FACEBOOK INC, 10-K filed on 1/28/2016
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Jun. 30, 2015
Jan. 25, 2016
Class A Common Stock
Jan. 25, 2016
Class B Common Stock
Document Information
 
 
 
 
Document Type
10-K 
 
 
 
Amendment Flag
false 
 
 
 
Document Period End Date
Dec. 31, 2015 
 
 
 
Document Fiscal Year Focus
2015 
 
 
 
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
 
 
2,294,939,865 
551,340,611 
Entity Public Float
 
$ 198 
 
 
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, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 4,907 
$ 4,315 
Marketable securities
13,527 
6,884 
Accounts receivable, net of allowances for doubtful accounts of $68 and $39 as of December 31, 2015 and December 31, 2014, respectively
2,559 
1,678 
Prepaid expenses and other current assets
659 
513 
Total current assets
21,652 
13,390 
Property and equipment, net
5,687 
3,967 
Intangible assets, net
3,246 
3,929 
Goodwill
18,026 
17,981 
Other assets
796 
699 
Total assets
49,407 
39,966 
Current liabilities:
 
 
Accounts payable
196 
176 
Partners payable
217 
202 
Accrued expenses and other current liabilities
1,449 
866 
Deferred revenue and deposits
56 
66 
Current portion of capital lease obligations
114 
Total current liabilities
1,925 
1,424 
Capital lease obligations, less current portion
107 
119 
Other liabilities
3,157 
2,327 
Total liabilities
5,189 
3,870 
Commitments and contingencies
   
   
Stockholders' equity:
 
 
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,293 million and 2,234 million shares issued and outstanding, including 8 million and 13 million outstanding shares subject to repurchase, as of December 31, 2015 and December 31, 2014, respectively; 4,141 million Class B shares authorized, 552 million and 563 million shares issued and outstanding, including 3 million and 6 million outstanding shares subject to repurchase, as of December 31, 2015 and December 31, 2014, respective
Additional paid-in capital
34,886 
30,225 
Accumulated other comprehensive loss
(455)
(228)
Retained earnings
9,787 
6,099 
Total stockholders' equity
44,218 
36,096 
Total liabilities and stockholders' equity
$ 49,407 
$ 39,966 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Accounts receivable, allowances for doubtful accounts
$ 68 
$ 39 
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
5,000,000,000 
5,000,000,000 
Common stock, shares, issued
2,293,000,000 
2,234,000,000 
Common stock, shares, outstanding
2,293,000,000 
2,234,000,000 
Common stock, outstanding shares subject to repurchase
8,000,000 
13,000,000 
Class B Common Stock
 
 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
 
Common stock, shares authorized
4,141,000,000 
4,141,000,000 
Common stock, shares, issued
552,000,000 
563,000,000 
Common stock, shares, outstanding
552,000,000 
563,000,000 
Common stock, outstanding shares subject to repurchase
3,000,000 
6,000,000 
CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Revenue
$ 17,928 
$ 12,466 
$ 7,872 
Costs and expenses:
 
 
 
Cost of revenue
2,867 
2,153 
1,875 
Research and development
4,816 
2,666 
1,415 
Marketing and sales
2,725 
1,680 
997 
General and administrative
1,295 
973 
781 
Total costs and expenses
11,703 
7,472 
5,068 
Income from operations
6,225 
4,994 
2,804 
Interest and other income/(expense), net
(31)
(84)
(50)
Income before provision for income taxes
6,194 
4,910 
2,754 
Provision for income taxes
2,506 
1,970 
1,254 
Net income
3,688 
2,940 
1,500 
Less: Net income attributable to participating securities
19 
15 
Net income attributable to Class A and Class B common stockholders
3,669 
2,925 
1,491 
Earnings per share attributable to Class A and Class B common stockholders:
 
 
 
Basic (in dollars per share)
$ 1.31 
$ 1.12 
$ 0.62 
Diluted (in dollars per share)
$ 1.29 
$ 1.10 
$ 0.60 
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
 
 
 
Basic (in shares)
2,803 
2,614 
2,420 
Diluted (in shares)
2,853 
2,664 
2,517 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
2,969 
1,837 
906 
Cost of revenue
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
81 
62 
42 
Research and development
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
2,350 
1,328 
604 
Marketing and sales
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
320 
249 
133 
General and administrative
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
Share-based compensation expense
$ 218 
$ 198 
$ 127 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 3,688 
$ 2,940 
$ 1,500 
Other comprehensive income (loss):
 
 
 
Change in foreign currency translation adjustment, net of tax
(202)
(239)
11 
Change in unrealized gain/loss on available-for-sale investments and other, net of tax
(25)
(3)
Comprehensive income
$ 3,461 
$ 2,698 
$ 1,512 
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) Income
Retained Earnings
Total Stockholders' Equity
Total Stockholders' Equity, beginning at Dec. 31, 2012
 
 
$ 10,094 
$ 2 
$ 1,659 
$ 11,755 
Common stock, value, outstanding beginning at Dec. 31, 2012
 
 
 
 
 
Common stock, shares outstanding beginning at Dec. 31, 2012
 
2,372,000,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Issuance of common stock, shares
 
27,000,000 
 
 
 
 
Issuance of common stock, net of issuance costs, value
 
1,478 
 
 
1,478 
Issuance of common stock for cash upon exercise of stock options, shares
 
101,000,000 
 
 
 
 
Issuance of common stock for cash upon exercise of stock options, value
 
26 
 
 
26 
Issuance of common stock related to nonemployees for past services, shares
 
 
 
 
 
Issuance of common stock related to nonemployees for past services, value
 
 
 
Issuance of common stock related to acquisitions, shares
 
9,000,000 
 
 
 
 
Issuance of common stock related to acquisitions, value
 
77 
 
 
77 
Issuance of common stock for settlement of restricted stock units (RSUs)
 
65,000,000 
 
 
 
Shares withheld related to net share settlement, shares
 
(27,000,000)
 
 
 
 
Shares withheld related to net share settlement, value
 
 
(889)
 
 
(889)
Share-based compensation, related to employee share-based awards
 
 
906 
 
 
906 
Tax benefit from share-based award activity
 
 
602 
 
 
602 
Other comprehensive income
 
 
 
12 
 
12 
Net income
1,500 
 
 
 
1,500 
1,500 
Total Stockholders' Equity, ending at Dec. 31, 2013
 
 
12,297 
14 
3,159 
15,470 
Common stock, value, outstanding ending at Dec. 31, 2013
 
 
 
 
 
Common stock, shares outstanding ending at Dec. 31, 2013
 
2,547,000,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Issuance of common stock for cash upon exercise of stock options, shares
 
9,000,000 
 
 
 
 
Issuance of common stock for cash upon exercise of stock options, value
 
18 
 
 
18 
Issuance of common stock related to acquisitions, shares
 
201,000,000 
 
 
 
 
Issuance of common stock related to acquisitions, value
 
14,344 
 
 
14,344 
Issuance of common stock for settlement of restricted stock units (RSUs)
 
41,000,000 
 
 
 
Shares withheld related to net share settlement, shares
 
(1,000,000)
 
 
 
 
Shares withheld related to net share settlement, value
 
 
(73)
 
 
(73)
Share-based compensation, related to employee share-based awards
 
 
1,786 
 
 
1,786 
Tax benefit from share-based award activity
 
 
1,853 
 
 
1,853 
Other comprehensive income
 
 
 
(242)
 
(242)
Net income
2,940 
 
 
 
2,940 
2,940 
Total Stockholders' Equity, ending at Dec. 31, 2014
36,096 
 
30,225 
(228)
6,099 
36,096 
Common stock, value, outstanding ending at Dec. 31, 2014
 
 
 
 
 
Common stock, shares outstanding ending at Dec. 31, 2014
 
2,797,000,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
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 restricted stock units (RSUs)
 
44,000,000 
 
 
 
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
 
 
 
(227)
 
(227)
Net income
3,688 
 
 
 
3,688 
3,688 
Total Stockholders' Equity, ending at Dec. 31, 2015
44,218 
 
34,886 
(455)
9,787 
44,218 
Common stock, value, outstanding ending at Dec. 31, 2015
 
$ 0 
 
 
 
 
Common stock, shares outstanding ending at Dec. 31, 2015
 
2,845,000,000 
 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash flows from operating activities
 
 
 
Net income
$ 3,688 
$ 2,940 
$ 1,500 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
1,945 
1,243 
1,011 
Lease abandonment
(31)
117 
Share-based compensation
2,960 
1,786 
906 
Deferred income taxes
(795)
(210)
(37)
Tax benefit from share-based award activity
1,721 
1,853 
602 
Excess tax benefit from share-based award activity
(1,721)
(1,869)
(609)
Other
17 
56 
Changes in assets and liabilities:
 
 
 
Accounts receivable
(973)
(610)
(378)
Prepaid expenses and other current assets
(144)
(123)
355 
Other assets
(3)
(216)
(142)
Accounts payable
18 
31 
26 
Partners payable
17 
(28)
12 
Accrued expenses and other current liabilities
513 
328 
(38)
Deferred revenue and deposits
(9)
10 
Other liabilities
1,365 
346 
833 
Net cash provided by operating activities
8,599 
5,457 
4,222 
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(2,523)
(1,831)
(1,362)
Purchases of marketable securities
(15,938)
(9,104)
(7,433)
Sales of marketable securities
6,928 
8,438 
2,988 
Maturities of marketable securities
2,310 
1,909 
3,563 
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
(313)
(4,975)
(368)
Change in restricted cash and deposits
102 
(348)
(11)
Other investing activities, net
(2)
(1)
Net cash used in investing activities
(9,434)
(5,913)
(2,624)
Cash flows from financing activities
 
 
 
Net proceeds from issuance of common stock
1,478 
Taxes paid related to net share settlement
(20)
(73)
(889)
Proceeds from exercise of stock options
18 
26 
Repayment of long-term debt
(1,500)
Principal payments on capital lease obligations
(119)
(243)
(391)
Excess tax benefit from share-based award activity
1,721 
1,869 
609 
Net cash provided by (used in) financing activities
1,582 
1,571 
(667)
Effect of exchange rate changes on cash and cash equivalents
(155)
(123)
Net increase in cash and cash equivalents
592 
992 
939 
Cash and cash equivalents at beginning of period
4,315 
3,323 
2,384 
Cash and cash equivalents at end of period
4,907 
4,315 
3,323 
Cash paid during the period for:
 
 
 
Interest
10 
14 
38 
Income taxes
273 
184 
82 
Cash received during the period for:
 
 
 
Income taxes
421 
Non-cash investing and financing activities:
 
 
 
Fair value of shares issued related to acquisitions of businesses
14,344 
77 
Promissory note payable issued in connection with an acquisition
198 
Net change in accounts payable and accrued expenses and other current liabilities
 
 
 
Non-cash investing and financing activities:
 
 
 
Property and equipment incurred but not yet paid
88 
91 
53 
Property and equipment acquired under capital leases
 
 
 
Non-cash investing and financing activities:
 
 
 
Property and equipment incurred but not yet paid
$ 0 
$ 0 
$ 11 
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 share and make the world more open and connected. 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, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, 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, 2015, 2014, and 2013 consists of the following (in millions):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Advertising
$
17,079

 
$
11,492

 
$
6,986

Payments and other fees
849

 
974

 
886

Total revenue
$
17,928

 
$
12,466

 
$
7,872

 
Advertising
Advertising revenue is generated by displaying ad products on the Facebook properties, including our mobile applications, 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 clicks made by our users, the number of actions taken by our users, or the number of impressions delivered. The typical term of an advertising arrangement is less than one month with billing generally occurring after the delivery of the advertisement.
We recognize revenue from the delivery of click-based ads in the period in which a user clicks on the content, and action-based ads in the period in which a user takes the action the marketer contracted for. 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.
Payments and Other Fees
We enable Payments from people to purchase virtual and digital goods from our developers. People can transact and make payments on the Facebook website by using debit cards and credit cards, PayPal, mobile phone payments, gift cards, or other methods.
When a person engages in a payment transaction for the purchase of a virtual or digital good from a developer, we remit to the developer an amount that is based on the total amount of the transaction less the processing fee that we charge the developer. The price of the purchase is an amount that is solely determined by the developer. Our revenue is the net amount of the transaction, representing our processing fee for the service performed. We record revenue on a net basis as we do not consider ourselves to be the principal in the sale of the virtual or digital good to the person. Additionally, we record all Payments revenue at the time of the purchase of the related virtual goods, net of estimated refunds or chargebacks.
Other fees, which includes our ad serving and measurement products and the delivery of virtual reality platform devices, were not material in all periods presented in our financial statements.
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, energy and bandwidth costs, and salaries, benefits, and share-based compensation for employees on our operations teams. Cost of revenue also includes credit card and other transaction fees related to processing customer transactions, amortization of intangible assets, costs associated with data partner arrangements, and cost of virtual reality platform device inventory sold.
Share-based Compensation
We account for share-based employee compensation plans under the fair value recognition and measurement provisions of GAAP. Those provisions require all share-based payments to employees, including grants of stock options and restricted stock units (RSUs), to be measured based on the grant date fair value of the awards, with the resulting expense generally recognized on a straight-line basis in our consolidated statements of income over the period during which the employee is required to perform service in exchange for the award. The majority of our awards are earned over a service period of four years.
Share-based compensation expense is recorded net of estimated forfeitures in our consolidated statements of income and as such, only those share-based awards that we expect to vest are recorded. We estimate the forfeiture rate based on historical forfeitures of equity awards and adjust the rate to reflect changes in facts and circumstances, if any. We will revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates.
We have historically issued unvested restricted shares to employee stockholders of certain acquired companies. As these awards are generally subject to continued post-acquisition employment, we have accounted for them as post-acquisition share-based compensation expense. We recognize compensation expense equal to the grant date fair value of the common stock on a straight-line basis over the period during which the employee is required to perform service in exchange for the award.
During the years ended December 31, 2015, 2014, and 2013, we realized tax benefits from share-based award activity of $1.72 billion, $1.85 billion, and $602 million, respectively. These amounts reflect the extent that the total reduction to our income tax liability from share-based award activity was greater than the amount of the deferred tax assets that we had previously recorded in anticipation of these benefits. These amounts are the aggregate of the individual transactions in which the reduction to our income tax liability was greater than the deferred tax assets that we recorded, reduced by any individual transactions in which the reduction to our income tax liability was less than the deferred tax assets that were recorded. These net amounts were recorded as an adjustment to stockholders' equity in each period, as an increase to cash flows from operating activities, and were not recognized in our consolidated statements of income.
In addition, we reported excess tax benefits that decreased our cash flows from operating activities and increased our cash flows from financing activities for the years ended December 31, 2015, 2014, and 2013, by $1.72 billion, $1.87 billion, and $609 million, respectively. The amounts of these excess tax benefits reflect the total of the individual transactions in which the reduction to our income tax liability was greater than the deferred tax assets that were recorded, but were not reduced by any of the individual transactions in which the reduction to our income tax liability was less than the deferred tax assets that were recorded.
Income Taxes
We recognize income taxes under the asset and liability 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. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
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. 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. The provision for income taxes includes the effects of any reserves that are considered appropriate, as well as the related net interest and penalties.
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 $281 million, $135 million, and $117 million for the years ended December 31, 2015, 2014, and 2013, 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 was based on the present value of probability-weighted future cash flows related to the contingent earn-out criteria and the fair value of our common stock on each reporting date.
Accounts Receivable and Allowance for Doubtful Accounts
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 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 customers' ability to pay.
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, in the case of a capital lease, whichever is shorter.
The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to five years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Three 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 lease office space, data centers, and equipment under non-cancelable capital and operating leases with various expiration dates through 2032. 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 various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. 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. Significant judgment is required to determine both probability and the estimated amount. We review these provisions at least quarterly and adjust these provisions accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.
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 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. We evaluate indefinite-lived intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As of December 31, 2015, no impairment of goodwill or indefinite-lived intangible assets has been identified.
Acquired indefinite-lived intangible assets related to our in-process research and development (IPR&D) are capitalized and subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, we will make a separate determination of useful life of the acquired indefinite-lived intangible assets and the related amortization will be recorded as an expense over the estimated useful life of the specific projects.
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 would be amortized or depreciated over the revised estimated useful life.
Deferred Revenue and Deposits
Deferred revenue consists of billings 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,
 
2015
 
2014
Deferred revenue
$
28

 
$
38

Deposits
28

 
28

Total deferred revenue and deposits
$
56

 
$
66

 
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, 2015 and 2014, we had a cumulative translation loss, net of tax of $430 million and $227 million, respectively. Net losses resulting from foreign exchange transactions were $66 million, $87 million, and $14 million for the years ended December 31, 2015, 2014, and 2013, 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. Cash equivalents consist 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 47%, 45%, and 46% of our revenue for the years ended December 31, 2015, 2014, and 2013, 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, Brazil, Canada, and Australia.
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, 2015, 2014, and 2013, our bad debt expenses were $44 million, $19 million, and $21 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, 2015, 2014, and 2013.
 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 unit structure.
Recently Issued and Adopted Accounting Pronouncement
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. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The updated standard is effective for us beginning on January 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. We early adopted this standard retrospectively, and reclassified $280 million of our current deferred tax assets to noncurrent deferred tax assets as of December 31, 2014. This resulted in net adjustments of $62 million increase and $218 million decrease to our noncurrent deferred tax assets and noncurrent deferred tax liability, respectively, on our December 31, 2014 consolidated balance sheet.
Acquisitions
Acquisitions
Acquisitions
During the year ended December 31, 2015, we completed several business acquisitions for total consideration of $488 million, primarily related to a business combination involving land and buildings adjacent to our headquarters in Menlo Park. Included in this amount is a $198 million promissory note payable issued in connection with this particular acquisition. This promissory note payable is classified under accrued expenses and other current liabilities in our consolidated balance sheets. These acquisitions 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, 2015 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.
The following table summarizes the allocation of the total consideration transferred during the year ended December 31, 2015, including the related estimated useful lives, where applicable:
 
(in millions)
 
Useful lives (in years)
Finite-lived intangible assets:
 
 
 
Acquired technology
$
30

 
3
Other
5

 
3
Land acquired
379

 
 
Other net tangible assets acquired
12

 
 
Deferred tax assets, net
17

 
 
Net assets acquired
$
443

 
 
Goodwill
45

 
 
Total fair value consideration
$
488

 
 

Goodwill generated from all business acquisitions completed during the year ended December 31, 2015 is primarily attributable to expected synergies from future growth and potential monetization opportunities. The amount of goodwill generated during this period that is deductible for tax purposes is not material.
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, including awards under our equity compensation plans and inducement awards under separate non-plan 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.
Basic and dilutive securities in our basic and diluted EPS calculation for the year ended December 31, 2015 and 2014 do not include contingent earn-out shares. Issuance of these earn-out shares is dependent upon the completion of certain milestones. These milestones have not been met as of December 31, 2015 and accordingly, these shares have been excluded from the effect of basic and dilutive securities.
The RSUs excluded from the EPS calculation because the impact would be anti-dilutive, were not material for the years ended December 31, 2015, 2014, and 2013, 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,
 
2015
 
2014
 
2013
 
Class
A
 
Class
B
 
Class
A
 
Class
B
 
Class
A
 
Class
B 
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income
$
2,959

 
$
729

 
$
2,308

 
$
632

 
$
1,114

 
$
386

Less: Net income attributable to participating securities
15

 
4

 
12

 
3

 
7

 
2

Net income attributable to common stockholders
$
2,944

 
$
725

 
$
2,296

 
$
629

 
$
1,107

 
$
384

Denominator
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,259

 
559

 
2,059

 
568

 
1,803

 
631

Less: Shares subject to repurchase
10

 
5

 
6

 
7

 
5

 
9

Number of shares used for basic EPS computation
2,249

 
554

 
2,053

 
561

 
1,798

 
622

Basic EPS
$
1.31

 
$
1.31

 
$
1.12

 
$
1.12

 
$
0.62

 
$
0.62

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
2,944

 
$
725

 
$
2,296

 
$
629

 
$
1,107

 
$
384

Reallocation of net income attributable to participating securities
19

 

 
15

 

 
9

 

Reallocation of net income as a result of conversion of Class B to Class A common stock
725

 

 
629

 

 
384

 

Reallocation of net income to Class B common stock

 
15

 

 
23

 

 
39

Net income attributable to common stockholders for diluted EPS
$
3,688

 
$
740

 
$
2,940

 
$
652

 
$
1,500

 
$
423

Denominator
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,249

 
554

 
2,053

 
561

 
1,798

 
622

Conversion of Class B to Class A common stock
554

 

 
561

 

 
622

 

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
8

 
8

 
13

 
13

 
65

 
65

RSUs
37

 
9

 
30

 
13

 
25

 
15

Shares subject to repurchase
5

 
2

 
7

 
4

 
7

 
7

Number of shares used for diluted EPS computation
2,853

 
573

 
2,664

 
591

 
2,517

 
709

Diluted EPS
$
1.29

 
$
1.29

 
$
1.10

 
$
1.10

 
$
0.60

 
$
0.60

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,
 
2015
 
2014
Cash and cash equivalents:
 
 
 
Cash
$
1,703

 
$
2,162

Money market funds
2,409

 
2,153

U.S. government securities
597

 

U.S. government agency securities
145

 

Corporate debt securities
53

 

Total cash and cash equivalents
4,907

 
4,315

Marketable securities:
 
 
 
U.S. government securities
5,948

 
2,830

U.S. government agency securities
4,475

 
2,710

Corporate debt securities
3,104

 
1,344

Total marketable securities
13,527

 
6,884

Total cash and cash equivalents, and marketable securities
$
18,434

 
$
11,199


The gross unrealized gains or losses on our marketable securities as of December 31, 2015 and 2014 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, 2015. There was no such loss as of December 31, 2014. As of December 31, 2015, 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,
 
2015
 
2014
Due in one year
$
5,029

 
$
3,422

Due in one to two years
8,498

 
3,462

Total
$
13,527

 
$
6,884

Fair Value Measurement
Fair Value Measurements
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,
2015
 
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
 
$
2,409

 
$
2,409

 
$

 
$

U.S. government securities
 
597

 
597

 

 

U.S. government agency securities
 
145

 
145

 

 

Corporate debt securities
 
53

 

 
53

 

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
5,948

 
5,948

 

 

U.S. government agency securities
 
4,475

 
4,475

 

 

Corporate debt securities
 
3,104

 

 
3,104

 

Total cash equivalents and marketable securities
 
$
16,731

 
$
13,574

 
$
3,157

 
$

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
260

 
$

 
$

 
$
260

 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
December 31,
2014
 
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
 
$
2,153

 
$
2,153

 
$

 
$

Marketable securities:
 

 
 
 
 
 
 
U.S. government securities
 
2,830

 
2,830

 

 

U.S. government agency securities
 
2,710

 
2,710

 

 

Corporate debt securities
 
1,344

 

 
1,344

 

Total cash equivalents and marketable securities
 
$
9,037

 
$
7,693

 
$
1,344

 
$

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
191

 
$

 
$

 
$
191


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.
We classify our contingent consideration liability in connection with an acquisition in 2014 within Level 3 as factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. We estimate the fair value of our contingent consideration liability based on the present value of probability-weighted future cash flows related to the contingent earn-out criteria and the fair value of our common stock on each reporting date. Changes in the fair value of the contingent consideration liability subsequent to the acquisition date, such as changes in the probability assessment and the fair value of our common stock, are recognized in earnings in the period when the change in the estimated fair value occurs. During the year ended December 31, 2015, we recognized an increase in the fair value of our contingent liability of $69 million, in research and development expense in our consolidated statements of income, primarily due to an increase in the fair value of our common stock.
Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consists of the following (in millions):
 
December 31,
 
2015
 
2014
Land
$
596

 
$
153

Buildings
2,273

 
1,420

Leasehold improvements
447

 
304

Network equipment
3,633

 
3,020

Computer software, office equipment and other
248

 
149

Construction in progress
622

 
738

Total
7,819

 
5,784

Less: Accumulated depreciation
(2,132
)
 
(1,817
)
Property and equipment, net
$
5,687

 
$
3,967

 
Depreciation expense on property and equipment was $1.22 billion, $923 million, and $857 million during 2015, 2014, and 2013, respectively.
Property and equipment at December 31, 2015 and 2014 includes $287 million and $700 million, respectively, acquired under capital lease agreements, of which the majority is included in network equipment. Accumulated depreciation of property and equipment acquired under these capital leases was $71 million and $425 million at December 31, 2015 and 2014, respectively.
Construction in progress includes costs primarily related to construction of data centers and office buildings, and network equipment infrastructure to support our data centers around the world. The construction of office buildings includes the leased office space in London, United Kingdom for which we are considered to be the owner for accounting purposes. See Note 10 in these notes to the consolidated financial statements for additional information. No interest was capitalized during the years ended December 31, 2015 and 2014. Interest capitalized during the year ended December 31, 2013 was not material.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows (in millions):
Balance as of December 31, 2013
$
839

Goodwill acquired
17,150

Effect of currency translation adjustment
(8
)
Balance as of December 31, 2014
$
17,981

Goodwill acquired
45

Balance as of December 31, 2015
$
18,026


Intangible assets consist of the following (in millions):
 
 
 
December 31, 2015
 
December 31, 2014
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.7
 
$
2,056

 
$
(382
)
 
$
1,674

 
$
2,056

 
$
(85
)
 
$
1,971

Acquired technology
3.3
 
831

 
(310
)
 
521

 
813

 
(144
)
 
669

Acquired patents
6.5
 
785

 
(333
)
 
452

 
773

 
(239
)
 
534

Trade names
4.1
 
629

 
(163
)
 
466

 
632

 
(46
)
 
586

Other
3.5
 
162

 
(89
)
 
73

 
164

 
(55
)
 
109

Total finite-lived intangible assets
5.2
 
$
4,463

 
$
(1,277
)
 
$
3,186

 
$
4,438

 
$
(569
)
 
$
3,869

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
60

 
$

 
$
60

 
$
60

 
$

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,523

 
$
(1,277
)
 
$
3,246

 
$
4,498

 
$
(569
)
 
$
3,929

 
As of December 31, 2015, technological feasibility has not been established for our IPR&D intangible assets. They have no alternative future use and, as such, continue to be accounted for as indefinite-lived intangible assets.
Amortization expense of intangible assets for the years ended December 31, 2015, 2014, and 2013 was $730 million, $319 million, and $145 million, respectively.
As of December 31, 2015, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
2016
$
701

2017
658

2018
603

2019
520

2020
357

Thereafter
347

Total
$
3,186

Liabilities
Liabilities
Liabilities
The components of accrued expenses and other current liabilities are as follows (in millions):
 
December 31,
 
2015
 
2014
Accrued compensation and benefits
$
473

 
$
322

Accrued property and equipment
192

 
164

Promissory note payable(1)
201

 

Other current liabilities
583

 
380

Accrued expenses and other current liabilities
$
1,449

 
$
866


(1) See Note 2 in these notes to the consolidated financial statements for additional information related to our promissory note payable.
The components of other liabilities are as follows (in millions):
 
December 31,
 
2015
 
2014
Income tax payable
$
2,458

 
$
1,190

Deferred tax liabilities(1)
163

 
769

Contingent consideration liability
267

 
193

Other liabilities
269

 
175

Other liabilities
$
3,157

 
$
2,327


(1)
In November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. We early adopted this standard retrospectively, and as a result of the reclassifications, certain noncurrent deferred tax liabilities were netted with noncurrent deferred tax assets. See Note 1 in these notes to the consolidated financial statements for additional information.
Long-term Debt
Long-term Debt
Long-term Debt
In August 2013, we entered into a five-year senior unsecured revolving credit facility (2013 Revolving Credit Facility) that allows us to borrow up to $6.5 billion to fund working capital and general corporate purposes with interest payable on the borrowed amounts set at LIBOR plus 1.0%, as well as an annual commitment fee of 0.10% on the daily undrawn balance of the facility. We paid origination fees at closing of the 2013 Revolving Credit Facility, which fees are being amortized over the term of the facility. Any amounts outstanding under this facility will be due and payable on August 15, 2018. As of December 31, 2015, no amounts had been drawn down and we were in compliance with the covenants under this facility.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Commitments
Leases
We entered into various capital lease arrangements to obtain property and equipment for our operations. Additionally, on occasion we have purchased property and equipment for which we have subsequently obtained capital financing under sale-leaseback transactions. These agreements are typically for three years, except for a building lease which is for 15 years, with interest rates ranging from 1% to 13%. The leases are secured by the underlying leased buildings, leasehold improvements, and equipment. We have also entered into various non-cancelable operating lease agreements for certain of our offices, equipment, land, and data centers with original lease periods expiring between 2016 and 2032. 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 capital and operating leases as of December 31, 2015 (in millions):
 
Capital
Leases
 
Operating
Leases
 
Financing obligation, building in progress - leased facility(1)
2016
$
16

 
$
209

 
$

2017
15

 
230

 

2018
16

 
216

 

2019
16

 
200

 
13

2020
17

 
159

 
25

Thereafter
94

 
438

 
299

Total minimum lease payments
$
174

 
$
1,452

 
$
337

Less: amount representing interest and taxes
(60
)
 
 
 
 
Less: current portion of the present value of minimum lease payments
(7
)
 
 
 
 
Capital lease obligations, net of current portion
$
107

 
 
 
 

(1)
In 2015, we entered into an agreement to lease an entire office building in London, United Kingdom, that is currently under construction. As a result of our involvement during the construction period, we are considered to be the owner of the construction project for accounting purposes. The above financing obligation, building in progress - leased facility represents the total expected financing and lease obligation associated with this lease and will be settled through monthly lease payments to the landlord when we occupy the office space upon completion. This amount includes $62 million that is included in property and equipment, net and other liabilities on our consolidated balance sheets as of December 31, 2015.
Operating lease expense was $181 million, $125 million, and $130 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Other contractual commitments
We also have $1.22 billion of non-cancelable contractual commitments as of December 31, 2015, primarily related to network infrastructure for our data center operations and, to a lesser extent, construction of our data center sites. The majority of these commitments are 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. In addition, the events surrounding our IPO became the subject of various state and federal government inquiries. In May 2014, the Securities and Exchange Commission (SEC) notified us that it had terminated its inquiry and that no enforcement action had been recommended by the SEC.
We are also party to various legal proceedings and claims that arise in the ordinary course of business. With respect to our outstanding legal matters, we believe that the amount or estimable range of reasonably possible 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 litigation is inherently uncertain. Therefore, if one or more of these legal 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, could be materially adversely affected.
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, 2015, 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, 2015.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity
Follow-on Offering
In December 2013, we completed a follow-on offering in which we issued and sold 27 million shares of Class A common stock at a public offering price of $55.05 per share and the selling stockholders sold 43 million shares of Class A common stock. We did not receive any proceeds from the sale of shares by the selling stockholders. The total net proceeds received from the follow-on offering were $1.48 billion after deducting underwriting discounts and commissions of $7 million and other offering expenses of approximately $1 million.
Common Stock
Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2015, 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, 2015, we did not declare 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, 2015, there were 2,293 million shares and 552 million shares of Class A common stock and Class B common stock, respectively, issued and outstanding.
Share-based Compensation Plans
We maintain two share-based employee compensation plans: the 2012 Equity Incentive Plan (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 the first day of January of each of 2013 through 2022 by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total outstanding shares of our common stock as of the immediately preceding December 31st or (ii) a number of shares determined by the board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2015 and 2014. 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. In January 2014, we began requiring that employees sell a portion of the shares that they receive upon the vesting of RSUs in order to cover any required withholding taxes, rather than our previous approach of net share settlement. The maximum term for stock options granted under the 2012 Plan may not exceed ten years from the date of grant. Our 2012 Plan will terminate ten years from the date of approval unless it is terminated earlier by our board of directors or a committee thereof.
In connection with an acquisition in 2014, we granted inducement awards covering an aggregate of 37 million RSUs earned over a service period of four years. These awards are excluded from the Stock Plans and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.
The following table summarizes the activities of stock option awards under the Stock Plans for the year ended December 31, 2015:
 
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, 2014
12,984

 
$
4.78

 
 
 
 
Stock options exercised
(4,541
)
 
0.48

 
 
 
 
Balance as of December 31, 2015
8,443

 
$
7.10

 
3.7
 
$
824

Stock options vested and expected to vest as of December 31, 2015
8,441

 
$
7.10

 
3.7
 
$
824

Stock options exercisable as of December 31, 2015
6,250

 
$
5.19

 
3.3
 
$
622

 
(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, as reported on the NASDAQ Global Select Market, of $104.66 on December 31, 2015.
There were no options granted, forfeited, or canceled for the year ended December 31, 2015. The aggregate intrinsic value of the options exercised in the years ended December 31, 2015, 2014, and 2013 was $403 million, $624 million, and $4.58 billion, respectively. The total grant date fair value of stock options vested during the years ended December 31, 2015, 2014, and 2013 was $5 million, $7 million, and $7 million, respectively.
The following table summarizes additional information regarding outstanding and exercisable options under the Stock Plans at December 31, 2015:
 
 
Options Outstanding 
 
Options Exercisable 
Exercise
Price (Range) 
 
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)
 
 
$0.10 - 0.18
 
446
 
0.6
 
$
0.11

 
446

 
$
0.11

0.29 - 0.33
 
1,182
 
1.5
 
0.32

 
1,182

 
0.32

1.85
 
968
 
3.0
 
1.85

 
968

 
1.85

2.95
 
1,147
 
3.6
 
2.95

 
1,147

 
2.95

10.39
 
3,500
 
4.6
 
10.39

 
2,334

 
10.39

15.00
 
1,200
 
4.8
 
15.00

 
173

 
15.00

 
 
8,443
 
3.7
 
$
7.10

 
6,250

 
$
5.19


The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2015:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2014
138,055

 
$
55.89

Granted
31,507

 
82.15

Vested
(46,434
)
 
49.19

Forfeited
(6,719
)
 
51.19

Unvested at December 31, 2015
116,409

 
$
65.95


(1)
Unvested shares include inducement awards issued in connection with an 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, 2015, 2014, and 2013 was $4.23 billion, $2.77 billion, and $1.55 billion, respectively.
As of December 31, 2015, there was $7.23 billion of unrecognized share-based compensation expense, of which $6.67 billion is related to RSUs and $559 million is related to restricted shares, shares with performance conditions related to our contingent consideration, and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.
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,
 
2015
 
2014
 
2013
Interest expense
$
(23
)
 
$
(23
)
 
$
(56
)
Interest income
52

 
27

 
19

Foreign currency exchange losses, net
(66
)
 
(87
)
 
(14
)
Other
6

 
(1
)
 
1

Interest and other income/(expense), net
$
(31
)
 
$
(84
)
 
$
(50
)
Income Taxes
Income Taxes
Income Taxes
The components of income before provision for income taxes for the years ended December 31, 2015, 2014, and 2013 are as follows (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Domestic
$
2,802

 
$
4,918

 
$
3,197

Foreign
3,392

 
(8
)
 
(443
)
Income before provision for income taxes
$
6,194

 
$
4,910

 
$
2,754


The provision for income taxes consisted of the following (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
Federal
$
3,012

 
$
1,999

 
$
1,154

State
183

 
130

 
69

Foreign
123

 
96

 
68

Total current tax expense
3,318

 
2,225

 
1,291

Deferred:
 
 
 
 
 
Federal
(800
)
 
(240
)
 
(28
)
State
(17
)
 
(14
)
 
(7
)
Foreign
5

 
(1
)
 
(2
)
Total deferred tax benefit
(812
)
 
(255
)
 
(37
)
Provision for income taxes
$
2,506

 
$
1,970

 
$
1,254

 
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, 
 
2015
 
2014
 
2013
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
2.0

 
1.4

 
1.6

Research tax credits
(1.4
)
 
(1.1
)
 
(4.7
)
Share-based compensation
2.2

 
6.5

 
5.2

Effect of non-U.S. operations
(0.9
)
 
(3.6
)
 
6.8

Other
3.5

 
1.9

 
1.6

Effective tax rate
40.4
 %
 
40.1
 %
 
45.5
 %
 
Excess tax benefits associated with stock option exercises and other equity awards are credited to stockholders' equity. The income tax benefits resulting from stock awards that were credited to stockholders' equity were $1.72 billion, $1.85 billion and $602 million for the years ended December 31, 2015, 2014, and 2013, respectively.
Our deferred tax assets (liabilities) are as follows (in millions):
 
December 31, 
 
2015
 
2014
Deferred tax assets:
 
 
 
Net operating loss carryforward
$
476

 
$
130

Tax credit carryforward
297

 
190

Share-based compensation
529

 
225

Accrued expenses and other liabilities
239

 
136

Other
34

 
21

Total deferred tax assets
1,575

 
702

Less: valuation allowance
(205
)
 
(101
)
Deferred tax assets, net of valuation allowance
1,370

 
601

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation and amortization
(270
)
 
(101
)
Purchased intangible assets
(934
)
 
(1,190
)
Deferred foreign taxes
(15
)
 

Total deferred tax liabilities
(1,219
)
 
(1,291
)
Net deferred tax assets (liabilities)
$
151

 
$
(690
)

The valuation allowance was approximately $205 million and $101 million as of December 31, 2015 and 2014, respectively, primarily related to state tax credits that we do not believe will ultimately be realized.
As of December 31, 2015, the U.S. federal and state net operating loss carryforwards were $2.70 billion and $3.31 billion, which will begin to expire in 2032 and 2023, respectively, if not utilized. If realized, the impact of the net operating loss carryforwards will be recognized as a benefit of $655 million through additional paid in capital. We have federal and state tax credit carryforwards of $1.08 billion and $905 million, respectively, which will begin to expire in 2030 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.
Our net foreign pretax income includes jurisdictions with both pretax earnings and pretax losses. Our consolidated financial statements provide taxes for all related tax liabilities that would arise upon repatriation of earnings in the foreign jurisdictions where we do not intend to indefinitely reinvest those earnings outside the United States, and the amount of taxes provided for has been insignificant.
The following table reflects changes in the gross unrecognized tax benefits (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Gross unrecognized tax benefits-beginning of period
$
1,682

 
$
1,316

 
$
164

Increases related to prior year tax positions
322

 
24

 
425

Decreases related to prior year tax positions
(52
)
 

 
(13
)
Increases related to current year tax positions
1,066

 
346

 
740

Decreases related to settlements of prior year tax positions
(1
)
 
(4
)
 

Gross unrecognized tax benefits-end of period
$
3,017

 
$
1,682

 
$
1,316


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, 2015 and 2014 was not material.
If the balance of gross unrecognized tax benefits of $3.02 billion as of December 31, 2015 was realized in a future period, this would result in a tax benefit of $2.40 billion within our provision of income taxes at such time.
On July 27, 2015, the United States Tax Court issued an opinion in Altera Corp. v. Commissioner related to the treatment of share-based compensation expense in an intercompany cost-sharing arrangement. This opinion concluded that related parties in a cost-sharing arrangement are not required to share share-based compensation. A final decision was issued by the Tax Court, however, this decision may be appealed by the Commissioner. The impact of the conclusions stated by the Tax Court in its opinion was not material to our consolidated financial statements.
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 2008 through 2010 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Our 2011 and future years remain open to examination by the IRS. Our 2011 and future years remain open to examination in Ireland.
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. However, 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.
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, 
 
2015
 
2014
 
2013
Revenue:
 
 
 
 
 
United States
$
8,513

 
$
5,649

 
$
3,613

Rest of the world(1)
9,415

 
6,817

 
4,259

Total revenue
$
17,928

 
$
12,466

 
$
7,872

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented
 
 
December 31,
 
2015
 
2014
Property and equipment, net:
 
 
 
United States
$
4,498

 
$
3,256

Sweden
713

 
514

Rest of the world
476

 
197

Total property and equipment, net
$
5,687

 
$
3,967

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, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, 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, 2015, 2014, and 2013 consists of the following (in millions):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Advertising
$
17,079

 
$
11,492

 
$
6,986

Payments and other fees
849

 
974

 
886

Total revenue
$
17,928

 
$
12,466

 
$
7,872

 
Advertising
Advertising revenue is generated by displaying ad products on the Facebook properties, including our mobile applications, 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 clicks made by our users, the number of actions taken by our users, or the number of impressions delivered. The typical term of an advertising arrangement is less than one month with billing generally occurring after the delivery of the advertisement.
We recognize revenue from the delivery of click-based ads in the period in which a user clicks on the content, and action-based ads in the period in which a user takes the action the marketer contracted for. 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.
Payments and Other Fees
We enable Payments from people to purchase virtual and digital goods from our developers. People can transact and make payments on the Facebook website by using debit cards and credit cards, PayPal, mobile phone payments, gift cards, or other methods.
When a person engages in a payment transaction for the purchase of a virtual or digital good from a developer, we remit to the developer an amount that is based on the total amount of the transaction less the processing fee that we charge the developer. The price of the purchase is an amount that is solely determined by the developer. Our revenue is the net amount of the transaction, representing our processing fee for the service performed. We record revenue on a net basis as we do not consider ourselves to be the principal in the sale of the virtual or digital good to the person. Additionally, we record all Payments revenue at the time of the purchase of the related virtual goods, net of estimated refunds or chargebacks.
Other fees, which includes our ad serving and measurement products and the delivery of virtual reality platform devices, were not material in all periods presented in our financial statements.
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, energy and bandwidth costs, and salaries, benefits, and share-based compensation for employees on our operations teams. Cost of revenue also includes credit card and other transaction fees related to processing customer transactions, amortization of intangible assets, costs associated with data partner arrangements, and cost of virtual reality platform device inventory sold.
Share-based Compensation
We account for share-based employee compensation plans under the fair value recognition and measurement provisions of GAAP. Those provisions require all share-based payments to employees, including grants of stock options and restricted stock units (RSUs), to be measured based on the grant date fair value of the awards, with the resulting expense generally recognized on a straight-line basis in our consolidated statements of income over the period during which the employee is required to perform service in exchange for the award. The majority of our awards are earned over a service period of four years.
Share-based compensation expense is recorded net of estimated forfeitures in our consolidated statements of income and as such, only those share-based awards that we expect to vest are recorded. We estimate the forfeiture rate based on historical forfeitures of equity awards and adjust the rate to reflect changes in facts and circumstances, if any. We will revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates.
We have historically issued unvested restricted shares to employee stockholders of certain acquired companies. As these awards are generally subject to continued post-acquisition employment, we have accounted for them as post-acquisition share-based compensation expense. We recognize compensation expense equal to the grant date fair value of the common stock on a straight-line basis over the period during which the employee is required to perform service in exchange for the award.
During the years ended December 31, 2015, 2014, and 2013, we realized tax benefits from share-based award activity of $1.72 billion, $1.85 billion, and $602 million, respectively. These amounts reflect the extent that the total reduction to our income tax liability from share-based award activity was greater than the amount of the deferred tax assets that we had previously recorded in anticipation of these benefits. These amounts are the aggregate of the individual transactions in which the reduction to our income tax liability was greater than the deferred tax assets that we recorded, reduced by any individual transactions in which the reduction to our income tax liability was less than the deferred tax assets that were recorded. These net amounts were recorded as an adjustment to stockholders' equity in each period, as an increase to cash flows from operating activities, and were not recognized in our consolidated statements of income.
In addition, we reported excess tax benefits that decreased our cash flows from operating activities and increased our cash flows from financing activities for the years ended December 31, 2015, 2014, and 2013, by $1.72 billion, $1.87 billion, and $609 million, respectively. The amounts of these excess tax benefits reflect the total of the individual transactions in which the reduction to our income tax liability was greater than the deferred tax assets that were recorded, but were not reduced by any of the individual transactions in which the reduction to our income tax liability was less than the deferred tax assets that were recorded.
Income Taxes
We recognize income taxes under the asset and liability 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. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
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. 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. The provision for income taxes includes the effects of any reserves that are considered appropriate, as well as the related net interest and penalties.
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 $281 million, $135 million, and $117 million for the years ended December 31, 2015, 2014, and 2013, 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 was based on the present value of probability-weighted future cash flows related to the contingent earn-out criteria and the fair value of our common stock on each reporting date.
Accounts Receivable and Allowance for Doubtful Accounts
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 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 customers' ability to pay.
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, in the case of a capital lease, whichever is shorter.
The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to five years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Three 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 lease office space, data centers, and equipment under non-cancelable capital and operating leases with various expiration dates through 2032. 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 various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. 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. Significant judgment is required to determine both probability and the estimated amount. We review these provisions at least quarterly and adjust these provisions accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.
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 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. We evaluate indefinite-lived intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As of December 31, 2015, no impairment of goodwill or indefinite-lived intangible assets has been identified.
Acquired indefinite-lived intangible assets related to our in-process research and development (IPR&D) are capitalized and subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, we will make a separate determination of useful life of the acquired indefinite-lived intangible assets and the related amortization will be recorded as an expense over the estimated useful life of the specific projects.
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 would be amortized or depreciated over the revised estimated useful life.
Deferred Revenue and Deposits
Deferred revenue consists of billings 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,
 
2015
 
2014
Deferred revenue
$
28

 
$
38

Deposits
28

 
28

Total deferred revenue and deposits
$
56

 
$
66

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, 2015 and 2014, we had a cumulative translation loss, net of tax of $430 million and $227 million, respectively. Net losses resulting from foreign exchange transactions were $66 million, $87 million, and $14 million for the years ended December 31, 2015, 2014, and 2013, 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. Cash equivalents consist 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 47%, 45%, and 46% of our revenue for the years ended December 31, 2015, 2014, and 2013, 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, Brazil, Canada, and Australia.
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, 2015, 2014, and 2013, our bad debt expenses were $44 million, $19 million, and $21 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, 2015, 2014, and 2013.
 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 unit structure.
Recently Issued and Adopted Accounting Pronouncement
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. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The updated standard is effective for us beginning on January 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. We early adopted this standard retrospectively, and reclassified $280 million of our current deferred tax assets to noncurrent deferred tax assets as of December 31, 2014. This resulted in net adjustments of $62 million increase and $218 million decrease to our noncurrent deferred tax assets and noncurrent deferred tax liability, respectively, on our December 31, 2014 consolidated balance sheet.
Summary of Significant Accounting Policies (Tables)
Revenue for the years ended December 31, 2015, 2014, and 2013 consists of the following (in millions):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Advertising
$
17,079

 
$
11,492

 
$
6,986

Payments and other fees
849

 
974

 
886

Total revenue
$
17,928

 
$
12,466

 
$
7,872

The estimated useful lives of property and equipment are described below:
Property and Equipment 
 
Useful Life 
Network equipment
 
Three to five years
Buildings
 
Three to 30 years
Computer software, office equipment and other
 
Three 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,
 
2015
 
2014
Deferred revenue
$
28

 
$
38

Deposits
28

 
28

Total deferred revenue and deposits
$
56

 
$
66

Acquisitions (Tables)
Schedule of Business Acquisitions, Total Consideration Transferred
The following table summarizes the allocation of the total consideration transferred during the year ended December 31, 2015, including the related estimated useful lives, where applicable:
 
(in millions)
 
Useful lives (in years)
Finite-lived intangible assets:
 
 
 
Acquired technology
$
30

 
3
Other
5

 
3
Land acquired
379

 
 
Other net tangible assets acquired
12

 
 
Deferred tax assets, net
17

 
 
Net assets acquired
$
443

 
 
Goodwill
45

 
 
Total fair value consideration
$
488

 
 
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,
 
2015
 
2014
 
2013
 
Class
A
 
Class
B
 
Class
A
 
Class
B
 
Class
A
 
Class
B 
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income
$
2,959

 
$
729

 
$
2,308

 
$
632

 
$
1,114

 
$
386

Less: Net income attributable to participating securities
15

 
4

 
12

 
3

 
7

 
2

Net income attributable to common stockholders
$
2,944

 
$
725

 
$
2,296

 
$
629

 
$
1,107

 
$
384

Denominator
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,259

 
559

 
2,059

 
568

 
1,803

 
631

Less: Shares subject to repurchase
10

 
5

 
6

 
7

 
5

 
9

Number of shares used for basic EPS computation
2,249

 
554

 
2,053

 
561

 
1,798

 
622

Basic EPS
$
1.31

 
$
1.31

 
$
1.12

 
$
1.12

 
$
0.62

 
$
0.62

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
2,944

 
$
725

 
$
2,296

 
$
629

 
$
1,107

 
$
384

Reallocation of net income attributable to participating securities
19

 

 
15

 

 
9

 

Reallocation of net income as a result of conversion of Class B to Class A common stock
725

 

 
629

 

 
384

 

Reallocation of net income to Class B common stock

 
15

 

 
23

 

 
39

Net income attributable to common stockholders for diluted EPS
$
3,688

 
$
740

 
$
2,940

 
$
652

 
$
1,500

 
$
423

Denominator
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,249

 
554

 
2,053

 
561

 
1,798

 
622

Conversion of Class B to Class A common stock
554

 

 
561

 

 
622

 

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
8

 
8

 
13

 
13

 
65

 
65

RSUs
37

 
9

 
30

 
13

 
25

 
15

Shares subject to repurchase
5

 
2

 
7

 
4

 
7

 
7

Number of shares used for diluted EPS computation
2,853

 
573

 
2,664

 
591

 
2,517

 
709

Diluted EPS
$
1.29

 
$
1.29

 
$
1.10

 
$
1.10

 
$
0.60

 
$
0.60

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,
 
2015
 
2014
Cash and cash equivalents:
 
 
 
Cash
$
1,703

 
$
2,162

Money market funds
2,409

 
2,153

U.S. government securities
597

 

U.S. government agency securities
145

 

Corporate debt securities
53

 

Total cash and cash equivalents
4,907

 
4,315

Marketable securities:
 
 
 
U.S. government securities
5,948

 
2,830

U.S. government agency securities
4,475

 
2,710

Corporate debt securities
3,104

 
1,344

Total marketable securities
13,527

 
6,884

Total cash and cash equivalents, and marketable securities
$
18,434

 
$
11,199

The following table classifies our marketable securities by contractual maturities (in millions):
 
December 31,
 
2015
 
2014
Due in one year
$
5,029

 
$
3,422

Due in one to two years
8,498

 
3,462

Total
$
13,527

 
$
6,884

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,
2015
 
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
 
$
2,409

 
$
2,409

 
$

 
$

U.S. government securities
 
597

 
597

 

 

U.S. government agency securities
 
145

 
145

 

 

Corporate debt securities
 
53

 

 
53

 

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
5,948

 
5,948

 

 

U.S. government agency securities
 
4,475

 
4,475

 

 

Corporate debt securities
 
3,104

 

 
3,104

 

Total cash equivalents and marketable securities
 
$
16,731

 
$
13,574

 
$
3,157

 
$

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
260

 
$

 
$

 
$
260

 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
December 31,
2014
 
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
 
$
2,153

 
$
2,153

 
$

 
$

Marketable securities:
 

 
 
 
 
 
 
U.S. government securities
 
2,830

 
2,830

 

 

U.S. government agency securities
 
2,710

 
2,710

 

 

Corporate debt securities
 
1,344

 

 
1,344

 

Total cash equivalents and marketable securities
 
$
9,037

 
$
7,693

 
$
1,344

 
$

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
191

 
$

 
$

 
$
191

Property and Equipment (Tables)
Property and equipment
Property and equipment consists of the following (in millions):
 
December 31,
 
2015
 
2014
Land
$
596

 
$
153

Buildings
2,273

 
1,420

Leasehold improvements
447

 
304

Network equipment
3,633

 
3,020

Computer software, office equipment and other
248

 
149

Construction in progress
622

 
738

Total
7,819

 
5,784

Less: Accumulated depreciation
(2,132
)
 
(1,817
)
Property and equipment, net
$
5,687

 
$
3,967

Goodwill and Intangible Assets (Tables)
The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows (in millions):
Balance as of December 31, 2013
$
839

Goodwill acquired
17,150

Effect of currency translation adjustment
(8
)
Balance as of December 31, 2014
$
17,981

Goodwill acquired
45

Balance as of December 31, 2015
$
18,026

Intangible assets consist of the following (in millions):
 
 
 
December 31, 2015
 
December 31, 2014
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.7
 
$
2,056

 
$
(382
)
 
$
1,674

 
$
2,056

 
$
(85
)
 
$
1,971

Acquired technology
3.3
 
831

 
(310
)
 
521

 
813

 
(144
)
 
669

Acquired patents
6.5
 
785

 
(333
)
 
452

 
773

 
(239
)
 
534

Trade names
4.1
 
629

 
(163
)
 
466

 
632

 
(46
)
 
586

Other
3.5
 
162

 
(89
)
 
73

 
164

 
(55
)
 
109

Total finite-lived intangible assets
5.2
 
$
4,463

 
$
(1,277
)
 
$
3,186

 
$
4,438

 
$
(569
)
 
$
3,869

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
60

 
$

 
$
60

 
$
60

 
$

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,523

 
$
(1,277
)
 
$
3,246

 
$
4,498

 
$
(569
)
 
$
3,929

Intangible assets consist of the following (in millions):
 
 
 
December 31, 2015
 
December 31, 2014
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.7
 
$
2,056

 
$
(382
)
 
$
1,674

 
$
2,056

 
$
(85
)
 
$
1,971

Acquired technology
3.3
 
831

 
(310
)
 
521

 
813

 
(144
)
 
669

Acquired patents
6.5
 
785

 
(333
)
 
452

 
773

 
(239
)
 
534

Trade names
4.1
 
629

 
(163
)
 
466

 
632

 
(46
)
 
586

Other
3.5
 
162

 
(89
)
 
73

 
164

 
(55
)
 
109

Total finite-lived intangible assets
5.2
 
$
4,463

 
$
(1,277
)
 
$
3,186

 
$
4,438

 
$
(569
)
 
$
3,869

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
60

 
$

 
$
60

 
$
60

 
$

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,523

 
$
(1,277
)
 
$
3,246

 
$
4,498

 
$
(569
)
 
$
3,929

As of December 31, 2015, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
2016
$
701

2017
658

2018
603

2019
520

2020
357

Thereafter
347

Total
$
3,186

Liabilities (Tables)
The components of accrued expenses and other current liabilities are as follows (in millions):
 
December 31,
 
2015
 
2014
Accrued compensation and benefits
$
473

 
$
322

Accrued property and equipment
192

 
164

Promissory note payable(1)
201

 

Other current liabilities
583

 
380

Accrued expenses and other current liabilities
$
1,449

 
$
866


(1) See Note 2 in these notes to the consolidated financial statements for additional information related to our promissory note payable.
The components of other liabilities are as follows (in millions):
 
December 31,
 
2015
 
2014
Income tax payable
$
2,458

 
$
1,190

Deferred tax liabilities(1)
163

 
769

Contingent consideration liability
267

 
193

Other liabilities
269

 
175

Other liabilities
$
3,157

 
$
2,327


(1)
In November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. We early adopted this standard retrospectively, and as a result of the reclassifications, certain noncurrent deferred tax liabilities were netted with noncurrent deferred tax assets. See Note 1 in these notes to the consolidated financial statements for additional information.
Commitments and Contingencies (Tables)
The following is a schedule, by years, of the future minimum lease payments required under non-cancelable capital and operating leases as of December 31, 2015 (in millions):
 
Capital
Leases
 
Operating
Leases
 
Financing obligation, building in progress - leased facility(1)
2016
$
16

 
$
209

 
$

2017
15

 
230

 

2018
16

 
216

 

2019
16

 
200

 
13

2020
17

 
159

 
25

Thereafter
94

 
438

 
299

Total minimum lease payments
$
174

 
$
1,452

 
$
337

Less: amount representing interest and taxes
(60
)
 
 
 
 
Less: current portion of the present value of minimum lease payments
(7
)
 
 
 
 
Capital lease obligations, net of current portion
$
107

 
 
 
 

(1)
In 2015, we entered into an agreement to lease an entire office building in London, United Kingdom, that is currently under construction. As a result of our involvement during the construction period, we are considered to be the owner of the construction project for accounting purposes. The above financing obligation, building in progress - leased facility represents the total expected financing and lease obligation associated with this lease and will be settled through monthly lease payments to the landlord when we occupy the office space upon completion. This amount includes $62 million that is included in property and equipment, net and other liabilities on our consolidated balance sheets as of December 31, 2015.
The following is a schedule, by years, of the future minimum lease payments required under non-cancelable capital and operating leases as of December 31, 2015 (in millions):
 
Capital
Leases
 
Operating
Leases
 
Financing obligation, building in progress - leased facility(1)
2016
$
16

 
$
209

 
$

2017
15

 
230

 

2018
16

 
216

 

2019
16

 
200

 
13

2020
17

 
159

 
25

Thereafter
94

 
438

 
299

Total minimum lease payments
$
174

 
$
1,452

 
$
337

Less: amount representing interest and taxes
(60
)
 
 
 
 
Less: current portion of the present value of minimum lease payments
(7
)
 
 
 
 
Capital lease obligations, net of current portion
$
107

 
 
 
 

(1)
In 2015, we entered into an agreement to lease an entire office building in London, United Kingdom, that is currently under construction. As a result of our involvement during the construction period, we are considered to be the owner of the construction project for accounting purposes. The above financing obligation, building in progress - leased facility represents the total expected financing and lease obligation associated with this lease and will be settled through monthly lease payments to the landlord when we occupy the office space upon completion. This amount includes $62 million that is included in property and equipment, net and other liabilities on our consolidated balance sheets as of December 31, 2015.
Stockholders' Equity (Tables)
The following table summarizes the activities of stock option awards under the Stock Plans for the year ended December 31, 2015:
 
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, 2014
12,984

 
$
4.78

 
 
 
 
Stock options exercised
(4,541
)
 
0.48

 
 
 
 
Balance as of December 31, 2015
8,443

 
$
7.10

 
3.7
 
$
824

Stock options vested and expected to vest as of December 31, 2015
8,441

 
$
7.10

 
3.7
 
$
824

Stock options exercisable as of December 31, 2015
6,250

 
$
5.19

 
3.3
 
$
622

 
(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, as reported on the NASDAQ Global Select Market, of $104.66 on December 31, 2015.
The following table summarizes additional information regarding outstanding and exercisable options under the Stock Plans at December 31, 2015:
 
 
Options Outstanding 
 
Options Exercisable 
Exercise
Price (Range) 
 
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)
 
 
$0.10 - 0.18
 
446
 
0.6
 
$
0.11

 
446

 
$
0.11

0.29 - 0.33
 
1,182
 
1.5
 
0.32

 
1,182

 
0.32

1.85
 
968
 
3.0
 
1.85

 
968

 
1.85

2.95
 
1,147
 
3.6
 
2.95

 
1,147

 
2.95

10.39
 
3,500
 
4.6
 
10.39

 
2,334

 
10.39

15.00
 
1,200
 
4.8
 
15.00

 
173

 
15.00

 
 
8,443
 
3.7
 
$
7.10

 
6,250

 
$
5.19

The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2015:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2014
138,055

 
$
55.89

Granted
31,507

 
82.15

Vested
(46,434
)
 
49.19

Forfeited
(6,719
)
 
51.19

Unvested at December 31, 2015
116,409

 
$
65.95


(1)
Unvested shares include inducement awards issued in connection with an 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,
 
2015
 
2014
 
2013
Interest expense
$
(23
)
 
$
(23
)
 
$
(56
)
Interest income
52

 
27

 
19

Foreign currency exchange losses, net
(66
)
 
(87
)
 
(14
)
Other
6

 
(1
)
 
1

Interest and other income/(expense), net
$
(31
)
 
$
(84
)
 
$
(50
)
Income Taxes (Tables)
The components of income before provision for income taxes for the years ended December 31, 2015, 2014, and 2013 are as follows (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Domestic
$
2,802

 
$
4,918

 
$
3,197

Foreign
3,392

 
(8
)
 
(443
)
Income before provision for income taxes
$
6,194

 
$
4,910

 
$
2,754

The provision for income taxes consisted of the following (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
Federal
$
3,012

 
$
1,999

 
$
1,154

State
183

 
130

 
69

Foreign
123

 
96

 
68

Total current tax expense
3,318

 
2,225

 
1,291

Deferred:
 
 
 
 
 
Federal
(800
)
 
(240
)
 
(28
)
State
(17
)
 
(14
)
 
(7
)
Foreign
5

 
(1
)
 
(2
)
Total deferred tax benefit
(812
)
 
(255
)
 
(37
)
Provision for income taxes
$
2,506

 
$
1,970

 
$
1,254

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, 
 
2015
 
2014
 
2013
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
2.0

 
1.4

 
1.6

Research tax credits
(1.4
)
 
(1.1
)
 
(4.7
)
Share-based compensation
2.2

 
6.5

 
5.2

Effect of non-U.S. operations
(0.9
)
 
(3.6
)
 
6.8

Other
3.5

 
1.9

 
1.6

Effective tax rate
40.4
 %
 
40.1
 %
 
45.5
 %
Our deferred tax assets (liabilities) are as follows (in millions):
 
December 31, 
 
2015
 
2014
Deferred tax assets:
 
 
 
Net operating loss carryforward
$
476

 
$
130

Tax credit carryforward
297

 
190

Share-based compensation
529

 
225

Accrued expenses and other liabilities
239

 
136

Other
34

 
21

Total deferred tax assets
1,575

 
702

Less: valuation allowance
(205
)
 
(101
)
Deferred tax assets, net of valuation allowance
1,370

 
601

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation and amortization
(270
)
 
(101
)
Purchased intangible assets
(934
)
 
(1,190
)
Deferred foreign taxes
(15
)
 

Total deferred tax liabilities
(1,219
)
 
(1,291
)
Net deferred tax assets (liabilities)
$
151

 
$
(690
)
The following table reflects changes in the gross unrecognized tax benefits (in millions):
 
Year Ended December 31, 
 
2015
 
2014
 
2013
Gross unrecognized tax benefits-beginning of period
$
1,682

 
$
1,316

 
$
164

Increases related to prior year tax positions
322

 
24

 
425

Decreases related to prior year tax positions
(52
)
 

 
(13
)
Increases related to current year tax positions
1,066

 
346

 
740

Decreases related to settlements of prior year tax positions
(1
)
 
(4
)
 

Gross unrecognized tax benefits-end of period
$
3,017

 
$
1,682

 
$
1,316

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, 
 
2015
 
2014
 
2013
Revenue:
 
 
 
 
 
United States
$
8,513

 
$
5,649

 
$
3,613

Rest of the world(1)
9,415

 
6,817

 
4,259

Total revenue
$
17,928

 
$
12,466

 
$
7,872

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented
 
 
December 31,
 
2015
 
2014
Property and equipment, net:
 
 
 
United States
$
4,498

 
$
3,256

Sweden
713

 
514

Rest of the world
476

 
197

Total property and equipment, net
$
5,687

 
$
3,967

Summary of Significant Accounting Policies - Revenue Recognition (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Accounting Policies [Abstract]
 
 
 
Advertising
$ 17,079 
$ 11,492 
$ 6,986 
Payments and other fees
849 
974 
886 
Total revenue
$ 17,928 
$ 12,466 
$ 7,872 
Advertising arrangement typical term, less than
1 month 
 
 
Summary of Significant Accounting Policies - Share-based Compensation (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
Tax benefit from share-based award activity
$ 1,721 
$ 1,853 
$ 602 
Excess tax benefit from share-based award activity
$ 1,721 
$ 1,869 
$ 609 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
Service period
4 years 
 
 
Summary of Significant Accounting Policies - Property & Equipment and Lease Obligations (Details)
12 Months Ended
Dec. 31, 2015
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
5 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
3 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, 2015
Accounting Policies [Abstract]
 
Goodwill, impairment loss
$ 0 
Summary of Significant Accounting Policies - Other Policies (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Accounting Policies [Abstract]
 
 
 
Advertising expense
$ 281 
$ 135 
$ 117 
Deferred Revenue & Deposits [Abstract]
 
 
 
Deferred revenue, rate payable to developer upon utilization of virtual currency
70.00% 
 
 
Deferred revenue
28 
38 
 
Deposits
28 
28 
 
Total deferred revenue and deposits
$ 56 
$ 66 
 
Maximum
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Lease expiration year
2032 
 
 
Summary of Significant Accounting Policies - Foreign Currency (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Accounting Policies [Abstract]
 
 
 
Cumulative translation loss, net of tax
$ (430)
$ (227)
 
Foreign currency exchange losses, net
$ (66)
$ (87)
$ (14)
Summary of Significant Accounting Policies - Credit Risk and Concentration (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Concentration Risk
 
 
 
Provision for doubtful accounts
$ 44 
$ 19 
$ 21 
Major customer percentage
10.00% 
10.00% 
10.00% 
Geographic concentration risk |
Sales revenue |
United States
 
 
 
Concentration Risk
 
 
 
Concentration risk percentage
47.00% 
45.00% 
46.00% 
Customer concentration risk
 
 
 
Concentration Risk
 
 
 
Number of major customer
Summary of Significant Accounting Policies - Recently Issued and Adopted Accounting Pronouncement (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncement, Early Adoption [Line Items]
 
 
Noncurrent deferred tax liability
$ 163 
$ 769 
Prepaid expenses and other current assets |
New Accounting Pronouncement, Early Adoption, Effect
 
 
New Accounting Pronouncement, Early Adoption [Line Items]
 
 
Current deferred tax assets
 
280 
Other assets |
New Accounting Pronouncement, Early Adoption, Effect
 
 
New Accounting Pronouncement, Early Adoption [Line Items]
 
 
Noncurrent deferred tax assets
 
62 
Other liabilities |
New Accounting Pronouncement, Early Adoption, Effect
 
 
New Accounting Pronouncement, Early Adoption [Line Items]
 
 
Noncurrent deferred tax liability
 
$ 218 
Acquisitions - Other (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Business Acquisition [Line Items]
 
 
 
Promissory note payable issued in connection with an acquisition
$ 198 
$ 0 
$ 0 
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
 
 
 
Goodwill
18,026 
17,981 
839 
Series of Individually Immaterial Business Acquisitions
 
 
 
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
 
 
 
Land acquired
379 
 
 
Other net tangible assets acquired
12 
 
 
Deferred tax assets, net
17 
 
 
Net assets acquired
443 
 
 
Goodwill
45 
 
 
Total fair value consideration
488 
 
 
Series of Individually Immaterial Business Acquisitions |
Acquired technology
 
 
 
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
 
 
 
Finite-lived intangible assets
30 
 
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
3 years 
 
 
Series of Individually Immaterial Business Acquisitions |
Other
 
 
 
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
 
 
 
Finite-lived intangible assets
$ 5 
 
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
3 years 
 
 
Earnings per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Numerator
 
 
 
Net income
$ 3,688 
$ 2,940 
$ 1,500 
Less: Net income attributable to participating securities
19 
15 
Net income attributable to common stockholders
3,669 
2,925 
1,491 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,803 
2,614 
2,420 
Basic EPS (in dollars per share)
$ 1.31 
$ 1.12 
$ 0.62 
Numerator
 
 
 
Net income attributable to common stockholders
3,669 
2,925 
1,491 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,803 
2,614 
2,420 
Number of shares used for diluted EPS computation (in shares)
2,853 
2,664 
2,517 
Diluted EPS (in dollars per share)
$ 1.29 
$ 1.10 
$ 0.60 
Class A Common Stock
 
 
 
Numerator
 
 
 
Net income
2,959 
2,308 
1,114 
Less: Net income attributable to participating securities
15 
12 
Net income attributable to common stockholders
2,944 
2,296 
1,107 
Denominator
 
 
 
Weighted average shares outstanding (in shares)
2,259 
2,059 
1,803 
Less: Shares subject to repurchase (in shares)
10 
Number of shares used for basic EPS computation (in shares)
2,249 
2,053 
1,798 
Basic EPS (in dollars per share)
$ 1.31 
$ 1.12 
$ 0.62 
Numerator
 
 
 
Net income attributable to common stockholders
2,944 
2,296 
1,107 
Reallocation of net income attributable to participating securities
19 
15 
Reallocation of net income as a result of conversion of Class B to Class A common stock
725 
629 
384 
Reallocation of net income to Class B common stock
Net income attributable to common stockholders for diluted EPS
3,688 
2,940 
1,500 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
2,249 
2,053 
1,798 
Conversion of Class B to Class A common stock (in shares)
554 
561 
622 
Shares subject to repurchase (in shares)
Number of shares used for diluted EPS computation (in shares)
2,853 
2,664 
2,517 
Diluted EPS (in dollars per share)
$ 1.29 
$ 1.10 
$ 0.60 
Class A Common Stock |
Restricted Stock Units (RSUs)
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
37 
30 
25 
Class A Common Stock |
Employee Stock Option
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
13 
65 
Class B Common Stock
 
 
 
Numerator
 
 
 
Net income
729 
632 
386 
Less: Net income attributable to participating securities
Net income attributable to common stockholders
725 
629 
384 
Denominator
 
 
 
Weighted average shares outstanding (in shares)
559 
568 
631 
Less: Shares subject to repurchase (in shares)
Number of shares used for basic EPS computation (in shares)
554 
561 
622 
Basic EPS (in dollars per share)
$ 1.31 
$ 1.12 
$ 0.62 
Numerator
 
 
 
Net income attributable to common stockholders
725 
629 
384 
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
15 
23 
39 
Net income attributable to common stockholders for diluted EPS
$ 740 
$ 652 
$ 423 
Denominator
 
 
 
Number of shares used for basic EPS computation (in shares)
554 
561 
622 
Conversion of Class B to Class A common stock (in shares)
Shares subject to repurchase (in shares)
Number of shares used for diluted EPS computation (in shares)
573 
591 
709 
Diluted EPS (in dollars per share)
$ 1.29 
$ 1.10 
$ 0.60 
Class B Common Stock |
Restricted Stock Units (RSUs)
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
13 
15 
Class B Common Stock |
Employee Stock Option
 
 
 
Denominator
 
 
 
Share based payment arrangements (in shares)
13 
65 
Cash, Cash Equivalents and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
security
Dec. 31, 2013
Dec. 31, 2012
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 4,907 
$ 4,315 
$ 3,323 
$ 2,384 
Marketable securities
13,527 
6,884 
 
 
Total cash and cash equivalents, and marketable securities
18,434 
11,199 
 
 
Number of positions in a continuous loss position for 12 months or longer
 
 
 
U.S. government securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
5,948 
2,830 
 
 
U.S. government agency securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
4,475 
2,710 
 
 
Corporate debt securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Marketable securities
3,104 
1,344 
 
 
Cash
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
1,703 
2,162 
 
 
Money market funds
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
2,409 
2,153 
 
 
U.S. government securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
597 
 
 
U.S. government agency securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
145 
 
 
Corporate debt securities
 
 
 
 
Cash, Cash Equivalents and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 53 
$ 0 
 
 
Cash and Cash Equivalents, and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Cash and Cash Equivalents, and Marketable Securities [Abstract]
 
 
Due in one year
$ 5,029 
$ 3,422 
Due in one to two years
8,498 
3,462 
Total marketable securities
$ 13,527 
$ 6,884 
Fair Value Measurement (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
$ 13,527 
$ 6,884 
Change in fair value of contingent consideration liability
69 
 
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
16,731 
9,037 
Contingent consideration liability
260 
191 
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
13,574 
7,693 
Contingent consideration liability
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
3,157 
1,344 
Contingent consideration liability
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
Contingent consideration liability
260 
191 
U.S. government securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
5,948 
2,830 
U.S. government securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
5,948 
2,830 
U.S. government securities |
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
 
 
Marketable securities
5,948 
2,830 
U.S. government securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
U.S. government securities |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
U.S. government agency securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
4,475 
2,710 
U.S. government agency securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
4,475 
2,710 
U.S. government agency securities |
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
 
 
Marketable securities
4,475 
2,710 
U.S. government agency securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
U.S. government agency securities |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Corporate debt securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
3,104 
1,344 
Corporate debt securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
3,104 
1,344 
Corporate debt securities |
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
 
 
Marketable securities
Corporate debt securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
3,104 
1,344 
Corporate debt securities |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
Money market funds |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
2,409 
2,153 
Money market funds |
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
 
 
Cash equivalents
2,409 
2,153 
Money market funds |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
Money market funds |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
U.S. government securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
597 
 
U.S. government securities |
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
 
 
Cash equivalents
597 
 
U.S. government securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
U.S. government securities |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
U.S. government agency securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
145 
 
U.S. government agency securities |
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
 
 
Cash equivalents
145 
 
U.S. government agency securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
U.S. government agency securities |
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
 
Corporate debt securities |
Fair Value, Measurements, Recurring
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
53 
 
Corporate debt securities |
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
 
 
Cash equivalents
 
Corporate debt securities |
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
53 
 
Corporate debt securities |
Fair Value, Measurements, Recurring |
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, 2015
Dec. 31, 2014
Dec. 31, 2013
Property, Plant and Equipment
 
 
 
Property and equipment, gross
$ 7,819,000,000 
$ 5,784,000,000 
 
Less: Accumulated depreciation
(2,132,000,000)
(1,817,000,000)
 
Property and equipment, net
5,687,000,000 
3,967,000,000 
 
Depreciation expense
1,220,000,000 
923,000,000 
857,000,000 
Assets acquired under capital lease agreements
287,000,000 
700,000,000 
 
Accumulated depreciation of property and equipment acquired under capital leases
71,000,000 
425,000,000 
 
Interest costs capitalized
 
Land
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
596,000,000 
153,000,000 
 
Buildings
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
2,273,000,000 
1,420,000,000 
 
Leasehold improvements
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
447,000,000 
304,000,000 
 
Network equipment
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
3,633,000,000 
3,020,000,000 
 
Computer software, office equipment and other
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
248,000,000 
149,000,000 
 
Construction in progress
 
 
 
Property, Plant and Equipment
 
 
 
Property and equipment, gross
$ 622,000,000 
$ 738,000,000 
 
Goodwill and Intangible Assets - Change in Carrying Amount (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Goodwill [Roll Forward]
 
 
Goodwill beginning
$ 17,981 
$ 839 
Goodwill acquired
45 
17,150 
Effect of currency translation adjustment
 
(8)
Goodwill ending
$ 18,026 
$ 17,981 
Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
5 years 1 month 28 days 
 
 
Gross Carrying Amount
$ 4,463 
$ 4,438 
 
Accumulated Amortization
1,277 
569 
 
Net Carrying Amount
3,186 
3,869 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Total intangible assets, Gross
4,523 
4,498 
 
Accumulated Amortization
(1,277)
(569)
 
Total intangible assets, Net
3,246 
3,929 
 
Amortization expense
730 
319 
145 
In-process research and development (IPR&D)
 
 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Indefinite-lived intangible assets
60 
60 
 
Acquired users
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
5 years 8 months 25 days 
 
 
Gross Carrying Amount
2,056 
2,056 
 
Accumulated Amortization
382 
85 
 
Net Carrying Amount
1,674 
1,971 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Accumulated Amortization
(382)
(85)
 
Acquired technology
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
3 years 4 months 
 
 
Gross Carrying Amount
831 
813 
 
Accumulated Amortization
310 
144 
 
Net Carrying Amount
521 
669 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Accumulated Amortization
(310)
(144)
 
Acquired patents
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
6 years 6 months 
 
 
Gross Carrying Amount
785 
773 
 
Accumulated Amortization
333 
239 
 
Net Carrying Amount
452 
534 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Accumulated Amortization
(333)
(239)
 
Trade names
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
4 years 1 month 3 days 
 
 
Gross Carrying Amount
629 
632 
 
Accumulated Amortization
163 
46 
 
Net Carrying Amount
466 
586 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Accumulated Amortization
(163)
(46)
 
Other
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Weighted-Average Remaining Useful Lives (in years)
3 years 6 months 4 days 
 
 
Gross Carrying Amount
162 
164 
 
Accumulated Amortization
89 
55 
 
Net Carrying Amount
73 
109 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
Accumulated Amortization
$ (89)
$ (55)
 
Goodwill and Intangible Assets - Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
2016
$ 701 
 
2017
658 
 
2018
603 
 
2019
520 
 
2020
357 
 
Thereafter
347 
 
Net Carrying Amount
$ 3,186 
$ 3,869 
Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Accrued Liabilities and Other Current Liabilities [Abstract]
 
 
Accrued compensation and benefits
$ 473 
$ 322 
Accrued property and equipment
192 
164 
Promissory note payable
201 
Other current liabilities
583 
380 
Accrued expenses and other current liabilities
1,449 
866 
Other Liabilities [Abstract]
 
 
Income tax payable
2,458 
1,190 
Noncurrent deferred tax liability
163 
769 
Contingent consideration liability
267 
193 
Other liabilities
269 
175 
Other liabilities
$ 3,157 
$ 2,327 
Long-term Debt - Borrowings (Details) (Revolving Credit Facility, 2013 Revolving Credit Facility, USD $)
1 Months Ended 12 Months Ended
Aug. 31, 2013
Dec. 31, 2015
Revolving Credit Facility |
2013 Revolving Credit Facility
 
 
Debt Instrument
 
 
Term loan facility, term period (in years)
5 years 
 
Line of credit facility, maximum borrowing capacity
$ 6,500,000,000.0 
 
Debt instrument, interest rate basis during period
 
LIBOR 
Basis spread on variable rate (percent)
1.00% 
 
Line of credit facility, unused capacity, commitment fee percentage
0.10% 
 
Line of credit facility, amount outstanding
 
$ 0 
Commitments and Contingencies (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Leases [Abstract]
 
 
 
Capital lease agreement period
3 years 
 
 
Capital Leases, Future Minimum Payments Due
 
 
 
2016
$ 16,000,000 
 
 
2017
15,000,000 
 
 
2018
16,000,000 
 
 
2019
16,000,000 
 
 
2020
17,000,000 
 
 
Thereafter
94,000,000 
 
 
Total minimum lease payments
174,000,000 
 
 
Less: amount representing interest and taxes
(60,000,000)
 
 
Less: current portion of the present value of minimum lease payments
(7,000,000)
(114,000,000)
 
Capital lease obligations, less current portion
107,000,000 
119,000,000 
 
Operating Leases, Future Minimum Payments Due
 
 
 
2016
209,000,000 
 
 
2017
230,000,000 
 
 
2018
216,000,000 
 
 
2019
200,000,000 
 
 
2020
159,000,000 
 
 
Thereafter
438,000,000 
 
 
Total minimum lease payments
1,452,000,000 
 
 
Financing Obligation, Future Minimum Payments Due
 
 
 
2016
 
 
2017
 
 
2018
 
 
2019
13,000,000 
 
 
2020
25,000,000 
 
 
Thereafter
299,000,000 
 
 
Total minimum lease payments
337,000,000 
 
 
Financing obligation, building in progress - leased facility
62,000,000 
 
 
Operating lease expense
181,000,000 
125,000,000 
130,000,000 
Other contractual commitments
 
 
 
Other contractual commitments
$ 1,220,000,000 
 
 
Contractual obligation, period
5 years 
 
 
Minimum
 
 
 
Leases [Abstract]
 
 
 
Interest rate
1.00% 
 
 
Lease expiration year
2016 
 
 
Maximum
 
 
 
Leases [Abstract]
 
 
 
Interest rate
13.00% 
 
 
Lease expiration year
2032 
 
 
Building
 
 
 
Leases [Abstract]
 
 
 
Capital lease agreement period
15 years 
 
 
Stockholders' Equity - Follow-on Offering (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 1 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2013
Class A Common Stock
Dec. 31, 2015
Class A Common Stock
Class of Stock
 
 
 
 
 
Issuance of common stock, shares
 
 
 
27,004,761 
 
Share price
 
 
 
$ 55.05 
$ 104.66 
Sale of stock, sold by stockholders
 
 
 
42,995,239 
 
Net proceeds from issuance of common stock
$ 0 
$ 0 
$ 1,478 
$ 1,478 
 
Underwriting discounts and commissions
 
 
 
 
Other offering costs
 
 
 
$ 1 
 
Stockholders' Equity - Common Stock (Details) (USD $)
Dec. 31, 2015
Dec. 31, 2014
Class of Stock
 
 
Common stock, par value
$ 0.000006 
$ 0.000006 
Class A Common Stock
 
 
Class of Stock
 
 
Common stock, shares authorized
5,000,000,000 
5,000,000,000 
Common stock, par value
$ 0.000006 
 
Common stock, number of votes by class
 
Common stock, shares, issued
2,293,000,000 
2,234,000,000 
Common stock, shares, outstanding
2,293,000,000 
2,234,000,000 
Class B Common Stock
 
 
Class of Stock
 
 
Common stock, shares authorized
4,141,000,000 
4,141,000,000 
Common stock, par value
$ 0.000006 
 
Common stock, number of votes by class
10 
 
Common stock, shares, issued
552,000,000 
563,000,000 
Common stock, shares, outstanding
552,000,000 
563,000,000 
Stockholders' Equity - Share-based Compensation Plans (Detail)
12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2015
plans
Dec. 31, 2015
2012 Plan
Dec. 31, 2015
2012 Plan
Minimum
Dec. 31, 2015
2012 Plan
Maximum
Oct. 31, 2014
Inducement awards
Dec. 31, 2014
Inducement awards
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
 
Share-based employee compensation plans, number
 
 
 
 
 
2012 equity incentive plan shares authorized
 
25,000,000 
 
 
 
 
Shares reserved for issuance increase date range
 
 
Jan. 01, 2013 
Jan. 01, 2022 
 
 
Shares reserved for issuance increase percentage
 
2.50% 
 
 
 
 
Share-based compensation arrangement by share-based payment award, expiration period (in years)
 
10 years 
 
 
 
 
Share-based compensation arrangement by share-based payment award, expiration period for plan (in years)
 
10 years 
 
 
 
 
Granted (in shares)
 
 
 
 
37,475,271 
 
Deferred compensation, Requisite service period
 
 
 
 
 
4 years 
Stockholders' Equity - Stock Option Award Activity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Number of Shares
 
 
 
Ending balance (in shares)
8,443,000 
 
 
Aggregate Intrinsic Value
 
 
 
Aggregate intrinsic value of the options exercised
$ 403 
$ 624 
$ 4,580 
Total grant date fair value of stock options vested
Employee Stock Option
 
 
 
Number of Shares
 
 
 
Beginning balance (in shares)
12,984,000 
 
 
Stock options exercised (in shares)
(4,541,000)
 
 
Ending balance (in shares)
8,443,000 
 
 
Stock options vested and expected to vest as of period end (in shares)
8,441,000 
 
 
Stock options exercisable as of period end (in shares)
6,250,000 
 
 
Weighted Average Exercise Price
 
 
 
Beginning Balance (in dollars per share)
$ 4.78 
 
 
Stock options exercised (in dollars per share)
$ 0.48 
 
 
Ending Balance (in dollars per share)
$ 7.10 
 
 
Stock options vested and expected to vest as of period end (in dollars per share)
$ 7.10 
 
 
Stock options exercisable as of period end (in dollars per share)
$ 5.19 
 
 
Weighted Average Remaining Contractual Term
 
 
 
Balance at period end (in years)
3 years 7 months 25 days 
 
 
Stock options vested and expected to vest as of period end (in years)
3 years 7 months 25 days 
 
 
Stock options exercisable as of period end (in years)
3 years 3 months 14 days 
 
 
Aggregate Intrinsic Value
 
 
 
Balance at period end
824 
 
 
Stock options vested and expected to vest as of period end
824 
 
 
Stock options exercisable as of period end
$ 622 
 
 
Options granted in period
 
 
Options forfeited or canceled in period
 
 
Class A Common Stock
 
 
 
Aggregate Intrinsic Value
 
 
 
Share price
$ 104.66 
 
$ 55.05 
Stockholders' Equity - Stock Options Additional Disclosures (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Number of Shares
8,443 
Options Outstanding, Weighted Average Remaining Contractual Term
3 years 7 months 25 days 
Options Outstanding, Weighted Average Exercise Price
$ 7.10 
Options Exercisable, Number of Shares
6,250 
Options Exercisable, Weighted Average Exercise Price
$ 5.19 
Exercise Price Range 0.10 - 0.18
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, minimum
$ 0.10 
Exercise Price, maximum
$ 0.18 
Number of Shares
446 
Options Outstanding, Weighted Average Remaining Contractual Term
0 years 6 months 25 days 
Options Outstanding, Weighted Average Exercise Price
$ 0.11 
Options Exercisable, Number of Shares
446 
Options Exercisable, Weighted Average Exercise Price
$ 0.11 
Exercise Price Range 0.29 - 0.33
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, minimum
$ 0.29 
Exercise Price, maximum
$ 0.33 
Number of Shares
1,182 
Options Outstanding, Weighted Average Remaining Contractual Term
1 year 5 months 20 days 
Options Outstanding, Weighted Average Exercise Price
$ 0.32 
Options Exercisable, Number of Shares
1,182 
Options Exercisable, Weighted Average Exercise Price
$ 0.32 
Exercise Price Range 1.85
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, maximum
$ 1.85 
Number of Shares
968 
Options Outstanding, Weighted Average Remaining Contractual Term
3 years 0 months 10 days 
Options Outstanding, Weighted Average Exercise Price
$ 1.85 
Options Exercisable, Number of Shares
968 
Options Exercisable, Weighted Average Exercise Price
$ 1.85 
Exercise Price Range 2.95
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, maximum
$ 2.95 
Number of Shares
1,147 
Options Outstanding, Weighted Average Remaining Contractual Term
3 years 7 months 18 days 
Options Outstanding, Weighted Average Exercise Price
$ 2.95 
Options Exercisable, Number of Shares
1,147 
Options Exercisable, Weighted Average Exercise Price
$ 2.95 
Exercise Price Range 10.39
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, maximum
$ 10.39 
Number of Shares
3,500 
Options Outstanding, Weighted Average Remaining Contractual Term
4 years 6 months 22 days 
Options Outstanding, Weighted Average Exercise Price
$ 10.39 
Options Exercisable, Number of Shares
2,334 
Options Exercisable, Weighted Average Exercise Price
$ 10.39 
Exercise Price Range 15.00
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
Exercise Price, maximum
$ 15.00 
Number of Shares
1,200 
Options Outstanding, Weighted Average Remaining Contractual Term
4 years 9 months 20 days 
Options Outstanding, Weighted Average Exercise Price
$ 15.00 
Options Exercisable, Number of Shares
173 
Options Exercisable, Weighted Average Exercise Price
$ 15.00 
Stockholders' Equity - RSU Award Activity (Details) (Restricted Stock Units (RSUs), USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Restricted Stock Units (RSUs)
 
 
 
Number of Shares
 
 
 
Unvested at beginning of period (in shares)
138,055,000 
 
 
Granted (in shares)
31,507,000 
 
 
Vested (in shares)
(46,434,000)
 
 
Forfeited (in shares)
(6,719,000)
 
 
Unvested at end of period (in shares)
116,409,000 
138,055,000 
 
Weighted Average Grant Date Fair Value
 
 
 
Unvested at beginning of period (in dollars per share)
$ 55.89 
 
 
Granted (in dollars per share)
$ 82.15 
 
 
Vested (in dollars per share)
$ 49.19 
 
 
Forfeited (in dollars per share)
$ 51.19 
 
 
Unvested at end of period (in dollars per share)
$ 65.95 
$ 55.89 
 
Fair value of vested RSUs
$ 4.23 
$ 2.77 
$ 1.55 
Stockholders' Equity - Additional Award Disclosures (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
$ 7,230 
Future period share-based compensation expense period of recognition (in years)
3 years 
Restricted Stock Units (RSUs)
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
6,670 
Other Awards
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
$ 559 
Interest and other income/(expense), net (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Nonoperating Income (Expense) [Abstract]
 
 
 
Interest expense
$ (23)
$ (23)
$ (56)
Interest income
52 
27 
19 
Foreign currency exchange losses, net
(66)
(87)
(14)
Other
(1)
Interest and other income/(expense), net
$ (31)
$ (84)
$ (50)
Income Taxes - Schedule for Income Before Income Tax (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
 
 
Domestic
$ 2,802 
$ 4,918 
$ 3,197 
Foreign
3,392 
(8)
(443)
Income before provision for income taxes
$ 6,194 
$ 4,910 
$ 2,754 
Income Taxes - Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Current:
 
 
 
Federal
$ 3,012 
$ 1,999 
$ 1,154 
State
183 
130 
69 
Foreign
123 
96 
68 
Total current tax expense
3,318 
2,225 
1,291 
Deferred:
 
 
 
Federal
(800)
(240)
(28)
State
(17)
(14)
(7)
Foreign
(1)
(2)
Total deferred tax benefit
(812)
(255)
(37)
Provision for income taxes
$ 2,506 
$ 1,970 
$ 1,254 
Income Taxes - Effective Income Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
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
2.00% 
1.40% 
1.60% 
Research tax credits
(1.40%)
(1.10%)
(4.70%)
Share-based compensation
2.20% 
6.50% 
5.20% 
Effect of non-U.S. operations
(0.90%)
(3.60%)
6.80% 
Other
3.50% 
1.90% 
1.60% 
Effective tax rate
40.40% 
40.10% 
45.50% 
Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Deferred tax assets:
 
 
Net operating loss carryforward
$ 476 
$ 130 
Tax credit carryforward
297 
190 
Share-based compensation
529 
225 
Accrued expenses and other liabilities
239 
136 
Other
34 
21 
Total deferred tax assets
1,575 
702 
Less: valuation allowance
(205)
(101)
Deferred tax assets, net of valuation allowance
1,370 
601 
Deferred tax liabilities:
 
 
Depreciation and amortization
(270)
(101)
Purchased intangible assets
(934)
(1,190)
Deferred foreign taxes
(15)
Total deferred tax liabilities
(1,219)
(1,291)
Net deferred tax assets
151 
 
Net deferred tax liabilities
 
$ (690)
Income Taxes - Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Reconciliation of Unrecognized Tax Benefits
 
 
 
Gross unrecognized tax benefits-beginning of period
$ 1,682 
$ 1,316 
$ 164 
Increases related to prior year tax positions
322 
24 
425 
Decreases related to prior year tax positions
(52)
(13)
Increases related to current year tax positions
1,066 
346 
740 
Decreases related to settlements of prior year tax positions
(1)
(4)
Gross unrecognized tax benefits-end of period
$ 3,017 
$ 1,682 
$ 1,316 
Income Taxes - Narrative (Detail) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure
 
 
 
 
U.S. federal statutory income tax rate
35.00% 
35.00% 
35.00% 
 
Tax benefit from share-based award activity
$ 1,721,000,000 
$ 1,853,000,000 
$ 602,000,000 
 
Valuation allowance, deferred tax assets
205,000,000 
101,000,000 
 
 
Tax-effected benefit to be recognized in additional paid in capital if net operating loss carryforward is utilized
655,000,000 
 
 
 
Cumulative stock ownership change threshold
50.00% 
 
 
 
Change in ownership percentage over period
3 years 
 
 
 
Unrecognized tax benefits
3,017,000,000 
1,682,000,000 
1,316,000,000 
164,000,000 
Unrecognized tax benefits that would impact effective tax rate
2,400,000,000 
 
 
 
Internal Revenue Service (IRS)
 
 
 
 
Income Tax Disclosure
 
 
 
 
Operating loss carryforwards
2,700,000,000 
 
 
 
Operating loss carryforwards expiration year
2032 
 
 
 
Tax credit carryforward
1,080,000,000 
 
 
 
Tax credit carryforward expiration year
2030 
 
 
 
State and Local Jurisdiction
 
 
 
 
Income Tax Disclosure
 
 
 
 
Operating loss carryforwards
3,310,000,000 
 
 
 
Operating loss carryforwards expiration year
2023 
 
 
 
Tax credit carryforward
$ 905,000,000 
 
 
 
Tax credit carryforward expiration year
2032 
 
 
 
Geographical Information - Revenue (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Revenue by Geographical Area
 
 
 
Revenue
$ 17,928 
$ 12,466 
$ 7,872 
United States
 
 
 
Revenue by Geographical Area
 
 
 
Revenue
8,513 
5,649 
3,613 
Rest of the world
 
 
 
Revenue by Geographical Area
 
 
 
Revenue
$ 9,415 
$ 6,817 
$ 4,259 
Geographical Information - Property and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
$ 5,687 
$ 3,967 
United States
 
 
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
4,498 
3,256 
Sweden
 
 
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
713 
514 
Rest of the world
 
 
Long-Lived Assets, by Geographical Area
 
 
Property and equipment, net
$ 476 
$ 197