tonight on "nightline," inside facebook. the company hits 500 million users. and diane sawyer goes to the nerve center of the world's biggest social network. face to face with 26-year-old founder mark zuckerberg. plus, private lives. we find out where facebook stands on your privacy. charging fees. and the continuing drama over just who is entitled to a piece of the empire. it's an abc news exclusive. and, the video guy. he's done it again with his out of context video clip that got shirley sherrod fired. but how does andrew breitbart manage to cause political chaos wherever he goes? wherever he goes? we went to find out.

>> announcer: from the global resources of abc news, with terry moran, martin bashir and cynthia mcfadden in new york city, this is "nightline," july 21st, 2010. >> good evening, i'm cynthia mcfadden. we begin with business, and rather, remarkable news at facebook, which announced today that it had signed up its 500 millionth user. not bad for a website that didn't exist until six years ago. the story of its creation by founder mark zuckerberg has become almost mythological. soon a movie will bring that story to life. butch as the movie makers say, you don't get to 500 million friends without making a few enemies. so, who is mark zuckerberg? diane sawyer went to facebook's headquarters to find out what makes the 26-year-old ceo tick. >> reporter: 500 million. that's the mind boggling number

of users facebook hit this week. to give you an idea of how many people that is, it's the population of the united states, japan and germany combined. hard to believe that the i illusi illusive, very young ceo, mark zuckerberg, founded facebook only six years ago. this a milestone for you, though? when you were dreaming, can we get to 80 million -- >> it's definitely pretty surreal. >> reporter: if it keeps growing at its current rate, by 2013, every single person in the world who is online will be on facebook. case in point? >> you might be our 500 million pth user. >> i know. i know. you didn't know that i'd be the one to do it. >> who would have figured? we never would have gotten there without you. >> you were out there thinking, i've got all these, who possibly -- >> diane sawyer. >> oh, you're facebook friends. >> well, so, are you going to add me as a friend? >> i want everybody to be careful about what you post on

facebook. >> reporter: it is in the dna now of the american culture, not to mention the world's. and it's worth? estimated around $24 billion, but no one knows for sure. and zuckerberg isn't telling. i know it's a private company. how much profit? >> we're not going to answer that question. that's the advantage of being a private company. >> reporter: you want to give us a hint? >> no. >> reporter: all right. ipo next year? >> at some point along that path. i think it will make sense to have an ipo. but we're not running the company to do that. we're running the company to serve more people. >> reporter: amazingly, two years after he dropped out of harvard, zuckerberg was offered $1 billion for facebook, and he said no. >> we really just believe in what we're doing. it was a difficult decision -- >> reporter: but you can believe in what you're doing and take the money for it, too. >> well, we just felt that doing that and going down that path would not help us build facebook out to what we thought it could

be. >> reporter: at 26, he is now an icon, though famously shuns the big mogul lifestyle. what does it mean to you to be a billionaire right now? >> well, i'm not. the company is a private company, so i don't really have access to any money like that, but -- >> reporter: would we be surprised if we saw how you live right now? >> i think so. it's a pretty small house. but i want to be within walking distance from the office, so i can walk five, ten minutes from work. >> reporter: he's come a long way from the harvard dorm room where he and his roommates had the idea to put the college student drekry online. the idea was to connect students with their friends at the college. >> what we thought was that someone would build something like this. but as college students, we thought there was no chance that we would be able to play a part in building that. >> reporter: as with any creation myth, it's been hard to separate the facts from the legend. just who built it along with him?

how much of the company they're entitled to has been fraught with controversy. so many lawsuits, settlements, even one against his close friend and roommate. >> they're saying we stole the facebook -- >> i know what it says. >> reporter: one version, about to become very public in the upcoming time m "the social network." >> your actions could have destroyed everything i've been working on. >> we. >> mark? >> reporter: the trailer por tapes zuckerberg as a geeky, stop at nothing force. >> as for the charges, i believe i deserve some recognition from this board. >> i'm sorry? >> yes. >> i don't understand? >> which part? >> reporter: have you seen the trailer for the movie? >> someone showed me part of it, but -- >> reporter: what did you think when you say -- >> it's interesting but it's fiction. there's been a lot of stories that have been written about facebook that are fiction and make it seem like what we did were interesting in different ways. but you know, i just -- what i tell everyone at the company is,

we shouldn't stay -- we shouldn't be that focused on things like that. we can't be focused when people try to -- >> reporter: but it's one thing to say that. it's another thing to know that a movie is coming. it has to affect you in human terms. >> you know, i think that a lot of these things are distractions, but -- >> reporter: is that all -- >> all the time, i really believe that people get remembered for what they build. if you build something great, people don't care about what someone says about you in a movie or even what you say. they care about what you build. >> reporter: what's the worst you've ever felt about it? >> you know, not specifically this episode, but i started facebook when i was 19, right, so i was just a kid, and i knew nothing about business and nothing had been written about me so a lot of these experiences along the way have been really new and took me some getting used to. >> reporter: if you could tell that 19-year-old kid something, what would you tell him? >> i think that the things that you learn along the way are part of what makes you who you are. >> reporter: anything you would have done differently?

>> i mean, i would have done a lot of things differently. i hope that instead of making the mistakes i made, i would have made different mistakes. i think this has been an extremely educational experience. >> reporter: some of it bruising for you inside? >> but i think all mistakes are. right? i mean, when you -- when you break up with a girlfriend or have a failed relationship, those things are bruising, but you learn from that and that's part of what makes you who you are. >> reporter: the claims continue to dog zuckerberg to this day. the latest from a man who says he was promised a majority stake in the company when zuckerberg worked for him as a programmer back in college. a lawyer said that she was unsure if you had signed a contract giving a man 84% of the company. >> if we said that we were unsure, i think that was likely taken out of context, but i think we're quite sure that we did not sign a contract that says they have any right to ownership over facebook. says they have any right to ownership over facebook. >> another claim to the fortune. and when we come back, diane

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a recent dust-up over privacy issues left many users feeling used. so, how does mark zuckerberg win them back? >> reporter: the company is entered into a sort of tango with its users over privacy. the latest example, cumbersome privacy settings that may mean in the default, you're allowing personal photos and information to go out to everybody. we know that you've had a series, through the years, of enflamed episodes in which you then had to address them. >> yeah, we've made mistakes. for sure. >> reporter: there's just uncertainty, distrust, based on the fact that there was at one point, a default, share with everybody episode. >> the business model and the way that we support facebook is through advertising, and we do that because we don't want to charge people for the site. and we've made this commitment that people will never have to pay to use facebook. they don't have to pay now, they never will. the more type of stuff you can

put up, the better. >> reporter: he's adamant that facebook responds to users privacy needs but says it has a larger mission, to nudge everyone to share more, not less. what about just changing the default setting? >> i think the right thing is to make it so that certain information by default is always private. so, for example, your phone number, other contact information, where you live. that stuff should be private. only the people you set up, said this is my friend, i trust them, should be able to see this. other things like photos, we think make sense to be shared with the community around you. >> reporter: so no plan to change default? >> no, i think it's set in a way that helps people share, the way that most people want to on the site. >> reporter: confident now, but last may, we saw him at a conference -- >> i can't go back and change the past, i can only do what we think is the right thing going forward. >> reporter: we ask him about visibly sweating. >> we saw the conference in which you were sweating. >> i was wearing a very hot

hoodie. >> reporter: it wasn't because you hated interviews? >> i have done a lot of interviews and q and as in the past. normally i don't sweat. >> reporter: right here. i'm looking. you're sweat-free. >> so far. >> reporter: so far. so far? so good. facebook now employs more than 1,600 people. >> making it so that people can easily talk to each other while they're working throughout the day, i think creates a better work environment. and it's more fun. >> reporter: headquarters here in california, wide open spaces, cleverly named conference rooms. the staff gets three people me day. even their laundry done for free. you think your biggest competitor is going to be something you haven't seen that. think that's true. >> reporter: not google? >> there are a lot of great companies that are trying to do different things. but history would say that a company should focus on new upstart companies rather than

large existing companies. >> reporter: what is it to be 26 and sitting astride this thing? what is it? >> i think it's really exciting. a lot of the people at this company are part of the first generation of people who really grew up with computers and the internet. >> reporter: i say you're getting up there. you worried about the 15-year-olds coming and taking you here? >> you know, 15-year-olds say the funniest things. we ask -- i was talking to a group of high school students and the person actually told me that she thought that e-mail was too slow. and my reaction was, are you kidding me? e-mail is instantaneous. >> reporter: so, are you going to see the movie? >> i don't think so. i don't read books about us, i don't read a lot of the press about us. i'm probably not going to see the movie, either. >> reporter: would you have liked somebody else to play you? >> i don't know. i've never met him. seems like a nice guy.

actually his cousin works here. >> reporter: what? >> yeah. his cousin is a designer here. we have meetings all the time. we're working on designing a product together. it's a small world. >> reporter: the world zuckerberg is making even smaller. for "nightline," diane sawyer in palo alto. >> our thanks to diane. you can get social with "nightline" by liking us on facebook, following us on twitter or visiting the "nightline" page at abcnews.com. when we come back, terry moran goes head to head with the man behind the latest obama administration kur fluffle. chronologically i'm 60 years old. is it the new 40, i don't know. i probably feel about 30. how is it that we don't act our age? [ marcie ] you keep us young. [ kurt ] we were having too much fun, we weren't thinking about a will at that time. we have responsibilities to the kids and ourselves. we're the vargos and we created our wills on legalzoom.

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>> announcer: "nightline" continues from new york city with cynthia mcfadden. >> to politics now. the obama administration apologized today to a former department of agriculture employee who was fired this week when conservative bloggers released a tape that seemed to catch her making remarks that were racist. turned out the tape was not what it seem. the man who released the tape is now well known to democrats as a

formidable antagonist. his name is andrew breitbart. my come colleaglleague interviee man behind the mayhem. >> reporter: in this year of american voter anger and discontent, andrew breitbart. >> love the ladies. >> thank you very much. >> reporter: has found his moment. >> i get to be me right now. and that's the best part of this entire thing. that's -- this to me is the beginning of the gunning. >> reporter: and what is beginning, he hopes, is the age of breitbart. >> andrew breitbart here. i come from hollywood. >> reporter: he's everywhere. on fox news a lot. >> andrew breitbart, welcome back. >> thank you, sean. >> reporter: rallying the tea party faithful in appearances across the country. >> i want to tell you that there is a beast out there in hollywood that does not allow for this to happen. >> reporter: launching the websites big government, big

journalism, big hollywood. and lobbing grenades of controversy, like his most recent revelation this week of an old speech by obama agriculture department official shirley sherrod, in which she con ffesses that she was once deeply reluctant to help a white farmer who needed her aid. >> i was struggling with the fact that so many black people had lost their farm land, and here i was faced with having to help a white person save their land. >> reporter: sherrod resigned under pressure, and then, it turned out, breitbart had released only a clip of her speech, which distorted her real meaning, that she was wrong and had learned from her error. the controversy continues to breitbart's delight. >> this is the standard if you want to talk about people clapping racist behavior that's exactly what you see in this video. >> reporter: today, a kind of victory for breitbart. the controversy he stirred up, and the way he succeeded in panicking the obama administration resulted in a

public apology from the white house to sherrod. >> on behalf of the administration, i offer our apologies. >> reporter: pretty much everywhere he goes these days, andrew breitbart is looking for a fight. >> are you in the room? are you in the room? you're despicable. >> reporter: if you interview breitbart, you know what you're in for, as i found out. i want to ask you about the president of the united states. you consider him a far leftist? >> what's wrong with saying -- >> reporter: nothing. >> there's no evidence -- >> reporter: but i'm -- >> there's no evidence that -- >> reporter: i'm trying to get it straight. in the angry, bruising world of modern american politics and media, there is no angrier rhetorical bruiser than an dry breitbart. >> you are a despicable human being. you're the lowest life form. >> reporter: and if this is his moment, there are good reasons for it. first, he's worked very, very hard to get here. >> i'm kind of an alien. i grew up in west los angeles.

i was adopted, so, my sister was hispanic, clearly, and i was irish, clearly, and my dad was jewish, and my parents were very middle american in the heart of the beverly hills, brentwood, rich, you know, scene. >> reporter: he was, he sails, a typical west coast liberal until the clarence thomas hearings lit him up against the liberal establishment. >> this is a circus. it's a national disgrace. and from my standpoint, as a black american, as far as i'm concerned, it is a high tech lynching for uppity blacks who dare to think for themselves. >> i saw a glimpse of the matrix and i started to ask some very tough questions of myself. >> reporter: breitbart soon signed on to work for a conservative website, the drudge report, which he helped build

into an internet colossus. and he helped launch the liberal site the huffington post. >> yeah, i don't -- that's the one thing i don't talk about. i mean, matt is an international man of mystery, and the last time i saw him was running into him at -- at the white house correspondents dinner in 2005. that's the last time i saw him. i will say this. boy did i get lucky to work with matt drudge and arianna huffington. >> reporter: now it's breitbart who has a agagenius for buzz, f getting stuff out there that he knows the media can't resist covering, like the 2009 uproar over undercover videos shot by james o'keefe in the offices of a.c.o.r.n. they appeal red to show them

offering guidance for running a brothel. >> i have to have a code number. >> when they came to me with their videos, they had concocted the strategy, they have done everything. they hadited the videos, and i said, i want to put it on youtube. i want everybody to dissect this thing however they want. >> reporter: and everyone did, and that was the end of a.c.o.r.n. but not the end of the story. once again, breitbart had put out a heavily edited version of the tapes that omitted key information, like the fact that an a.c.o.r.n. 'employee called the police after talking to the supposed pimp. did you tell the audience that that employee called the police? >> i'm -- i actually don't know, but -- >> reporter: is it relevant, do you think? >> i don't think he called the police. he called his cousin. >> reporter: who is a police officer. >> doesn't matter.

this is the first time that there was anything, other than, that he called his cousin -- >> reporter: in the main stream media, that's called follow-up journalism. >> reporter: but he isn't about main stream debates. he's a rabble-rouser, a master man anyone lay or the of the media's appetite for controversy, real or fake. and his time has come. >> you're awesome, man. >> reporter: i'm fig . >> i'm fighting back against years and years and years of the cultural and the political left telling people to sit down and shut up. and you want to follow me, fine. and there are people who are. >> our own terry moran reporting on a man with a big voice and a big following. we'll be right back. but first, here's jimmy kimmel with what's coming up next on abc. jimmy? >> jimmy: tonight, adam carolla is here. we have music from raheem

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