.
- Zuckerberg heavily diluting his ownership through share sales or philanthropy. Unlikely given his sunset clause conversion of Class B shares.
- A shareholder coalition or investor activism manages to amend some of the company’s governance rules and share structures. But the super-majority clause makes this difficult.
- Shift in institutional investor stances opposing founder control shares and demanding more board accountability.
- Severely damaging revelations through leaks, hacks or lawsuits that force Zuckerberg out of the company.
However, none of these scenarios seem probable in the near future. Zuckerberg has structured Facebook’s ownership and governance in a way that gives him durable long-term control. Barring unforeseen events, Facebook’s majority shareholder is likely to remain Zuckerberg for many years to come.
Conclusion
Despite Facebook being a publicly traded company since 2012, co-founder and CEO Mark Zuckerberg has retained decisive control through his super-voting Class B shares, governance provisions favoring his authority, and commanding 63% of voting power.
While public shareholders and institutions collectively own a majority economic stake, Zuckerberg remains the single largest individual shareholder with nearly 14% ownership. More importantly, he has majority voting control and is able to make strategic decisions unilaterally on Facebook’s direction.
Zuckerberg’s durable control has provided strategic continuity but also concentrated power and accountability within Facebook. It remains to be seen how long this founder-led model will persist as Facebook faces growing public scrutiny. But Zuckerberg has structured the company such that relinquishing control would require his voluntary consent. Barring unforeseen events, Facebook’s majority shareholder is likely to stay as Mark Zuckerberg for the foreseeable future.