FACEBOOK INC, 10-K filed on 2/1/2018
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Jun. 30, 2017
Jan. 29, 2018
Class A Common Stock
Jan. 29, 2018
Class B Common Stock
Entity Information
 
 
 
 
Document Type
10-K 
 
 
 
Amendment Flag
false 
 
 
 
Document Period End Date
Dec. 31, 2017 
 
 
 
Document Fiscal Year Focus
2017 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
Trading Symbol
FB 
 
 
 
Entity Registrant Name
FACEBOOK INC 
 
 
 
Entity Central Index Key
0001326801 
 
 
 
Current Fiscal Year End Date
--12-31 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
Entity Common Stock, Shares Outstanding
 
 
2,395,921,635 
509,079,123 
Entity Public Float
 
$ 372 
 
 
Well-known Seasoned Issuer
Yes 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 8,079 
$ 8,903 
Marketable securities
33,632 
20,546 
Accounts receivable, net of allowances of $189 and $94 as of December 31, 2017 and 2016, respectively
5,832 
3,993 
Prepaid expenses and other current assets
1,020 
959 
Total current assets
48,563 
34,401 
Property and equipment, net
13,721 
8,591 
Intangible assets, net
1,884 
2,535 
Goodwill
18,221 
18,122 
Other assets
2,135 
1,312 
Total assets
84,524 
64,961 
Current liabilities:
 
 
Accounts payable
380 
302 
Partners payable
390 
280 
Accrued expenses and other current liabilities
2,892 
2,203 
Deferred revenue and deposits
98 
90 
Total current liabilities
3,760 
2,875 
Other liabilities
6,417 
2,892 
Total liabilities
10,177 
5,767 
Commitments and contingencies
   
   
Stockholders' equity:
 
 
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,397 million and 2,354 million shares issued and outstanding, as of December 31, 2017 and December 31, 2016, respectively; 4,141 million Class B shares authorized, 509 million and 538 million shares issued and outstanding, as of December 31, 2017 and December 31, 2016, respectively.
Additional paid-in capital
40,584 
38,227 
Accumulated other comprehensive loss
(227)
(703)
Retained earnings
33,990 
21,670 
Total stockholders' equity
74,347 
59,194 
Total liabilities and stockholders' equity
$ 84,524 
$ 64,961 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Accounts receivable, allowances for doubtful accounts
$ 189 
$ 94 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
$ 0.000006 
Class A Common Stock
 
 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
 
Common stock, shares authorized (in shares)
5,000,000,000 
5,000,000,000 
Common stock, shares, issued (in shares)
2,397,000,000 
2,354,000,000 
Common stock, shares, outstanding (in shares)
2,397,000,000 
2,354,000,000 
Class B Common Stock
 
 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
 
Common stock, shares authorized (in shares)
4,141,000,000 
4,141,000,000 
Common stock, shares, issued (in shares)
509,000,000 
538,000,000 
Common stock, shares, outstanding (in shares)
509,000,000 
538,000,000 
CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Revenue
$ 40,653 
$ 27,638 
$ 17,928 
Costs and expenses:
 
 
 
Cost of revenue
5,454 
3,789 
2,867 
Research and development
7,754 
5,919 
4,816 
Marketing and sales
4,725 
3,772 
2,725 
General and administrative
2,517 
1,731 
1,295 
Total costs and expenses
20,450 
15,211 
11,703 
Income from operations
20,203 
12,427 
6,225 
Interest and other income (expense), net
391 
91 
(31)
Income before provision for income taxes
20,594 
12,518 
6,194 
Provision for income taxes
4,660 
2,301 
2,506 
Net income
15,934 
10,217 
3,688 
Less: Net income attributable to participating securities
14 
29 
19 
Net income attributable to Class A and Class B common stockholders
15,920 
10,188 
3,669 
Earnings per share attributable to Class A and Class B common stockholders:
 
 
 
Basic (in dollars per share)
$ 5.49 
$ 3.56 
$ 1.31 
Diluted (in dollars per share)
$ 5.39 
$ 3.49 
$ 1.29 
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
 
 
 
Basic (in shares)
2,901 
2,863 
2,803 
Diluted (in shares)
2,956 
2,925 
2,853 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
3,723 
3,218 
2,969 
Cost of revenue
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
178 
113 
81 
Research and development
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
2,820 
2,494 
2,350 
Marketing and sales
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
436 
368 
320 
General and administrative
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
$ 289 
$ 243 
$ 218 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 15,934 
$ 10,217 
$ 3,688 
Other comprehensive income (loss):
 
 
 
Change in foreign currency translation adjustment, net of tax
566 
(152)
(202)
Change in unrealized gain/loss on available-for-sale investments and other, net of tax
(90)
(96)
(25)
Comprehensive income
$ 16,410 
$ 9,969 
$ 3,461 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
In Millions, except Share data, unless otherwise specified
Total
Class A and Class B Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Total stockholders' equity, beginning at Dec. 31, 2014
$ 36,096 
$ 0 
$ 30,225 
$ (228)
$ 6,099 
Common stock, shares outstanding beginning (in shares) at Dec. 31, 2014
 
2,797,000,000 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Cumulative-effect adjustment from adoption of ASU 2016-09
1,705 
 
39 
 
1,666 
Issuance of common stock for cash upon exercise of stock options, shares
 
4,000,000 
 
 
 
Issuance of common stock for cash upon exercise of stock options, value
 
 
 
Issuance of common stock for settlement of RSUs, shares
 
44,000,000 
 
 
 
Issuance of common stock for settlement of RSUs. value
 
 
 
Shares withheld related to net share settlement, shares
 
 
 
 
Shares withheld related to net share settlement, value
(20)
(20)
 
 
Share-based compensation, related to employee share-based awards
2,960 
 
2,960 
 
 
Tax benefit from share-based award activity
1,721 
 
1,721 
 
 
Other comprehensive income (loss)
(227)
 
 
(227)
 
Net income
3,688 
 
 
 
3,688 
Total stockholders' equity, ending at Dec. 31, 2015
44,218 
34,886 
(455)
9,787 
Common stock, shares outstanding ending (in shares) at Dec. 31, 2015
 
2,845,000,000 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Issuance of common stock for cash upon exercise of stock options, shares
 
3,000,000 
 
 
 
Issuance of common stock for cash upon exercise of stock options, value
16 
16 
 
 
Issuance of common stock related to acquisitions, shares
 
1,000,000 
 
 
 
Issuance of common stock related to acquisitions, value
74 
74 
 
 
Issuance of common stock for settlement of RSUs, shares
 
43,000,000 
 
 
 
Issuance of common stock for settlement of RSUs. value
 
 
 
Shares withheld related to net share settlement, value
(6)
 
(6)
 
 
Share-based compensation, related to employee share-based awards
3,218 
 
3,218 
 
 
Other comprehensive income (loss)
(248)
 
 
(248)
 
Net income
10,217 
 
 
 
10,217 
Total stockholders' equity, ending at Dec. 31, 2016
59,194 
38,227 
(703)
21,670 
Common stock, shares outstanding ending (in shares) at Dec. 31, 2016
 
2,892,000,000 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Issuance of common stock for cash upon exercise of stock options, shares
 
3,000,000 
 
 
 
Issuance of common stock for cash upon exercise of stock options, value
13 
13 
 
 
Issuance of common stock related to acquisitions, shares
 
2,000,000 
 
 
 
Issuance of common stock related to acquisitions, value
323 
323 
 
 
Issuance of common stock for settlement of RSUs, shares
 
43,000,000 
 
 
 
Issuance of common stock for settlement of RSUs. value
 
 
 
Shares withheld related to net share settlement, shares
 
(21,000,000)
 
 
 
Shares withheld related to net share settlement, value
(3,246)
 
(1,702)
 
(1,544)
Share-based compensation, related to employee share-based awards
3,723 
 
3,723 
 
 
Share repurchases, shares
 
(13,000,000)
 
 
 
Share repurchases, value
(2,070)
 
 
 
(2,070)
Other comprehensive income (loss)
476 
 
 
476 
 
Net income
15,934 
 
 
 
15,934 
Total stockholders' equity, ending at Dec. 31, 2017
$ 74,347 
$ 0 
$ 40,584 
$ (227)
$ 33,990 
Common stock, shares outstanding ending (in shares) at Dec. 31, 2017
 
2,906,000,000 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities
 
 
 
Net income
$ 15,934 
$ 10,217 
$ 3,688 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
3,025 
2,342 
1,945 
Share-based compensation
3,723 
3,218 
2,960 
Deferred income taxes
(377)
(457)
(795)
Tax benefit from share-based award activity
1,721 
Other
24 
30 
17 
Changes in assets and liabilities:
 
 
 
Accounts receivable
(1,609)
(1,489)
(973)
Prepaid expenses and other current assets
(192)
(159)
(144)
Other assets
154 
14 
(3)
Accounts payable
43 
14 
18 
Partners payable
95 
67 
17 
Accrued expenses and other current liabilities
309 
1,014 
513 
Deferred revenue and deposits
35 
(9)
Other liabilities
3,083 
1,262 
1,365 
Net cash provided by operating activities
24,216 
16,108 
10,320 
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(6,733)
(4,491)
(2,523)
Purchases of marketable securities
(25,682)
(22,341)
(15,938)
Sales of marketable securities
9,444 
13,894 
6,928 
Maturities of marketable securities
2,988 
1,261 
2,310 
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
(122)
(123)
(313)
Change in restricted cash and deposits
67 
61 
102 
Net cash used in investing activities
(20,038)
(11,739)
(9,434)
Cash flows from financing activities
 
 
 
Taxes paid related to net share settlement of equity awards
(3,246)
(6)
(20)
Principal payments on capital lease and other financing obligations
(312)
(119)
Repurchases of Class A common stock
(1,976)
Other financing activities, net
(13)
Net cash used in financing activities
(5,235)
(310)
(139)
Effect of exchange rate changes on cash and cash equivalents
233 
(63)
(155)
Net (decrease) increase in cash and cash equivalents
(824)
3,996 
592 
Cash and cash equivalents at beginning of period
8,903 
4,907 
4,315 
Cash and cash equivalents at end of period
8,079 
8,903 
4,907 
Cash paid during the period for:
 
 
 
Interest
11 
10 
Income taxes, net
2,117 
1,210 
270 
Non-cash investing and financing activities:
 
 
 
Net change in accounts payable, accrued expenses and other current liabilities, and other liabilities related to property and equipment additions
363 
272 
88 
Promissory note payable issued in connection with an acquisition
198 
Settlement of acquisition-related contingent consideration liability
102 
33 
Change in unsettled repurchases of Class A common stock
$ 94 
$ 0 
$ 0 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Organization and Description of Business
Facebook was incorporated in Delaware in July 2004. Our mission is to give people the power to build community and bring the world closer together. We generate substantially all of our revenue from advertising.
Basis of Presentation
We prepared the consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, commitments and contingencies, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, leases, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Revenue Recognition
We recognize revenue once all of the following criteria have been met:
persuasive evidence of an arrangement exists;
delivery of our obligations to our customer has occurred;
the price is fixed or determinable; and
collectability of the related receivable is reasonably assured.
Revenue for the years ended December 31, 2017, 2016, and 2015 consists of the following (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Advertising
$
39,942

 
$
26,885

 
$
17,079

Payments and other fees
711

 
753

 
849

Total revenue
$
40,653

 
$
27,638

 
$
17,928

 
Advertising
Advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. Marketers pay for ad products either directly or through their relationships with advertising agencies, based on the number of impressions delivered or the number of actions, such as clicks, taken by our users.
We recognize revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to users. We recognize revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. For advertising revenue arrangements where we are not the primary obligor, we recognize revenue on a net basis.
Payments and Other Fees
Payments revenue is comprised of the net fee we receive from developers using our Payments infrastructure.
Other fees revenue, which was not material for all periods presented in our financial statements, consists primarily of revenue from the delivery of virtual reality platform devices and various other sources.
Revenue is recognized net of applicable sales and other taxes.
Cost of Revenue
Our cost of revenue consists primarily of expenses associated with the delivery and distribution of our products. These include expenses related to the operation of our data centers, such as facility and server equipment depreciation, salaries, benefits, and share-based compensation for employees on our operations teams, and energy and bandwidth costs. Cost of revenue also includes costs associated with partner arrangements, including content acquisition costs, credit card and other transaction fees related to processing customer transactions, cost of virtual reality platform device inventory sold, and amortization of intangible assets.
Content acquisition costs

We license and pay to produce content in order to increase engagement on the platform. For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for viewing. The amounts capitalized are limited to estimated net realizable value or fair value on a per title basis. The portion available for viewing within one year is recognized as prepaid expenses and other current assets and the remaining portion as other assets on the consolidated balance sheets. For original programming, we capitalize costs associated with the production, including development costs and direct costs, if those amounts are recoverable. Capitalized original programming costs are included in other assets on the consolidated balance sheets. Capitalized costs are amortized in cost of revenue on the consolidated statements of income based on historical and estimated viewing patterns.

Capitalized content costs are reviewed when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than amortized cost. If such changes are identified, capitalized content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off.

Capitalized content acquisition costs have not been material to date.
Income Taxes
We record provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment.
We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. These uncertain tax positions include our estimates for transfer pricing that have been developed based upon analyses of appropriate arms-length prices. Similarly, our estimates related to uncertain tax positions concerning research tax credits are based on an assessment of whether our available documentation corroborating the nature of our activities supporting the tax credits will be sufficient. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial position, results of operations, and cash flows.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation is expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118. See Note 12 in these notes to the consolidated financial statements for additional information.
Advertising Expense
Advertising costs are expensed when incurred and are included in marketing and sales expenses in the accompanying consolidated statements of income. We incurred advertising expenses of $324 million, $310 million, and $281 million for the years ended December 31, 2017, 2016, and 2015, respectively.
Cash and Cash Equivalents, and Marketable Securities
Cash and cash equivalents primarily consist of cash on deposit with banks and investments in money market funds with maturities of 90 days or less from the date of purchase.
We hold investments in marketable securities, consisting of U.S. government securities, U.S. government agency securities, and corporate debt securities. We classify our marketable securities as available-for-sale investments in our current assets because they represent investments of cash available for current operations. Our available-for-sale investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive (loss) income in stockholders' equity. Unrealized losses are charged against interest and other income (expense), net when a decline in fair value is determined to be other-than-temporary. We have not recorded any such impairment charge in the periods presented. We determine realized gains or losses on sale of marketable securities on a specific identification method, and record such gains or losses as interest and other income (expense), net.
We classify certain restricted cash balances within prepaid expenses and other current assets and other assets on the accompanying consolidated balance sheets based upon the term of the remaining restrictions.
Fair Value of Financial Instruments
We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1-Quoted prices in active markets for identical assets or liabilities.
Level 2-Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3-Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability.
Our valuation techniques used to measure the fair value of money market funds and marketable debt securities were derived from quoted market prices or alternative pricing sources and models utilizing market observable inputs.
Our valuation technique used to measure the fair value of our contingent consideration liability as of December 31, 2016 was derived from the fair value of our common stock on such date. We settled this contingent consideration liability in July 2017.
Accounts Receivable and Allowances
Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers.
Property and Equipment
Property and equipment, which includes amounts recorded under capital leases, are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term, whichever is shorter.
The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to 20 years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Two to five years
Leased equipment and leasehold improvements
 
Lesser of estimated useful life or remaining lease term
 
Land and assets held within construction in progress are not depreciated. Construction in progress is related to the construction or development of property and equipment that have not yet been placed in service for their intended use.
The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income from operations.
Lease Obligations
We enter into lease arrangements for office space, land, facilities, data centers, and equipment under non-cancelable capital and operating leases. Certain of the operating lease agreements contain rent holidays, rent escalation provisions, and purchase options. Rent holidays and rent escalation provisions are considered in determining the straight-line rent expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception.
We record assets and liabilities for the estimated construction costs incurred by third parties under build-to-suit lease arrangements to the extent that we are involved in the construction of structural improvements or bear construction risk prior to commencement of a lease.
Loss Contingencies
We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss in the notes to the consolidated financial statements.
We review the developments in our contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Long-Lived Assets, Including Goodwill and Other Acquired Intangible Assets
We evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any significant impairment charges during the years presented.
We review goodwill for impairment at least annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of our single reporting unit below its carrying value. As of December 31, 2017, no impairment of goodwill has been identified.
Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. We routinely review the remaining estimated useful lives of property and equipment and finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.
Deferred Revenue and Deposits
Deferred revenue consists of billings and payments from marketers in advance of revenue recognition. Deposits relate to unused balances held on behalf of our users. Once this balance is utilized by a user, approximately 70% of this amount would then be payable to the developer and the balance would be recognized as revenue.
Deferred revenue and deposits consists of the following (in millions):
 
December 31,
 
2017
 
2016
Deferred revenue
$
68

 
$
62

Deposits
30

 
28

Total deferred revenue and deposits
$
98

 
$
90

 
Foreign Currency
Generally the functional currency of our international subsidiaries is the local currency. We translate the financial statements of these subsidiaries to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs, and expenses. Translation gains and losses are recorded in accumulated other comprehensive (loss) income as a component of stockholders' equity. As of December 31, 2017 and 2016, we had a cumulative translation loss, net of tax of $16 million and $582 million, respectively. Net losses resulting from foreign exchange transactions were $6 million, $76 million, and $66 million for the years ended December 31, 2017, 2016, and 2015, respectively. These losses were recorded as interest and other income (expense), net in our consolidated statements of income.
Credit Risk and Concentration
Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities, and accounts receivable. The majority of cash equivalents consists of short-term money market funds, which are managed by reputable financial institutions. Marketable securities consist of investments in U.S. government securities, U.S. government agency securities, and corporate debt securities. Our investment policy limits investment instruments to U.S. government securities, U.S. government agency securities, and corporate debt securities with the main objective of preserving capital and maintaining liquidity.
Accounts receivable are typically unsecured and are derived from revenue earned from customers across different industries and countries. We generated 44%, 46%, and 47% of our revenue for the years ended December 31, 2017, 2016, and 2015, respectively, from marketers and developers based in the United States, with the majority of revenue outside of the United States coming from customers located in western Europe, China, Canada, Australia, and Brazil.
We perform ongoing credit evaluations of our customers, and generally do not require collateral. We maintain an allowance for estimated credit losses. During the years ended December 31, 2017, 2016, and 2015, our bad debt expenses were $48 million, $66 million, and $44 million, respectively. In the event that accounts receivable collection cycles deteriorate, our operating results and financial position could be adversely affected.
No customer represented 10% or more of total revenue during the years ended December 31, 2017, 2016, and 2015.
 Segments
Our chief operating decision-maker is our Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we have a single reportable segment and operating segment structure.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance. We will adopt the new standard effective January 1, 2018, using the modified retrospective transition method. We finalized our analysis and the adoption of this guidance will not have a material impact on our consolidated financial statements and our internal controls over financial reporting.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for us in the first quarter of 2019 on a modified retrospective basis and early adoption is permitted. We will adopt the new standard effective January 1, 2019. We have selected a lease accounting system and we are in the process of implementing such system as well as evaluating the use of the optional practical expedients. While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, as disclosed in Note 9 — Commitments and Contingencies, will be subject to the new standard. We will recognize right-of-use assets and operating lease liabilities on our consolidated balance sheets upon adoption, which will increase our total assets and liabilities.
In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. We will adopt the new standard effective January 1, 2018, using the modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the effective date. A cumulative-effect adjustment will capture the write-off of income tax consequences deferred from past intra-entity transfers involving assets other than inventory, new deferred tax assets, and other liabilities for amounts not currently recognized under U.S. GAAP. Based on transactions up to December 31, 2017, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We will adopt the new standard effective January 1, 2018, using the retrospective transition approach for all periods presented. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. We will adopt the new standard effective January 1, 2018, on a prospective basis and do not expect the standard to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our consolidated financial statements.
Earnings per Share
Earnings per Share
Earnings per Share
We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. We consider restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.
Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Basic EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.
For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, such as awards under our equity compensation plans and inducement awards under separate non-plan restricted stock unit (RSU) award agreements. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.
RSUs with anti-dilutive effect were excluded from the EPS calculation and they were not material for the years ended December 31, 2017, 2016, and 2015, respectively.
Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.
The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts):
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Class
A
 
Class
B
 
Class
A
 
Class
B
 
Class
A
 
Class
B 
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income
$
13,034

 
$
2,900

 
$
8,270

 
$
1,947

 
$
2,959

 
$
729

Less: Net income attributable to participating securities
12

 
2

 
24

 
5

 
15

 
4

Net income attributable to common stockholders
$
13,022

 
$
2,898

 
$
8,246

 
$
1,942

 
$
2,944

 
$
725

Denominator
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,375

 
528

 
2,323

 
548

 
2,259

 
559

Less: Shares subject to repurchase
2

 

 
6

 
2

 
10

 
5

Number of shares used for basic EPS computation
2,373

 
528

 
2,317

 
546

 
2,249

 
554

Basic EPS
$
5.49

 
$
5.49

 
$
3.56

 
$
3.56

 
$
1.31

 
$
1.31

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
13,022

 
$
2,898

 
$
8,246

 
$
1,942

 
$
2,944

 
$
725

Reallocation of net income attributable to participating securities
14

 

 
29

 

 
19

 

Reallocation of net income as a result of conversion of Class B to Class A common stock
2,898

 

 
1,942

 

 
725

 

Reallocation of net income to Class B common stock

 
(13
)
 

 
14

 

 
15

Net income attributable to common stockholders for diluted EPS
$
15,934

 
$
2,885

 
$
10,217

 
$
1,956

 
$
3,688

 
$
740

Denominator
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,373

 
528

 
2,317

 
546

 
2,249

 
554

Conversion of Class B to Class A common stock
528

 

 
546

 

 
554

 

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
4

 
4

 
6

 
6

 
8

 
8

RSUs
49

 
3

 
49

 
5

 
37

 
9

Shares subject to repurchase and other
2

 

 
7

 
3

 
5

 
2

Number of shares used for diluted EPS computation
2,956

 
535

 
2,925

 
560

 
2,853

 
573

Diluted EPS
$
5.39

 
$
5.39

 
$
3.49

 
$
3.49

 
$
1.29

 
$
1.29

Cash and Cash Equivalents, and Marketable Securities
Cash and Cash Equivalents, and Marketable Securities
Cash and Cash Equivalents, and Marketable Securities
The following table sets forth the cash and cash equivalents, and marketable securities (in millions):
 
December 31,
 
2017
 
2016
Cash and cash equivalents:
 
 
 
Cash
$
2,212

 
$
1,364

Money market funds
5,268

 
5,409

U.S. government securities
66

 
1,463

U.S. government agency securities
25

 
667

Certificate of deposits and time deposits
440

 

Corporate debt securities
68

 

Total cash and cash equivalents
8,079

 
8,903

Marketable securities:
 
 
 
U.S. government securities
12,766

 
7,130

U.S. government agency securities
10,944

 
7,411

Corporate debt securities
9,922

 
6,005

Total marketable securities
33,632

 
20,546

Total cash and cash equivalents, and marketable securities
$
41,711

 
$
29,449


The gross unrealized gains or losses on our marketable securities as of December 31, 2017 and 2016 were not significant. In addition, the gross unrealized loss that had been in a continuous loss position for 12 months or longer was not significant as of December 31, 2017 and 2016. As of December 31, 2017, we considered the decreases in market value on our marketable securities to be temporary in nature and did not consider any of our investments to be other-than-temporarily impaired.
The following table classifies our marketable securities by contractual maturities (in millions):
 
December 31,
 
2017
 
2016
Due in one year
$
7,976

 
$
4,966

Due in one to five years
25,656

 
15,580

Total
$
33,632

 
$
20,546

Fair Value Measurement
Fair Value Measurement
Fair Value Measurement
The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions):
 
 
 
 
Fair Value Measurement at Reporting Date Using
Description 
 
December 31,
2017
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
5,268

 
$
5,268

 
$

 
$

U.S. government securities
 
66

 
66

 

 

U.S. government agency securities
 
25

 
25

 

 

Certificate of deposits and time deposits
 
440

 

 
440

 

Corporate debt securities
 
68

 

 
68

 

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
12,766

 
12,766

 

 

U.S. government agency securities
 
10,944

 
10,944

 

 

Corporate debt securities
 
9,922

 

 
9,922

 

Total cash equivalents and marketable securities
 
$
39,499

 
$
29,069

 
$
10,430

 
$

 
 
 
 
Fair Value Measurement at Reporting Date Using
Description
 
December 31,
2016
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3 
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
5,409

 
$
5,409

 
$

 
$

U.S. government securities
 
1,463

 
1,463

 

 

U.S. government agency securities
 
667

 
667

 

 

Marketable securities:
 

 
 
 
 
 
 
U.S. government securities
 
7,130

 
7,130

 

 

U.S. government agency securities
 
7,411

 
7,411

 

 

Corporate debt securities
 
6,005

 

 
6,005

 

Total cash equivalents and marketable securities
 
$
28,085

 
$
22,080

 
$
6,005

 
$

 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
242

 
$

 
242

 
$


We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. In July 2017, we settled our Level 2 contingent consideration liability that was outstanding as of December 31, 2016.
Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consists of the following (in millions):
 
December 31,
 
2017
 
2016
Land
$
798

 
$
696

Buildings
4,909

 
3,109

Leasehold improvements
959

 
531

Network equipment
7,998

 
5,179

Computer software, office equipment and other
681

 
398

Construction in progress
2,992

 
1,890

Total
18,337

 
11,803

Less: Accumulated depreciation
(4,616
)
 
(3,212
)
Property and equipment, net
$
13,721

 
$
8,591

 
Depreciation expense on property and equipment was $2.33 billion, $1.59 billion, and $1.22 billion during 2017, 2016, and 2015, respectively.
Property and equipment as of December 31, 2017 and 2016 includes $533 million and $283 million, respectively, acquired under capital lease agreements, of which a substantial majority, is included in network equipment. Accumulated depreciation of property and equipment acquired under these capital leases was $101 million and $30 million at December 31, 2017 and 2016, respectively.
Construction in progress includes costs mostly related to construction of data centers, office buildings, and network equipment infrastructure to support our data centers around the world. The construction of office buildings includes leased office spaces for which we are considered to be the owner for accounting purposes. See Note 9 in these notes to the consolidated financial statements for additional information. No interest was capitalized during the years ended December 31, 2017, 2016 and 2015.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
During the year ended December 31, 2017, we completed several business acquisitions that were not material to our consolidated financial statements, either individually or in the aggregate. Accordingly, pro forma historical results of operations related to these business acquisitions during the year ended December 31, 2017 have not been presented. We have included the financial results of these business acquisitions in our consolidated financial statements from their respective dates of acquisition.
Goodwill generated from all business acquisitions completed during the year ended December 31, 2017 was primarily attributable to expected synergies from future growth and potential monetization opportunities. The amount of goodwill generated during this period that was deductible for tax purposes was not material.
The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 are as follows (in millions):
Balance as of December 31, 2015
$
18,026

Goodwill acquired
95

Effect of currency translation adjustment
1

Balance as of December 31, 2016
$
18,122

Goodwill acquired
90

Effect of currency translation adjustment
9

Balance as of December 31, 2017
$
18,221


Intangible assets consist of the following (in millions):
 
 
 
December 31, 2017
 
December 31, 2016
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
3.8
 
$
2,056

 
$
(971
)
 
$
1,085

 
$
2,056

 
$
(678
)
 
$
1,378

Acquired technology
1.8
 
972

 
(711
)
 
261

 
931

 
(518
)
 
413

Acquired patents
5.7
 
785

 
(499
)
 
286

 
785

 
(420
)
 
365

Trade names
2.2
 
629

 
(406
)
 
223

 
629

 
(293
)
 
336

Other
2.7
 
162

 
(133
)
 
29

 
162

 
(119
)
 
43

Total intangible assets
3.6
 
$
4,604

 
$
(2,720
)
 
$
1,884

 
$
4,563

 
$
(2,028
)
 
$
2,535

 
Amortization expense of intangible assets for the years ended December 31, 2017, 2016, and 2015 was $692 million, $751 million, and $730 million, respectively.
As of December 31, 2017, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
2018
$
633

2019
540

2020
365

2021
265

2022
29

Thereafter
52

Total
$
1,884

Liabilities
Liabilities
Liabilities
The components of accrued expenses and other current liabilities are as follows (in millions):
 
December 31,
 
2017
 
2016
Accrued compensation and benefits
$
776

 
$
636

Accrued property and equipment
685

 
331

Accrued taxes payable
230

 
155

Contingent consideration liability

 
242

Other current liabilities
1,201

 
839

Accrued expenses and other current liabilities
$
2,892

 
$
2,203



The components of other liabilities are as follows (in millions):
 
December 31,
 
2017
 
2016
Income tax payable
$
5,372

 
$
2,431

Other liabilities
1,045

 
461

Other liabilities
$
6,417

 
$
2,892

Long-term Debt
Long-term Debt
Long-term Debt
In May 2016, we entered into a $2.0 billion senior unsecured revolving credit facility, and any amounts outstanding under this facility will be due and payable on May 20, 2021. As of December 31, 2017, no amounts had been drawn down and we were in compliance with the covenants under the facility.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Commitments
Leases
We have entered into various non-cancelable operating lease agreements for certain of our offices, land, facilities, colocations, and data centers with original lease periods expiring between 2018 and 2038. We are committed to pay a portion of the related actual operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.
The following is a schedule, by years, of the future minimum lease payments required under non-cancelable operating leases as of December 31, 2017 (in millions):
 
Operating Leases
 
Financing obligation, building in progress - leased facilities(1)
2018
$
409

 
$

2019
464

 
2

2020
470

 
14

2021
448

 
15

2022
430

 
15

Thereafter
2,423

 
149

Total minimum lease payments
$
4,644

 
$
195


(1)
We entered into agreements to lease office buildings that are under construction. As a result of our involvement during these construction periods, we are considered for accounting purposes to be the owner of the construction projects. Financing obligation, building in progress - leased facilities represent the total expected financing and lease obligations associated with these leases and will be settled through monthly lease payments to the landlords when we occupy the office spaces upon completion. This amount includes $72 million that is included in property and equipment, net and other liabilities on our consolidated balance sheets as of December 31, 2017.
Operating lease expense was $363 million, $269 million, and $196 million for the years ended December 31, 2017, 2016 and 2015, respectively. We fully repaid all our capital lease obligations during 2016.
Other contractual commitments
We also have $2.95 billion of non-cancelable contractual commitments as of December 31, 2017, primarily related to network infrastructure and our data center operations. These commitments are primarily due within five years.
Contingencies
Legal Matters
Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our initial public offering (IPO) and seeking unspecified damages. We believe these lawsuits are without merit, and we intend to continue to vigorously defend them. The vast majority of the cases in the United States, along with multiple cases filed against The NASDAQ OMX Group, Inc. and The Nasdaq Stock Market LLC (collectively referred to herein as NASDAQ) alleging technical and other trading-related errors by NASDAQ in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the U.S. District Court for the Southern District of New York. In a series of rulings in 2013 and 2014, the court denied our motion to dismiss the consolidated securities class action and granted our motions to dismiss the derivative actions against our directors and certain of our officers. On July 24, 2015, the court of appeals affirmed the dismissal of the derivative actions. On December 11, 2015, the court granted plaintiffs' motion for class certification in the consolidated securities action. On April 14, 2017, we filed a motion for summary judgment. Trial is scheduled to begin on February 26, 2018.
In addition, from time to time, we are subject to litigation and other proceedings involving law enforcement and other regulatory agencies, including in particular in Brazil and Europe, in order to ascertain the precise scope of our legal obligations to comply with the requests of those agencies, including our obligation to disclose user information in particular circumstances. A number of such instances have resulted in the assessment of fines and penalties against us. We believe we have multiple legal grounds to satisfy these requests or prevail against associated fines and penalties, and we intend to vigorously defend such fines and penalties. Although we believe that it is reasonably possible that we may incur a loss in some of these cases, we are currently unable to estimate the amount of such losses. 

We are also party to various other legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. With respect to these matters, we evaluate the developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated.

We believe that the amount or any estimable range of reasonably possible or probable loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of these matters is inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.
For information regarding income tax contingencies, see Note 12 — Income Taxes.
Indemnifications
In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar indemnification obligations.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material impact on our consolidated financial position, results of operations or cash flows. In our opinion, as of December 31, 2017, there was not at least a reasonable possibility we had incurred a material loss with respect to indemnification of such parties. We have not recorded any liability for costs related to indemnification through December 31, 2017.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity
Common Stock
Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2017, we are authorized to issue 5,000 million shares of Class A common stock and 4,141 million shares of Class B common stock, each with a par value of $0.000006 per share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by our board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of December 31, 2017, we have not declared any dividends and our credit facility contains restrictions on our ability to pay dividends. The holder of each share of Class A common stock is entitled to one vote, while the holder of each share of Class B common stock is entitled to ten votes. Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer. Class A common stock and Class B common stock are referred to as common stock throughout the notes to these financial statements, unless otherwise noted.
As of December 31, 2017, there were 2,397 million shares and 509 million shares of Class A common stock and Class B common stock, respectively, issued and outstanding.
Abandonment of the Reclassification

In September 2017, our board of directors decided to abandon the proposal to create a new class of non-voting capital stock (Class C capital stock) and the intention to issue a dividend of two shares of Class C capital stock for each outstanding share of Class A and Class B common stock (the Reclassification). As a result, we will not proceed with the filing of our amended and restated certificate of incorporation which was approved by our stockholders on June 20, 2016.
Share Repurchase Program
In November 2016, our board of directors authorized a $6.0 billion share repurchase program of our Class A common stock, which commenced in 2017 and does not have an expiration date. The timing and actual number of shares repurchased depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2017, we repurchased and subsequently retired approximately 13 million shares of our Class A common stock for an aggregate amount of approximately $2.07 billion.
Share-based Compensation Plans
We maintain two share-based employee compensation plans: the 2012 Equity Incentive Plan, which was amended in June 2016 (2012 Plan), and the 2005 Stock Plan (collectively, Stock Plans). Our 2012 Plan serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive and nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares, and stock bonuses to qualified employees, directors and consultants. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and conditions of the 2005 Stock Plan.
We initially reserved 25 million shares of our Class A common stock for issuance under our 2012 Plan. The number of shares reserved for issuance under our 2012 Plan increases automatically on January 1 of each of the calendar years during the term of the 2012 Plan, which will continue through and including April 2026 unless terminated earlier by our board of directors or a committee thereof, by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total issued and outstanding shares of our Class A common stock as of the immediately preceding December 31st or (ii) a number of shares determined by our board of directors. Pursuant to this automatic increase provision, our board of directors elected not to increase the number of shares reserved for issuance in 2017 and 2016, and approved an increase of 42 million shares reserved for issuance effective as of January 1, 2018.
In addition, shares available for grant under the 2005 Stock Plan, which were reserved but not issued, forfeited or repurchased at their original issue price, or subject to outstanding awards under the 2005 Stock Plan as of the effective date of our IPO, were added to the reserves of the 2012 Plan and shares that are withheld in connection with the net settlement of RSUs are also added to the reserves of the 2012 Plan.
The following table summarizes the activities of stock option awards under the Stock Plans for the year ended December 31, 2017:
 
Shares Subject to Options Outstanding
 
Number of Shares
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Term
 
Aggregate Intrinsic Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2016
5,687

 
$
7.78

 
 
 
 
Stock options exercised
(2,609
)
 
5.10

 
 
 
 
Balance as of December 31, 2017
3,078

 
$
10.06

 
2.4
 
$
512

Stock options exercisable as of December 31, 2017
2,765

 
$
9.50

 
2.3
 
$
462

 
(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock of $176.46, as reported on the Nasdaq Global Select Market on December 31, 2017.
There were no options granted, forfeited, or canceled for the year ended December 31, 2017. The aggregate intrinsic value of the options exercised in the years ended December 31, 2017, 2016, and 2015 was $359 million, $309 million, and $403 million, respectively. The total grant date fair value of stock options vested during the years ended December 31, 2017, 2016, and 2015 was not material.
The following table summarizes additional information regarding outstanding and exercisable options under the Stock Plans at December 31, 2017:
 
 
Options Outstanding 
 
Options Exercisable 
Exercise Price
 
Number of Shares
 
Weighted Average Remaining
Contractual Term
 
Weighted Average Exercise Price 
 
Number of Shares 
 
Weighted Average Exercise Price 
 
 
(in thousands)
 
(in years)
 
 
 
(in thousands)
 
 
$1.85
 
27
 
1.0
 
$
1.85

 
27

 
$
1.85

$2.95
 
851
 
1.6
 
2.95

 
851

 
2.95

$10.39
 
1,000
 
2.6
 
10.39

 
1,000

 
10.39

$15.00
 
1,200
 
2.8
 
15.00

 
887

 
15.00

 
 
3,078
 
2.4
 
$
10.06

 
2,765

 
$
9.50


The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2017:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2016
98,586

 
$
82.99

Granted
36,741

 
147.28

Vested
(43,176
)
 
83.74

Forfeited
(10,937
)
 
91.76

Unvested at December 31, 2017
81,214

 
$
110.49


(1)
Unvested shares include inducement awards issued in connection with the WhatsApp acquisition in 2014 and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.
The fair value as of the respective vesting dates of RSUs that vested during the years ended December 31, 2017, 2016, and 2015 was $6.76 billion, $4.92 billion, and $4.23 billion, respectively. Starting in 2016, upon adoption of ASU 2016-09, we account for forfeitures as they occur. As of December 31, 2017, there was $7.72 billion of unrecognized share-based compensation expense, substantially all of which was related to RSUs. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years. Included in this unrecognized share-based compensation expense are 9.5 million unvested shares as of December 31, 2017, related to RSU inducement award granted to an employee in connection with the WhatsApp acquisition in 2014. This award is subject to acceleration if the recipient's employment is terminated without "cause" or if the recipient resigns for "good reason".
Interest and other income (expense), net
Interest and other income (expense), net
Interest and other income (expense), net
The following table presents the detail of interest and other income (expense), net, for the periods presented (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Interest income
$
398

 
$
176

 
$
52

Interest expense
(6
)
 
(10
)
 
(23
)
Foreign currency exchange losses, net
(6
)
 
(76
)
 
(66
)
Other
5

 
1

 
6

Interest and other income (expense), net
$
391

 
$
91

 
$
(31
)
Income Taxes
Income Taxes
Income Taxes
The components of income before provision for income taxes for the years ended December 31, 2017, 2016, and 2015 are as follows (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Domestic
$
7,079

 
$
6,368

 
$
2,802

Foreign
13,515

 
6,150

 
3,392

Income before provision for income taxes
$
20,594

 
$
12,518

 
$
6,194


The provision for income taxes consisted of the following (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
4,455

 
$
2,384

 
$
3,012

State
190

 
179

 
183

Foreign
389

 
195

 
123

Total current tax expense
5,034

 
2,758

 
3,318

Deferred:
 
 
 
 
 
Federal
(296
)
 
(414
)
 
(800
)
State
(33
)
 
(18
)
 
(17
)
Foreign
(45
)
 
(25
)
 
5

Total deferred tax benefit
(374
)
 
(457
)
 
(812
)
Provision for income taxes
$
4,660

 
$
2,301

 
$
2,506

 
A reconciliation of the U.S. federal statutory income tax rate of 35.0% to our effective tax rate is as follows (in percentages):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.6

 
1.0

 
2.0

Research tax credits
(0.9
)
 
(0.7
)
 
(1.4
)
Share-based compensation
0.4

 
1.0

 
2.2

Excess tax benefits related to share-based compensation(1)
(5.8
)
 
(7.0
)
 

Effect of non-U.S. operations
(18.6
)
 
(12.8
)
 
(0.9
)
Effect of U.S. tax law change (2)
11.0

 

 

Other
0.9

 
1.9

 
3.5

Effective tax rate
22.6
 %
 
18.4
 %
 
40.4
 %
 
(1)
Starting in 2016, excess tax benefits from share-based award activity are reflected as a reduction of the provision for income taxes, whereas they were previously recognized in equity.
(2)
Due to the Tax Act which was enacted in December 2017, provisional mandatory transition tax on accumulated foreign earnings was accrued as of December 31, 2017. In addition, deferred taxes were derecognized for previous estimated tax liabilities that would arise upon repatriation of a portion of these earnings in the foreign jurisdictions. Our U.S. deferred tax assets and liabilities as of December 31, 2017 were re-measured from 35% to 21%.The provisional effects of the Tax Act are $2.53 billion of current income tax expense and $257 million of deferred income tax benefit for the year ended December 31, 2017.
Our deferred tax assets (liabilities) are as follows (in millions):
 
December 31, 
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss carryforward
$
1,300

 
$
1,252

Tax credit carryforward
509

 
268

Share-based compensation
385

 
684

Accrued expenses and other liabilities
381

 
339

Other
131

 
149

Total deferred tax assets
2,706

 
2,692

Less: valuation allowance
(438
)
 
(240
)
Deferred tax assets, net of valuation allowance
2,268

 
2,452

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation and amortization
(622
)
 
(535
)
Purchased intangible assets
(309
)
 
(706
)
Deferred taxes on foreign income
(88
)
 
(357
)
Total deferred tax liabilities
(1,019
)
 
(1,598
)
Net deferred tax assets
$
1,249

 
$
854


    
The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018, which resulted in the re-measurement of the federal portion of our deferred tax assets as of December 31, 2017 from 35% to the new 21% tax rate. The valuation allowance was approximately $438 million and $240 million as of December 31, 2017 and 2016, respectively, mostly related to state tax credits that we do not believe will ultimately be realized.
As of December 31, 2017, the U.S. federal and state net operating loss carryforwards were $5.36 billion and $2.50 billion, which will begin to expire in 2033 and 2032, respectively, if not utilized. We have federal and state tax credit carryforwards of $142 million and $1.38 billion, respectively, which will begin to expire in 2033 and 2032, respectively, if not utilized.
Utilization of our net operating loss and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change of greater than 50% over a three-year period.
The Tax Act imposes a mandatory transition tax on accumulated foreign earnings and eliminates US taxes on foreign subsidiary distribution. As a result, earnings in foreign jurisdictions are available for distribution to the U.S. without incremental U.S. taxes.
The following table reflects changes in the gross unrecognized tax benefits (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Gross unrecognized tax benefits-beginning of period
$
3,309

 
$
3,017

 
$
1,682

Increases related to prior year tax positions
72

 
32

 
322

Decreases related to prior year tax positions
(34
)
 
(36
)
 
(52
)
Increases related to current year tax positions
536

 
307

 
1,066

Decreases related to settlements of prior year tax positions
(13
)
 
(11
)
 
(1
)
Gross unrecognized tax benefits-end of period
$
3,870

 
$
3,309

 
$
3,017


During all years presented, we recognized interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of income. The amount of interest and penalties accrued as of December 31, 2017 and 2016 was $154 million and $80 million, respectively.
If the balance of gross unrecognized tax benefits of $3.87 billion as of December 31, 2017 were realized in a future period, this would result in a tax benefit of $2.67 billion within our provision of income taxes at such time.
We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2011 through 2013 tax years and Ireland for our 2012 through 2015 tax years. Our 2014 and subsequent years remain open to examination by the IRS. Our 2016 and subsequent years remain open to examination in Ireland.
In July 2016, we received a Statutory Notice of Deficiency (Notice) from the IRS related to transfer pricing with our foreign subsidiaries in conjunction with the examination of the 2010 tax year. While the Notice applies only to the 2010 tax year, the IRS states that it will also apply its position for tax years subsequent to 2010, which, if the IRS prevails in its position, could result in an additional federal tax liability of an estimated aggregate amount of approximately $3.0 billion to $5.0 billion in excess of originally filed U.S. return, plus interest and any penalties asserted. We do not agree with the position of the IRS and have filed a petition in the United States Tax Court challenging the Notice. We have previously accrued an estimated unrecognized tax benefit consistent with the guidance in ASC 740 that is lower than the potential additional federal tax liability of $3.0 billion to $5.0 billion in excess of the originally filed U.S. return, plus interest and penalties. If the IRS prevails in the assessment of additional tax due based on its position, the assessed tax, interest and penalties, if any, could have a material adverse impact on our financial position, results of operations, and cash flows. As of December 31, 2017, we have not resolved this matter and proceedings continue in the United States Tax Court. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations.
We believe that adequate amounts have been reserved for any adjustments to the provision for income taxes or other tax items that may ultimately result from these examinations. Although the timing of the resolution, settlement, and closure of any audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. However, we do not anticipate a significant impact to such amounts within the next 12 months.
Geographical Information
Geographical Information
Geographical Information
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
United States
$
17,734

 
$
12,579

 
$
8,513

Rest of the world(1)
22,919

 
15,059

 
9,415

Total revenue
$
40,653

 
$
27,638

 
$
17,928

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.
 
 
December 31,
 
2017
 
2016
Property and equipment, net:
 
 
 
United States
$
10,406

 
$
6,793

Rest of the world(1)
3,315

 
1,798

Total property and equipment, net
$
13,721

 
$
8,591


(1)
No individual country, other than disclosed above, exceeded 10% of our total property and equipment, net for any period presented.
Summary of Significant Accounting Policies (Policies)
Basis of Presentation
We prepared the consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, commitments and contingencies, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, leases, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Advertising
Advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. Marketers pay for ad products either directly or through their relationships with advertising agencies, based on the number of impressions delivered or the number of actions, such as clicks, taken by our users.
We recognize revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to users. We recognize revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. For advertising revenue arrangements where we are not the primary obligor, we recognize revenue on a net basis.
Payments and Other Fees
Payments revenue is comprised of the net fee we receive from developers using our Payments infrastructure.
Other fees revenue, which was not material for all periods presented in our financial statements, consists primarily of revenue from the delivery of virtual reality platform devices and various other sources.
Revenue is recognized net of applicable sales and other taxes.
Revenue Recognition
We recognize revenue once all of the following criteria have been met:
persuasive evidence of an arrangement exists;
delivery of our obligations to our customer has occurred;
the price is fixed or determinable; and
collectability of the related receivable is reasonably assured.
Cost of Revenue
Our cost of revenue consists primarily of expenses associated with the delivery and distribution of our products. These include expenses related to the operation of our data centers, such as facility and server equipment depreciation, salaries, benefits, and share-based compensation for employees on our operations teams, and energy and bandwidth costs. Cost of revenue also includes costs associated with partner arrangements, including content acquisition costs, credit card and other transaction fees related to processing customer transactions, cost of virtual reality platform device inventory sold, and amortization of intangible assets.
Content acquisition costs

We license and pay to produce content in order to increase engagement on the platform. For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for viewing. The amounts capitalized are limited to estimated net realizable value or fair value on a per title basis. The portion available for viewing within one year is recognized as prepaid expenses and other current assets and the remaining portion as other assets on the consolidated balance sheets. For original programming, we capitalize costs associated with the production, including development costs and direct costs, if those amounts are recoverable. Capitalized original programming costs are included in other assets on the consolidated balance sheets. Capitalized costs are amortized in cost of revenue on the consolidated statements of income based on historical and estimated viewing patterns.

Capitalized content costs are reviewed when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than amortized cost. If such changes are identified, capitalized content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off.

Income Taxes
We record provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment.
We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. These uncertain tax positions include our estimates for transfer pricing that have been developed based upon analyses of appropriate arms-length prices. Similarly, our estimates related to uncertain tax positions concerning research tax credits are based on an assessment of whether our available documentation corroborating the nature of our activities supporting the tax credits will be sufficient. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial position, results of operations, and cash flows.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation is expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.
Advertising Expense
Advertising costs are expensed when incurred and are included in marketing and sales expenses in the accompanying consolidated statements of income.
Cash and Cash Equivalents, and Marketable Securities
Cash and cash equivalents primarily consist of cash on deposit with banks and investments in money market funds with maturities of 90 days or less from the date of purchase.
We hold investments in marketable securities, consisting of U.S. government securities, U.S. government agency securities, and corporate debt securities. We classify our marketable securities as available-for-sale investments in our current assets because they represent investments of cash available for current operations. Our available-for-sale investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive (loss) income in stockholders' equity. Unrealized losses are charged against interest and other income (expense), net when a decline in fair value is determined to be other-than-temporary. We have not recorded any such impairment charge in the periods presented. We determine realized gains or losses on sale of marketable securities on a specific identification method, and record such gains or losses as interest and other income (expense), net.
We classify certain restricted cash balances within prepaid expenses and other current assets and other assets on the accompanying consolidated balance sheets based upon the term of the remaining restrictions.
Fair Value of Financial Instruments
We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1-Quoted prices in active markets for identical assets or liabilities.
Level 2-Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3-Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability.
Our valuation techniques used to measure the fair value of money market funds and marketable debt securities were derived from quoted market prices or alternative pricing sources and models utilizing market observable inputs.
Our valuation technique used to measure the fair value of our contingent consideration liability as of December 31, 2016 was derived from the fair value of our common stock on such date.
Accounts Receivable and Allowances
Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers.
Property and Equipment
Property and equipment, which includes amounts recorded under capital leases, are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term, whichever is shorter.
The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to 20 years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Two to five years
Leased equipment and leasehold improvements
 
Lesser of estimated useful life or remaining lease term
 
Land and assets held within construction in progress are not depreciated. Construction in progress is related to the construction or development of property and equipment that have not yet been placed in service for their intended use.
The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income from operations.
Lease Obligations
We enter into lease arrangements for office space, land, facilities, data centers, and equipment under non-cancelable capital and operating leases. Certain of the operating lease agreements contain rent holidays, rent escalation provisions, and purchase options. Rent holidays and rent escalation provisions are considered in determining the straight-line rent expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception.
We record assets and liabilities for the estimated construction costs incurred by third parties under build-to-suit lease arrangements to the extent that we are involved in the construction of structural improvements or bear construction risk prior to commencement of a lease.
Loss Contingencies
We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss in the notes to the consolidated financial statements.
We review the developments in our contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Long-Lived Assets, Including Goodwill and Other Acquired Intangible Assets
We evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any significant impairment charges during the years presented.
We review goodwill for impairment at least annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of our single reporting unit below its carrying value. As of December 31, 2017, no impairment of goodwill has been identified.
Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. We routinely review the remaining estimated useful lives of property and equipment and finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.
Deferred Revenue and Deposits
Deferred revenue consists of billings and payments from marketers in advance of revenue recognition. Deposits relate to unused balances held on behalf of our users. Once this balance is utilized by a user, approximately 70% of this amount would then be payable to the developer and the balance would be recognized as revenue.
Foreign Currency
Generally the functional currency of our international subsidiaries is the local currency. We translate the financial statements of these subsidiaries to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs, and expenses. Translation gains and losses are recorded in accumulated other comprehensive (loss) income as a component of stockholders' equity. As of December 31, 2017 and 2016, we had a cumulative translation loss, net of tax of $16 million and $582 million, respectively. Net losses resulting from foreign exchange transactions were $6 million, $76 million, and $66 million for the years ended December 31, 2017, 2016, and 2015, respectively. These losses were recorded as interest and other income (expense), net in our consolidated statements of income.
Credit Risk and Concentration
Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities, and accounts receivable. The majority of cash equivalents consists of short-term money market funds, which are managed by reputable financial institutions. Marketable securities consist of investments in U.S. government securities, U.S. government agency securities, and corporate debt securities. Our investment policy limits investment instruments to U.S. government securities, U.S. government agency securities, and corporate debt securities with the main objective of preserving capital and maintaining liquidity.
Accounts receivable are typically unsecured and are derived from revenue earned from customers across different industries and countries. We generated 44%, 46%, and 47% of our revenue for the years ended December 31, 2017, 2016, and 2015, respectively, from marketers and developers based in the United States, with the majority of revenue outside of the United States coming from customers located in western Europe, China, Canada, Australia, and Brazil.
We perform ongoing credit evaluations of our customers, and generally do not require collateral. We maintain an allowance for estimated credit losses. During the years ended December 31, 2017, 2016, and 2015, our bad debt expenses were $48 million, $66 million, and $44 million, respectively. In the event that accounts receivable collection cycles deteriorate, our operating results and financial position could be adversely affected.
 Segments
Our chief operating decision-maker is our Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we have a single reportable segment and operating segment structure.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance. We will adopt the new standard effective January 1, 2018, using the modified retrospective transition method. We finalized our analysis and the adoption of this guidance will not have a material impact on our consolidated financial statements and our internal controls over financial reporting.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for us in the first quarter of 2019 on a modified retrospective basis and early adoption is permitted. We will adopt the new standard effective January 1, 2019. We have selected a lease accounting system and we are in the process of implementing such system as well as evaluating the use of the optional practical expedients. While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, as disclosed in Note 9 — Commitments and Contingencies, will be subject to the new standard. We will recognize right-of-use assets and operating lease liabilities on our consolidated balance sheets upon adoption, which will increase our total assets and liabilities.
In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. We will adopt the new standard effective January 1, 2018, using the modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the effective date. A cumulative-effect adjustment will capture the write-off of income tax consequences deferred from past intra-entity transfers involving assets other than inventory, new deferred tax assets, and other liabilities for amounts not currently recognized under U.S. GAAP. Based on transactions up to December 31, 2017, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We will adopt the new standard effective January 1, 2018, using the retrospective transition approach for all periods presented. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. We will adopt the new standard effective January 1, 2018, on a prospective basis and do not expect the standard to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
Revenue for the years ended December 31, 2017, 2016, and 2015 consists of the following (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Advertising
$
39,942

 
$
26,885

 
$
17,079

Payments and other fees
711

 
753

 
849

Total revenue
$
40,653

 
$
27,638

 
$
17,928

 
The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to 20 years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Two to five years
Leased equipment and leasehold improvements
 
Lesser of estimated useful life or remaining lease term
Deferred revenue and deposits consists of the following (in millions):
 
December 31,
 
2017
 
2016
Deferred revenue
$
68

 
$
62

Deposits
30

 
28

Total deferred revenue and deposits
$
98

 
$
90

Earnings per Share (Tables)
Numerators and Denominators of Basic and Diluted EPS Computations for Common Stock
The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts):
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Class
A
 
Class
B
 
Class
A
 
Class
B
 
Class
A
 
Class
B 
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income
$
13,034

 
$
2,900

 
$
8,270

 
$
1,947

 
$
2,959

 
$
729

Less: Net income attributable to participating securities
12

 
2

 
24

 
5

 
15

 
4

Net income attributable to common stockholders
$
13,022

 
$
2,898

 
$
8,246

 
$
1,942

 
$
2,944

 
$
725

Denominator
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,375

 
528

 
2,323

 
548

 
2,259

 
559

Less: Shares subject to repurchase
2

 

 
6

 
2

 
10

 
5

Number of shares used for basic EPS computation
2,373

 
528

 
2,317

 
546

 
2,249

 
554

Basic EPS
$
5.49

 
$
5.49

 
$
3.56

 
$
3.56

 
$
1.31

 
$
1.31

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
13,022

 
$
2,898

 
$
8,246

 
$
1,942

 
$
2,944

 
$
725

Reallocation of net income attributable to participating securities
14

 

 
29

 

 
19

 

Reallocation of net income as a result of conversion of Class B to Class A common stock
2,898

 

 
1,942

 

 
725

 

Reallocation of net income to Class B common stock

 
(13
)
 

 
14

 

 
15

Net income attributable to common stockholders for diluted EPS
$
15,934

 
$
2,885

 
$
10,217

 
$
1,956

 
$
3,688

 
$
740

Denominator
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,373

 
528

 
2,317

 
546

 
2,249

 
554

Conversion of Class B to Class A common stock
528

 

 
546

 

 
554

 

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
4

 
4

 
6

 
6

 
8

 
8

RSUs
49

 
3

 
49

 
5

 
37

 
9

Shares subject to repurchase and other
2

 

 
7

 
3

 
5

 
2

Number of shares used for diluted EPS computation
2,956

 
535

 
2,925

 
560

 
2,853

 
573

Diluted EPS
$
5.39

 
$
5.39

 
$
3.49

 
$
3.49

 
$
1.29

 
$
1.29

Cash and Cash Equivalents, and Marketable Securities (Tables)
The following table sets forth the cash and cash equivalents, and marketable securities (in millions):
 
December 31,
 
2017
 
2016
Cash and cash equivalents:
 
 
 
Cash
$
2,212

 
$
1,364

Money market funds
5,268

 
5,409

U.S. government securities
66

 
1,463

U.S. government agency securities
25

 
667

Certificate of deposits and time deposits
440

 

Corporate debt securities
68

 

Total cash and cash equivalents
8,079

 
8,903

Marketable securities:
 
 
 
U.S. government securities
12,766

 
7,130

U.S. government agency securities
10,944

 
7,411

Corporate debt securities
9,922

 
6,005

Total marketable securities
33,632

 
20,546

Total cash and cash equivalents, and marketable securities
$
41,711

 
$
29,449

The following table classifies our marketable securities by contractual maturities (in millions):
 
December 31,
 
2017
 
2016
Due in one year
$
7,976

 
$
4,966

Due in one to five years
25,656

 
15,580

Total
$
33,632

 
$
20,546

Fair Value Measurement (Tables)
Assets and Liabilities Measured at Fair Value on Recurring Basis
The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions):
 
 
 
 
Fair Value Measurement at Reporting Date Using
Description 
 
December 31,
2017
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
5,268

 
$
5,268

 
$

 
$

U.S. government securities
 
66

 
66

 

 

U.S. government agency securities
 
25

 
25

 

 

Certificate of deposits and time deposits
 
440

 

 
440

 

Corporate debt securities
 
68

 

 
68

 

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
12,766

 
12,766

 

 

U.S. government agency securities
 
10,944

 
10,944

 

 

Corporate debt securities
 
9,922

 

 
9,922

 

Total cash equivalents and marketable securities
 
$
39,499

 
$
29,069

 
$
10,430

 
$

 
 
 
 
Fair Value Measurement at Reporting Date Using
Description
 
December 31,
2016
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3 
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
5,409

 
$
5,409

 
$

 
$

U.S. government securities
 
1,463

 
1,463

 

 

U.S. government agency securities
 
667

 
667

 

 

Marketable securities:
 

 
 
 
 
 
 
U.S. government securities
 
7,130

 
7,130

 

 

U.S. government agency securities
 
7,411

 
7,411

 

 

Corporate debt securities
 
6,005

 

 
6,005

 

Total cash equivalents and marketable securities
 
$
28,085

 
$
22,080

 
$
6,005

 
$

 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
242

 
$

 
242

 
$

Property and Equipment (Tables)
Property and Equipment
Property and equipment consists of the following (in millions):
 
December 31,
 
2017
 
2016
Land
$
798

 
$
696

Buildings
4,909

 
3,109

Leasehold improvements
959

 
531

Network equipment
7,998

 
5,179

Computer software, office equipment and other
681

 
398

Construction in progress
2,992

 
1,890

Total
18,337

 
11,803

Less: Accumulated depreciation
(4,616
)
 
(3,212
)
Property and equipment, net
$
13,721

 
$
8,591

 
Goodwill and Intangible Assets (Tables)
The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 are as follows (in millions):
Balance as of December 31, 2015
$
18,026

Goodwill acquired
95

Effect of currency translation adjustment
1

Balance as of December 31, 2016
$
18,122

Goodwill acquired
90

Effect of currency translation adjustment
9

Balance as of December 31, 2017
$
18,221

Intangible assets consist of the following (in millions):
 
 
 
December 31, 2017
 
December 31, 2016
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
3.8
 
$
2,056

 
$
(971
)
 
$
1,085

 
$
2,056

 
$
(678
)
 
$
1,378

Acquired technology
1.8
 
972

 
(711
)
 
261

 
931

 
(518
)
 
413

Acquired patents
5.7
 
785

 
(499
)
 
286

 
785

 
(420
)
 
365

Trade names
2.2
 
629

 
(406
)
 
223

 
629

 
(293
)
 
336

Other
2.7
 
162

 
(133
)
 
29

 
162

 
(119
)
 
43

Total intangible assets
3.6
 
$
4,604

 
$
(2,720
)
 
$
1,884

 
$
4,563

 
$
(2,028
)
 
$
2,535

As of December 31, 2017, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
2018
$
633

2019
540

2020
365

2021
265

2022
29

Thereafter
52

Total
$
1,884

Liabilities (Tables)
The components of accrued expenses and other current liabilities are as follows (in millions):
 
December 31,
 
2017
 
2016
Accrued compensation and benefits
$
776

 
$
636

Accrued property and equipment
685

 
331

Accrued taxes payable
230

 
155

Contingent consideration liability

 
242

Other current liabilities
1,201

 
839

Accrued expenses and other current liabilities
$
2,892

 
$
2,203



The components of other liabilities are as follows (in millions):
 
December 31,
 
2017
 
2016
Income tax payable
$
5,372

 
$
2,431

Other liabilities
1,045

 
461

Other liabilities
$
6,417

 
$
2,892

Commitments and Contingencies (Tables)
Schedule of Future Minimum Lease Payments for Operating Leases
The following is a schedule, by years, of the future minimum lease payments required under non-cancelable operating leases as of December 31, 2017 (in millions):
 
Operating Leases
 
Financing obligation, building in progress - leased facilities(1)
2018
$
409

 
$

2019
464

 
2

2020
470

 
14

2021
448

 
15

2022
430

 
15

Thereafter
2,423

 
149

Total minimum lease payments
$
4,644

 
$
195


(1)
We entered into agreements to lease office buildings that are under construction. As a result of our involvement during these construction periods, we are considered for accounting purposes to be the owner of the construction projects. Financing obligation, building in progress - leased facilities represent the total expected financing and lease obligations associated with these leases and will be settled through monthly lease payments to the landlords when we occupy the office spaces upon completion. This amount includes $72 million that is included in property and equipment, net and other liabilities on our consolidated balance sheets as of December 31, 2017.
Stockholders' Equity (Tables)
The following table summarizes the activities of stock option awards under the Stock Plans for the year ended December 31, 2017:
 
Shares Subject to Options Outstanding
 
Number of Shares
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Term
 
Aggregate Intrinsic Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2016
5,687

 
$
7.78

 
 
 
 
Stock options exercised
(2,609
)
 
5.10

 
 
 
 
Balance as of December 31, 2017
3,078

 
$
10.06

 
2.4
 
$
512

Stock options exercisable as of December 31, 2017
2,765

 
$
9.50

 
2.3
 
$
462

 
(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock of $176.46, as reported on the Nasdaq Global Select Market on December 31, 2017.
The following table summarizes additional information regarding outstanding and exercisable options under the Stock Plans at December 31, 2017:
 
 
Options Outstanding 
 
Options Exercisable 
Exercise Price
 
Number of Shares
 
Weighted Average Remaining
Contractual Term
 
Weighted Average Exercise Price 
 
Number of Shares 
 
Weighted Average Exercise Price 
 
 
(in thousands)
 
(in years)
 
 
 
(in thousands)
 
 
$1.85
 
27
 
1.0
 
$
1.85

 
27

 
$
1.85

$2.95
 
851
 
1.6
 
2.95

 
851

 
2.95

$10.39
 
1,000
 
2.6
 
10.39

 
1,000

 
10.39

$15.00
 
1,200
 
2.8
 
15.00

 
887

 
15.00

 
 
3,078
 
2.4
 
$
10.06

 
2,765

 
$
9.50

The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2017:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2016
98,586

 
$
82.99

Granted
36,741

 
147.28

Vested
(43,176
)
 
83.74

Forfeited
(10,937
)
 
91.76

Unvested at December 31, 2017
81,214

 
$
110.49


(1)
Unvested shares include inducement awards issued in connection with the WhatsApp acquisition in 2014 and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.
Interest and other income/(expense), net (Tables)
Schedule of Interest and Other Income (Expense), Net
The following table presents the detail of interest and other income (expense), net, for the periods presented (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Interest income
$
398

 
$
176

 
$
52

Interest expense
(6
)
 
(10
)
 
(23
)
Foreign currency exchange losses, net
(6
)
 
(76
)
 
(66
)
Other
5

 
1

 
6

Interest and other income (expense), net
$
391

 
$
91

 
$
(31
)
Income Taxes (Tables)
The components of income before provision for income taxes for the years ended December 31, 2017, 2016, and 2015 are as follows (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Domestic
$
7,079

 
$
6,368

 
$
2,802

Foreign
13,515

 
6,150

 
3,392

Income before provision for income taxes
$
20,594

 
$
12,518

 
$
6,194

The provision for income taxes consisted of the following (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
4,455

 
$
2,384

 
$
3,012

State
190

 
179

 
183

Foreign
389

 
195

 
123

Total current tax expense
5,034

 
2,758

 
3,318

Deferred:
 
 
 
 
 
Federal
(296
)
 
(414
)
 
(800
)
State
(33
)
 
(18
)
 
(17
)
Foreign
(45
)
 
(25
)
 
5

Total deferred tax benefit
(374
)
 
(457
)
 
(812
)
Provision for income taxes
$
4,660

 
$
2,301

 
$
2,506

 
A reconciliation of the U.S. federal statutory income tax rate of 35.0% to our effective tax rate is as follows (in percentages):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.6

 
1.0

 
2.0

Research tax credits
(0.9
)
 
(0.7
)
 
(1.4
)
Share-based compensation
0.4

 
1.0

 
2.2

Excess tax benefits related to share-based compensation(1)
(5.8
)
 
(7.0
)
 

Effect of non-U.S. operations
(18.6
)
 
(12.8
)
 
(0.9
)
Effect of U.S. tax law change (2)
11.0

 

 

Other
0.9

 
1.9

 
3.5

Effective tax rate
22.6
 %
 
18.4
 %
 
40.4
 %
 
(1)
Starting in 2016, excess tax benefits from share-based award activity are reflected as a reduction of the provision for income taxes, whereas they were previously recognized in equity.
(2)
Due to the Tax Act which was enacted in December 2017, provisional mandatory transition tax on accumulated foreign earnings was accrued as of December 31, 2017. In addition, deferred taxes were derecognized for previous estimated tax liabilities that would arise upon repatriation of a portion of these earnings in the foreign jurisdictions. Our U.S. deferred tax assets and liabilities as of December 31, 2017 were re-measured from 35% to 21%.The provisional effects of the Tax Act are $2.53 billion of current income tax expense and $257 million of deferred income tax benefit for the year ended December 31, 2017.
Our deferred tax assets (liabilities) are as follows (in millions):
 
December 31, 
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss carryforward
$
1,300

 
$
1,252

Tax credit carryforward
509

 
268

Share-based compensation
385

 
684

Accrued expenses and other liabilities
381

 
339

Other
131

 
149

Total deferred tax assets
2,706

 
2,692

Less: valuation allowance
(438
)
 
(240
)
Deferred tax assets, net of valuation allowance
2,268

 
2,452

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation and amortization
(622
)
 
(535
)
Purchased intangible assets
(309
)
 
(706
)
Deferred taxes on foreign income
(88
)
 
(357
)
Total deferred tax liabilities
(1,019
)
 
(1,598
)
Net deferred tax assets
$
1,249

 
$
854

The following table reflects changes in the gross unrecognized tax benefits (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Gross unrecognized tax benefits-beginning of period
$
3,309

 
$
3,017

 
$
1,682

Increases related to prior year tax positions
72

 
32

 
322

Decreases related to prior year tax positions
(34
)
 
(36
)
 
(52
)
Increases related to current year tax positions
536

 
307

 
1,066

Decreases related to settlements of prior year tax positions
(13
)
 
(11
)
 
(1
)
Gross unrecognized tax benefits-end of period
$
3,870

 
$
3,309

 
$
3,017

Geographical Information (Tables)
Revenue and Property and Equipment by Geographic Area
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Year Ended December 31, 
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
United States
$
17,734

 
$
12,579

 
$
8,513

Rest of the world(1)
22,919

 
15,059

 
9,415

Total revenue
$
40,653

 
$
27,638

 
$
17,928

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.
 
 
December 31,
 
2017
 
2016
Property and equipment, net:
 
 
 
United States
$
10,406

 
$
6,793

Rest of the world(1)
3,315

 
1,798

Total property and equipment, net
$
13,721

 
$
8,591


(1)
No individual country, other than disclosed above, exceeded 10% of our total property and equipment, net for any period presented.

Summary of Significant Accounting Policies - Revenue Recognition (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
 
Advertising
$ 39,942 
$ 26,885 
$ 17,079 
Payments and other fees
711 
753 
849 
Total revenue
$ 40,653 
$ 27,638 
$ 17,928 
Summary of Significant Accounting Policies - Other Policies (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
 
Advertising expense
$ 324 
$ 310 
$ 281 
Deferred Revenue & Deposits [Abstract]
 
 
 
Deferred revenue, rate payable to developer upon utilization of virtual currency
70.00% 
 
 
Deferred revenue
68 
62 
 
Deposits
30 
28 
 
Total deferred revenue and deposits
$ 98 
$ 90 
 
Summary of Significant Accounting Policies - Property & Equipment (Details)
12 Months Ended
Dec. 31, 2017
Network equipment |
Minimum
 
Property, Plant and Equipment
 
Useful life of property and equipment
3 years 
Network equipment |
Maximum
 
Property, Plant and Equipment
 
Useful life of property and equipment
20 years 
Buildings |
Minimum
 
Property, Plant and Equipment
 
Useful life of property and equipment
3 years 
Buildings |
Maximum
 
Property, Plant and Equipment
 
Useful life of property and equipment
30 years 
Computer software, office equipment and other |
Minimum
 
Property, Plant and Equipment
 
Useful life of property and equipment
2 years 
Computer software, office equipment and other |
Maximum
 
Property, Plant and Equipment
 
Useful life of property and equipment
5 years 
Summary of Significant Accounting Policies - Intangible Assets (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]
 
Goodwill, impairment loss
$ 0 
Summary of Significant Accounting Policies - Foreign Currency (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
 
Cumulative translation loss, net of tax
$ 16 
$ 582 
 
Foreign currency exchange losses, net
$ 6 
$ 76 
$ 66 
Summary of Significant Accounting Policies - Credit Risk and Concentration (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Concentration Risk
 
 
 
Bad debt expense
$ 48 
$ 66 
$ 44 
Geographic concentration risk |
Sales revenue |
United States
 
 
 
Concentration Risk
 
 
 
Concentration risk percentage
44.00% 
46.00% 
47.00% 
Earnings per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Numerator
 
 
 
Net income
$ 15,934 
$ 10,217 
$ 3,688 
Less: Net income attributable to participating securities
14 
29 
19 
Net income attributable to common stockholders
15,920 
10,188 
3,669 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,901 
2,863 
2,803 
Basic EPS (in dollars per share)
$ 5.49 
$ 3.56 
$ 1.31 
Numerator
 
 
 
Net income attributable to common stockholders
15,920 
10,188 
3,669 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,901 
2,863 
2,803 
Number of shares used for diluted EPS computation (in shares)
2,956 
2,925 
2,853 
Diluted EPS (in dollars per share)
$ 5.39 
$ 3.49 
$ 1.29 
Class A Common Stock
 
 
 
Numerator
 
 
 
Net income
13,034 
8,270 
2,959 
Less: Net income attributable to participating securities
12 
24 
15 
Net income attributable to common stockholders
13,022 
8,246 
2,944 
Denominator
 
 
 
Weighted average shares outstanding (in shares)
2,375 
2,323 
2,259 
Less: Shares subject to repurchase (in shares)
10 
Number of shares used for basic EPS computation (in shares)
2,373 
2,317 
2,249 
Basic EPS (in dollars per share)
$ 5.49 
$ 3.56 
$ 1.31 
Numerator
 
 
 
Net income attributable to common stockholders
13,022 
8,246 
2,944 
Reallocation of net income attributable to participating securities
14 
29 
19 
Reallocation of net income as a result of conversion of Class B to Class A common stock
2,898 
1,942 
725 
Reallocation of net income to Class B common stock
Net income attributable to common stockholders for diluted EPS
15,934 
10,217 
3,688 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,373 
2,317 
2,249 
Conversion of Class B to Class A common stock (in shares)
528 
546 
554 
Shares subject to repurchase and other (in shares)
Number of shares used for diluted EPS computation (in shares)
2,956 
2,925 
2,853 
Diluted EPS (in dollars per share)
$ 5.39 
$ 3.49 
$ 1.29 
Class A Common Stock |
Employee Stock Option
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
Class A Common Stock |
Restricted Stock Units (RSUs)
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
49 
49 
37 
Class B Common Stock
 
 
 
Numerator
 
 
 
Net income
2,900 
1,947 
729 
Less: Net income attributable to participating securities
Net income attributable to common stockholders
2,898 
1,942 
725 
Denominator
 
 
 
Weighted average shares outstanding (in shares)
528 
548 
559 
Less: Shares subject to repurchase (in shares)
Number of shares used for basic EPS computation (in shares)
528 
546 
554 
Basic EPS (in dollars per share)
$ 5.49 
$ 3.56 
$ 1.31 
Numerator
 
 
 
Net income attributable to common stockholders
2,898 
1,942 
725 
Reallocation of net income attributable to participating securities
Reallocation of net income as a result of conversion of Class B to Class A common stock
Reallocation of net income to Class B common stock
(13)
14 
15 
Net income attributable to common stockholders for diluted EPS
$ 2,885 
$ 1,956 
$ 740 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
528 
546 
554 
Conversion of Class B to Class A common stock (in shares)
Shares subject to repurchase and other (in shares)
Number of shares used for diluted EPS computation (in shares)
535 
560 
573 
Diluted EPS (in dollars per share)
$ 5.39 
$ 3.49 
$ 1.29 
Class B Common Stock |
Employee Stock Option
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
Class B Common Stock |
Restricted Stock Units (RSUs)
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
Cash and Cash Equivalents, and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 8,079 
$ 8,903 
$ 4,907 
$ 4,315 
Marketable securities
33,632 
20,546 
 
 
Total cash and cash equivalents, and marketable securities
41,711 
29,449 
 
 
U.S. government securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
12,766 
7,130 
 
 
U.S. government agency securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
10,944 
7,411 
 
 
Corporate debt securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
9,922 
6,005 
 
 
Cash
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
2,212 
1,364 
 
 
Money market funds
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
5,268 
5,409 
 
 
U.S. government securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
66 
1,463 
 
 
U.S. government agency securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
25 
667 
 
 
Certificate of deposits and time deposits
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
440 
 
 
Corporate debt securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 68 
$ 0 
 
 
Cash and Cash Equivalents, and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Cash and Cash Equivalents, and Marketable Securities [Abstract]
 
 
Due in one year
$ 7,976 
$ 4,966 
Due in one to five years
25,656 
15,580 
Total
$ 33,632 
$ 20,546 
Fair Value Measurement (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
$ 33,632 
$ 20,546 
U.S. government securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
12,766 
7,130 
U.S. government agency securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
10,944 
7,411 
Corporate debt securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
9,922 
6,005 
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
39,499 
28,085 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
29,069 
22,080 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
10,430 
6,005 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
Fair Value, Measurements, Recurring |
Other liabilities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Contingent consideration liability, other liabilities
 
242 
Fair Value, Measurements, Recurring |
Other liabilities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Contingent consideration liability, other liabilities
 
Fair Value, Measurements, Recurring |
Other liabilities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Contingent consideration liability, other liabilities
 
242 
Fair Value, Measurements, Recurring |
Other liabilities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Contingent consideration liability, other liabilities
 
Fair Value, Measurements, Recurring |
U.S. government securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
12,766 
7,130 
Fair Value, Measurements, Recurring |
U.S. government securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
12,766 
7,130 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
U.S. government agency securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
10,944 
7,411 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
10,944 
7,411 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
Corporate debt securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
9,922 
6,005 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
9,922 
6,005 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Fair Value, Measurements, Recurring |
Money market funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
5,268 
5,409 
Fair Value, Measurements, Recurring |
Money market funds |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
5,268 
5,409 
Fair Value, Measurements, Recurring |
Money market funds |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
Money market funds |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
U.S. government securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
66 
1,463 
Fair Value, Measurements, Recurring |
U.S. government securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
66 
1,463 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
U.S. government agency securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
25 
667 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
25 
667 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
Certificate of deposits and time deposits
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
440 
 
Fair Value, Measurements, Recurring |
Certificate of deposits and time deposits |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
Fair Value, Measurements, Recurring |
Certificate of deposits and time deposits |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
440 
 
Fair Value, Measurements, Recurring |
Certificate of deposits and time deposits |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
Fair Value, Measurements, Recurring |
Corporate debt securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
68 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
68 
 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
$ 0 
 
Property and Equipment (Detail) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment
 
 
 
Property and equipment, gross
$ 18,337,000,000 
$ 11,803,000,000 
 
Less: Accumulated depreciation
(4,616,000,000)
(3,212,000,000)
 
Property and equipment, net
13,721,000,000 
8,591,000,000 
 
Depreciation expense
2,330,000,000 
1,590,000,000 
1,220,000,000 
Assets acquired under capital lease agreements
533,000,000 
283,000,000 
 
Accumulated depreciation of property and equipment acquired under capital leases
101,000,000 
30,000,000 
 
Interest costs capitalized
Land
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
798,000,000 
696,000,000 
 
Buildings
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
4,909,000,000 
3,109,000,000 
 
Leasehold improvements
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
959,000,000 
531,000,000 
 
Network equipment
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
7,998,000,000 
5,179,000,000 
 
Computer software, office equipment and other
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
681,000,000 
398,000,000 
 
Construction in progress
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
$ 2,992,000,000 
$ 1,890,000,000 
 
Goodwill and Intangible Assets - Change in Carrying Amount (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Goodwill [Roll Forward]
 
 
Goodwill beginning
$ 18,122 
$ 18,026 
Goodwill acquired
90 
95 
Effect of currency translation adjustment
Goodwill ending
$ 18,221 
$ 18,122 
Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Amortization expense
$ 692 
$ 751 
$ 730 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
3 years 7 months 6 days 
 
 
Gross Carrying Amount
4,604 
4,563 
 
Accumulated Amortization
(2,720)
(2,028)
 
Net Carrying Amount
1,884 
2,535 
 
Acquired users
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
3 years 9 months 18 days 
 
 
Gross Carrying Amount
2,056 
2,056 
 
Accumulated Amortization
(971)
(678)
 
Net Carrying Amount
1,085 
1,378 
 
Acquired technology
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
1 year 9 months 18 days 
 
 
Gross Carrying Amount
972 
931 
 
Accumulated Amortization
(711)
(518)
 
Net Carrying Amount
261 
413 
 
Acquired patents
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
5 years 8 months 12 days 
 
 
Gross Carrying Amount
785 
785 
 
Accumulated Amortization
(499)
(420)
 
Net Carrying Amount
286 
365 
 
Trade names
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
2 years 2 months 12 days 
 
 
Gross Carrying Amount
629 
629 
 
Accumulated Amortization
(406)
(293)
 
Net Carrying Amount
223 
336 
 
Other
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
2 years 8 months 12 days 
 
 
Gross Carrying Amount
162 
162 
 
Accumulated Amortization
(133)
(119)
 
Net Carrying Amount
$ 29 
$ 43 
 
Goodwill and Intangible Assets - Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
2018
$ 633 
 
2019
540 
 
2020
365 
 
2021
265 
 
2022
29 
 
Thereafter
52 
 
Net Carrying Amount
$ 1,884 
$ 2,535 
Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Accrued Liabilities and Other Current Liabilities [Abstract]
 
 
Accrued compensation and benefits
$ 776 
$ 636 
Accrued property and equipment
685 
331 
Accrued taxes payable
230 
155 
Contingent consideration liability
242 
Other current liabilities
1,201 
839 
Accrued expenses and other current liabilities
2,892 
2,203 
Other Liabilities [Abstract]
 
 
Income tax payable
5,372 
2,431 
Other liabilities
1,045 
461 
Other liabilities
$ 6,417 
$ 2,892 
Long-term Debt - Borrowings (Details) (Revolving Credit Facility, 2016 Facility, USD $)
Dec. 31, 2017
May 31, 2016
Revolving Credit Facility |
2016 Facility
 
 
Debt Instrument
 
 
Line of credit facility, maximum borrowing capacity
 
$ 2,000,000,000.0 
Line of credit facility, amount outstanding
$ 0 
 
Commitments and Contingencies (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Operating Leases
 
 
 
2018
$ 409,000,000 
 
 
2019
464,000,000 
 
 
2020
470,000,000 
 
 
2021
448,000,000 
 
 
2022
430,000,000 
 
 
Thereafter
2,423,000,000 
 
 
Total minimum lease payments
4,644,000,000 
 
 
Financing obligation, building in progress - leased facilities(1)
 
 
 
2018
 
 
2019
2,000,000 
 
 
2020
14,000,000 
 
 
2021
15,000,000 
 
 
2022
15,000,000 
 
 
Thereafter
149,000,000 
 
 
Total minimum lease payments
195,000,000 
 
 
Financing obligation, building in progress - leased facility
72,000,000 
 
 
Operating lease expense
363,000,000 
269,000,000 
196,000,000 
Other contractual commitments
 
 
 
Non-cancelable contractual commitment
$ 2,950,000,000 
 
 
Contractual obligation, period
5 years 
 
 
Minimum
 
 
 
Leases [Abstract]
 
 
 
Lease expiration year
2018 
 
 
Maximum
 
 
 
Leases [Abstract]
 
 
 
Lease expiration year
2038 
 
 
Stockholders' Equity - Common Stock (Details) (USD $)
1 Months Ended
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Class of Stock
 
 
 
Common stock, par value (in dollars per share)
 
$ 0.000006 
$ 0.000006 
Proposed stock dividend, abandoned (in shares)
 
 
Class A Common Stock
 
 
 
Class of Stock
 
 
 
Common stock, shares authorized (in shares)
 
5,000,000,000 
5,000,000,000 
Common stock, par value (in dollars per share)
 
$ 0.000006 
 
Common stock, number of votes by class
 
 
Common stock, shares, issued (in shares)
 
2,397,000,000 
2,354,000,000 
Common stock, shares, outstanding (in shares)
 
2,397,000,000 
2,354,000,000 
Class B Common Stock
 
 
 
Class of Stock
 
 
 
Common stock, shares authorized (in shares)
 
4,141,000,000 
4,141,000,000 
Common stock, par value (in dollars per share)
 
$ 0.000006 
 
Common stock, number of votes by class
 
10 
 
Common stock, shares, issued (in shares)
 
509,000,000 
538,000,000 
Common stock, shares, outstanding (in shares)
 
509,000,000 
538,000,000 
Stockholders' Equity - Share Repurchase Program (Details) (USD $)
Share data in Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Nov. 30, 2016
Equity [Abstract]
 
 
Share repurchase program, authorized amount
 
$ 6,000,000,000 
Shares repurchased (in shares)
13 
 
Shares repurchased
$ 2,070,000,000 
 
Stockholders' Equity - Share-based Compensation Plans (Detail)
12 Months Ended 0 Months Ended
Dec. 31, 2017
plans
Dec. 31, 2017
2012 Plan
Jan. 1, 2018
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
Share-based employee compensation plans, number
 
 
2012 equity incentive plan shares authorized (in shares)
 
25,000,000 
 
Shares reserved for issuance increase percentage
 
2.50% 
 
Additional shares authorized (in shares)
 
 
42,000,000 
Stockholders' Equity - Stock Option Award Activity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Number of Shares
 
 
 
Ending balance (in shares)
3,078,000 
 
 
Aggregate Intrinsic Value
 
 
 
Aggregate intrinsic value of the options exercised
$ 359 
$ 309 
$ 403 
Employee Stock Option
 
 
 
Number of Shares
 
 
 
Beginning balance (in shares)
5,687,000 
 
 
Stock options exercised (in shares)
(2,609,000)
 
 
Ending balance (in shares)
3,078,000 
 
 
Stock options exercisable as of period end (in shares)
2,765,000 
 
 
Weighted Average Exercise Price
 
 
 
Beginning Balance (in dollars per share)
$ 7.78 
 
 
Stock options exercised (in dollars per share)
$ 5.10 
 
 
Ending Balance (in dollars per share)
$ 10.06 
 
 
Stock options exercisable as of period end (in dollars per share)
$ 9.50 
 
 
Weighted Average Remaining Contractual Term
 
 
 
Balance at period end
2 years 4 months 24 days 
 
 
Stock options exercisable as of period end
2 years 3 months 18 days 
 
 
Aggregate Intrinsic Value
 
 
 
Balance at period end
512 
 
 
Stock options exercisable as of period end
$ 462 
 
 
Options granted in period (in shares)
 
 
Options forfeited or canceled in period (in shares)
 
 
Class A Common Stock
 
 
 
Aggregate Intrinsic Value
 
 
 
Share price (in dollars per share)
$ 176 
 
 
Stockholders' Equity - Stock Options Additional Disclosures (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Options Outstanding, Number of Shares (in shares)
3,078 
Options Outstanding, Weighted Average Remaining Contractual Term
2 years 4 months 24 days 
Options Outstanding, Weighted Average Exercise Price (in dollars per share)
$ 10.06 
Options Exercisable, Number of Shares (in shares)
2,765 
Options Exercisable, Weighted Average Exercise Price (in dollars per share)
$ 9.50 
$1.85
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Options Outstanding, Number of Shares (in shares)
27 
Options Outstanding, Weighted Average Remaining Contractual Term
1 year 
Options Outstanding, Weighted Average Exercise Price (in dollars per share)
$ 1.85 
Options Exercisable, Number of Shares (in shares)
27 
Options Exercisable, Weighted Average Exercise Price (in dollars per share)
$ 1.85 
$2.95
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Options Outstanding, Number of Shares (in shares)
851 
Options Outstanding, Weighted Average Remaining Contractual Term
1 year 7 months 6 days 
Options Outstanding, Weighted Average Exercise Price (in dollars per share)
$ 2.95 
Options Exercisable, Number of Shares (in shares)
851 
Options Exercisable, Weighted Average Exercise Price (in dollars per share)
$ 2.95 
$10.39
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Options Outstanding, Number of Shares (in shares)
1,000 
Options Outstanding, Weighted Average Remaining Contractual Term
2 years 7 months 6 days 
Options Outstanding, Weighted Average Exercise Price (in dollars per share)
$ 10.39 
Options Exercisable, Number of Shares (in shares)
1,000 
Options Exercisable, Weighted Average Exercise Price (in dollars per share)
$ 10.39 
$15.00
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Options Outstanding, Number of Shares (in shares)
1,200 
Options Outstanding, Weighted Average Remaining Contractual Term
2 years 9 months 18 days 
Options Outstanding, Weighted Average Exercise Price (in dollars per share)
$ 15.00 
Options Exercisable, Number of Shares (in shares)
887 
Options Exercisable, Weighted Average Exercise Price (in dollars per share)
$ 15.00 
Stockholders' Equity - RSU Award Activity (Details) (Restricted Stock Units (RSUs), USD $)
In Billions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Restricted Stock Units (RSUs)
 
 
 
Number of Shares
 
 
 
Unvested at beginning of period (in shares)
98,586 
 
 
Granted (in shares)
36,741 
 
 
Vested (in shares)
(43,176)
 
 
Forfeited (in shares)
(10,937)
 
 
Unvested at end of period (in shares)
81,214 
98,586 
 
Weighted Average Grant Date Fair Value
 
 
 
Unvested at beginning of period (in dollars per share)
$ 82.99 
 
 
Granted (in dollars per share)
$ 147.28 
 
 
Vested (in dollars per share)
$ 83.74 
 
 
Forfeited (in dollars per share)
$ 91.76 
 
 
Unvested at end of period (in dollars per share)
$ 110.49 
$ 82.99 
 
Fair value of vested RSUs
$ 6.76 
$ 4.92 
$ 4.23 
Stockholders' Equity - Additional Award Disclosures (Details) (USD $)
In Billions, except Share data in Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
$ 7.72 
Unvested shares included in unrecognized share-based compensation expense (in shares)
9.5 
Future period share-based compensation expense period of recognition (in years)
3 years 
Interest and other income/(expense), net (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Nonoperating Income (Expense) [Abstract]
 
 
 
Interest income
$ 398 
$ 176 
$ 52 
Interest expense
(6)
(10)
(23)
Foreign currency exchange losses, net
(6)
(76)
(66)
Other
Interest and other income (expense), net
$ 391 
$ 91 
$ (31)
Income Taxes - Schedule for Income Before Income Tax (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
Domestic
$ 7,079 
$ 6,368 
$ 2,802 
Foreign
13,515 
6,150 
3,392 
Income before provision for income taxes
$ 20,594 
$ 12,518 
$ 6,194 
Income Taxes - Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Current:
 
 
 
Federal
$ 4,455 
$ 2,384 
$ 3,012 
State
190 
179 
183 
Foreign
389 
195 
123 
Total current tax expense
5,034 
2,758 
3,318 
Deferred:
 
 
 
Federal
(296)
(414)
(800)
State
(33)
(18)
(17)
Foreign
(45)
(25)
Total deferred tax benefit
(374)
(457)
(812)
Provision for income taxes
$ 4,660 
$ 2,301 
$ 2,506 
Income Taxes - Effective Income Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
 
 
 
U.S. federal statutory income tax rate
35.00% 
35.00% 
35.00% 
State income taxes, net of federal benefit
0.60% 
1.00% 
2.00% 
Research tax credits
(0.90%)
(0.70%)
(1.40%)
Share-based compensation
0.40% 
1.00% 
2.20% 
Excess tax benefits related to share-based compensation
(5.80%)
(7.00%)
0.00% 
Effect of non-U.S. operations
(18.60%)
(12.80%)
(0.90%)
Effect of U.S. tax law change
11.00% 
0.00% 
0.00% 
Other
0.90% 
1.90% 
3.50% 
Effective tax rate
22.60% 
18.40% 
40.40% 
Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Deferred tax assets:
 
 
Net operating loss carryforward
$ 1,300 
$ 1,252 
Tax credit carryforward
509 
268 
Share-based compensation
385 
684 
Accrued expenses and other liabilities
381 
339 
Other
131 
149 
Total deferred tax assets
2,706 
2,692 
Less: valuation allowance
(438)
(240)
Deferred tax assets, net of valuation allowance
2,268 
2,452 
Deferred tax liabilities:
 
 
Depreciation and amortization
(622)
(535)
Purchased intangible assets
(309)
(706)
Deferred taxes on foreign income
(88)
(357)
Total deferred tax liabilities
(1,019)
(1,598)
Net deferred tax assets
$ 1,249 
$ 854 
Income Taxes - Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Reconciliation of Unrecognized Tax Benefits
 
 
 
Gross unrecognized tax benefits-beginning of period
$ 3,309 
$ 3,017 
$ 1,682 
Increases related to prior year tax positions
72 
32 
322 
Decreases related to prior year tax positions
(34)
(36)
(52)
Increases related to current year tax positions
536 
307 
1,066 
Decreases related to settlements of prior year tax positions
(13)
(11)
(1)
Gross unrecognized tax benefits-end of period
$ 3,870 
$ 3,309 
$ 3,017 
Income Taxes - Narrative (Detail) (USD $)
12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Jul. 31, 2016
Minimum
Jul. 31, 2016
Maximum
Dec. 31, 2017
Internal Revenue Service (IRS)
Dec. 31, 2017
State and Local Jurisdiction
Income Tax Disclosure
 
 
 
 
 
 
 
 
U.S. federal statutory income tax rate
35.00% 
35.00% 
35.00% 
 
 
 
 
 
Provisional current income tax expense
$ 2,530,000,000 
 
 
 
 
 
 
 
Provisional effects of Tax Act, deferred income tax benefit
257,000,000 
 
 
 
 
 
 
 
Valuation allowance, deferred tax assets
438,000,000 
240,000,000 
 
 
 
 
 
 
Operating loss carryforwards
 
 
 
 
 
 
5,360,000,000 
2,500,000,000 
Operating loss carryforwards expiration year
 
 
 
 
 
 
2033 
2032 
Tax credit carryforward
 
 
 
 
 
 
142,000,000 
1,380,000,000 
Tax credit carryforward expiration year
 
 
 
 
 
 
2033 
2032 
Cumulative stock ownership change threshold
50.00% 
 
 
 
 
 
 
 
Change in ownership percentage over period
3 years 
 
 
 
 
 
 
 
Foreign income before provision for income taxes
13,515,000,000 
6,150,000,000 
3,392,000,000 
 
 
 
 
 
Estimated tax liability upon repatriation of earnings from foreign jurisdictions
88,000,000 
357,000,000 
 
 
 
 
 
 
Unrecognized tax benefits, interest and penalties accrued
154,000,000 
80,000,000 
 
 
 
 
 
 
Unrecognized tax benefits
3,870,000,000 
3,309,000,000 
3,017,000,000 
1,682,000,000 
 
 
 
 
Unrecognized tax benefits that would impact effective tax rate
2,670,000,000 
 
 
 
 
 
 
 
Income tax examination, estimate of possible additional tax liability
 
 
 
 
$ 3,000,000,000 
$ 5,000,000,000 
 
 
Geographical Information - Revenue (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Revenue by Geographical Area
 
 
 
Revenue
$ 40,653 
$ 27,638 
$ 17,928 
United States
 
 
 
Revenue by Geographical Area
 
 
 
Revenue
17,734 
12,579 
8,513 
Rest of the world
 
 
 
Revenue by Geographical Area
 
 
 
Revenue
$ 22,919 
$ 15,059 
$ 9,415 
Geographical Information - Property and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
$ 13,721 
$ 8,591 
United States
 
 
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
10,406 
6,793 
Rest of the world
 
 
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
$ 3,315 
$ 1,798