Facebook warns of government regulation in $5 billion IPO filing

Facebook warned that burdensome regulation and other challenges could mean "there is no guarantee" that the social network won't go the way of competitors like MySpace or Friendster, according to documents the company filed on Wednesday as it seeks to go public.

The social-networking giant filed for an initial public offering of $5 billion with the Securities and Exchange Commission, but it warned potential investors that problems like legislation, regulation, or lawsuits could hurt its bottom line.

"A decrease in user retention, growth, or engagement could render Facebook less attractive to developers and advertisers, which may have a material and adverse impact on our revenue, business, financial condition, and results of operations," Facebook said in the nearly 200-page document. Facebook's potentially blockbuster IPO would be one of the largest in years.

The document also reflected Facebook's international growth. Facebook said it does not know if it will be able to find an approach to managing its content in China that will be acceptable to both the company and the government.

"It is also possible that governments of one or more other countries may seek to censor content available on our website, restrict access, block our website, or impose other restrictions that may affect the accessibility of Facebook for an extended period of time or indefinitely." Twitter recently sparked uproar after saying it could selectively censor content at the request of governments around the world.

Before the documents were filed, the advocacy group Human Rights First pushed Facebook's potential investors to clarify its position on censoring its own content or giving user information to governments.

Facebook, which must weather new scrutiny as a publicly traded company, defended its privacy and security practices and sought to play up the potential benefits of its services, including changing how people relate to their government and other institutions.

"We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time," the document said.

In its S-1 form filed with the SEC, Facebook revealed it had $3.7 billion of revenue in 2011, with $1 billion in income. Founder and CEO Mark Zuckerberg owns 28 percent of the company.