The world's No.1 social networking site Facebook said, Wednesday, it has "served 500 million customers" and is on its way to breach the 1 billion mark, shrugging off a consumer survey report that it sits at the bottom of the heap in terms of user experience.

Facebook, founded 6 years ago, said it has over 500 million users to date and now aspires to reach the 1 billion member mark or connect one out every seven people on this planet.

To celebrate the occasion, Facebook has launched an application called Facebook Stories, which allows users to share a post with everyone using the application, rather than just friends. The application lets users search stories by location or theme. Among the 30 themes are crime fighting, grief, health, politics, love, rescues, and reunions.

"I could have never imagined all of the ways people would use Facebook when we were getting started six years ago," said Facebook founder Mark Zuckerberg in a blog post on Wednesday.

"Our mission at Facebook is to help make the world more open and connected," Zuckerberg wrote. "Stories like these are examples of that mission and are both humbling and inspiring. I could have never imagined all of the ways people would use Facebook when we were getting started 6 years ago."

Zuckerberg had created Facebook while he was a Harvard student. It was initially created as a place for college students to connect with one another.

Since then, there's been no looking back for Facebook and according to the latest online traffic data, it now towers above other social networking sites like MySpace (110 million users), Twitter (105 million users) and LinkedIn (70 million users).

According to ComScore analyst Andrew Lipsman, Facebook has grown phenomenally worldwide despite a slowing US growth. Lipsman said Facebook's international users grew 73 percent in 2009 and the site, which once faced hurdles in non-English speaking countries, is now gaining traction in Europe, Latin America and Asia. In particular, Facebook has 12 million users in India and 6 million in Brazil.

Lipsman said Facebook should not face any difficulty in touching the 1 billion mark and, considering the brisk growth rate, it could happen as early as this year. While it took Facebook about five years to reach the 175 million active member mark, by the company's sixth anniversary in February, it had topped 400 million. "It just goes to show that in a very short period of time, Facebook has a powerful network effect," the analyst said. "Once the site reaches that critical mass, it can really take off in a big way."

Agrees Altimeter Group analyst Jeremiah Owyang. "Facebook's potential market size is as large as the online communication market [itself]," Owyang said.

The announcement from the privately-held company came as a pleasant surprise because a recent customer survey report said that Facebook ranks poorly in terms of customer satisfaction.

Earlier this week, the University of Michigan's 2010 American Customer Satisfaction Index E-Business report gave Facebook 64 on its 100-point scale, a ranking lower than that of the IRS and in the bottom 5 percent of all the private companies the report measured, which included airlines and cable companies. Smaller rival MySpace received one point less.

"Facebook is a phenomenal success, so we were not expecting to see it score so poorly with consumers," said Larry Freed, president and CEO of ForeSee Results, an Ann Arbor, Mich.-based research firm that partnered with ACSI LLC to conduct the e-business survey.

"Our research shows that privacy concerns, frequent changes to the Web site, and commercialization and advertising adversely affect the consumer experience," Freed said, adding that when asked what they didn't like about Facebook, users reported privacy concerns, advertising, interface changes, navigation problems and constant notifications about "annoying" applications.

According to Gabriel Consulting Group Inc. analyst Dan Olds, this is not good news for Facebook, which is also being dogged by several controversies.

Earlier this month, a top German data protection official said he has taken legal action against the company for violating privacy laws in the country.

Johannes Caspar, Hamburg Commissioner for Data Protection and Freedom of Information, said Facebook has illegally been collecting data on non-Facebook users from the e-mail address books of its active users and could have used them for marketing purposes.

Facebook, which has time till August 11 to respond to the legal complaint, is facing similar privacy problems in Canada, the US and Switzerland.

Facebook has also been hit by an ownership lawsuit.

New York-based Paul D. Ceglia is claiming majority ownership of Facebook, citing a deal which he reportedly signed with Facebook founder Mark Zuckerberg in April 2003.

The deal, Ceglia said, allowed him to design and develop the website and in return he got $1000 fee and a 50 percent stake in the company.

However, one clause in the contract reportedly allowed Ceglia to own more stake in the company.

"Under Paragraph 3 of the contract, the Seller and Purchaser agreed that for each day after January 1, 2004, the Purchaser would acquire an additional 1 percent interest (in the business), per day, until the website was completed," the lawsuit reads.

Citing the time taken to complete and launch the Facebook (February 4, 2004), Ceglia claims it gave him additional 34 percent stake in the company or a total of 84 percent stake in Facebook.

Last month Ceglia filed his claim in the Supreme Court of New York's Allegany County and won a temporary injunction restricting Facebook from selling or disposing off its assets till the lawsuit is settled.

Facebook said it will vigorously challenge the "frivolous" claim and has filed for the transfer of the case to the federal court in Buffalo, New York. It said the lawsuit is almost certainly barred by the Statute of Limitations - which runs for six years in New York - as the deal was signed so long ago.

Facebook founder Zuckerberg has been accused of securities fraud by former Harvard colleagues Divya Narendra and brothers Cameron and Tyler Winklevoss. The case is still going pending.

However, people will continue to flock to Facebook because it "is the dominant social network," Olds said.

"The site definitely has been hurt by the turmoil surrounding their privacy policies but there really isn't a strong alternative right now. So even though their customer satisfaction scores suck, users are going to continue to flock there because Facebook is where their friends are," the analyst said.

Facebook, whose worldwide online ad spending increased 39 percent to $605 million from 2009 to 2010, has no dearth of investors. The company is estimated to be worth $6.5 billion after receiving a $200 million investment from the Russian firm Digital Sky Technologies in 2009. Zuckerberg's fortune was estimated by Forbes magazine earlier this year to be $4 billion.