Social Networking Watch: News on the Social Networking and Social Media Industry

Facebook Wins Lawsuit Against Power Ventures Over Login Data

BUSINESS WEEK - Feb 19 - Facebook sued Power Ventures in December 2008, saying Power.com offered users the ability to retrieve their Facebook messages and other information from Facebook’s computer servers without permission.Power Ventures is based in the Cayman Islands, according to court papers. Power.com is up for sale on the Internet. “Facebook has established a dangerous precedent for the future of users rights to own and control their data,” said Steven Vachani, chief executive officer of Power Ventures, in an e-mailed statement. “We intend to aggressively continue this fight.”

by Paul Milford
See full article at Business Week

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In Brazil, Google Paves Facebook's Path To The Top

IB TIMES - Feb 15 - Facebook said its number of active users in Brazil had nearly tripled in 2011, finally placing it ahead of Google Inc's Orkut service as the No. 1 social network in the country. Much of the credit for that may belong to Google, analysts say. While a growing economy and easier credit gave Brazilians the ability to purchase computers and broadband connections, Google's Orkut gave them a reason to do so in the first place. "Until Orkut came along in 2004, Internet use in Brazil was stagnant," said analyst José Calazans of market research firm IBOPEnielsen in Sao Paulo. Now many of those people are moving to Facebook." Orkut's failure to innovate in line with users' expectations created an opportunity for Facebook to step in, offering new apps and games, as well as the ability to connect with people beyond Brazil.

by Asher Levine
See full article at IB Times

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Facebook Teams Up With Bango For Mobile Payments

PC WORLD - Feb 9 - UK-based mobile billing and analytics company Bango has signed an agreement to provide payment services to Facebook. The terms of the deal have not been disclosed. BlackBerry maker Research in Motion already uses Bango to enable customers to pay for apps through their operator contracts, saving them the trouble of typing in their credit card details each time they buy an app. Bango also struck a deal with Amazon in December.

by Sophie Curtis
See full article at PC World

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Facebook's Saverin Agreed To Sell Shares To Russians

CNET NEWS - Feb 8 - Thanks to his depiction in the blockbuster film "The Social Network," Eduardo Saverin is one of the social network world's most famous co-founders. Facebook disclosed that Saverin cut a side deal to sell a chunk of his shares to Digital Sky Technologies in 2010. Facebook reported that Digital Sky, a Russian-based investment firm, and Saverin were involved in the transfer of shares as part of what it described as the "Saverin Agreement." It's unclear how many shares Saverin sold or what price he received. Digital Sky and its affiliates now owns 5.4% of the company's outstanding shares. But back on February 19, 2010, Digital Sky and a related party were said to own 8.2% of Facebook's outstanding stock.

by Charles Cooper
See full article at CNet News

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Facebook's Zuckerberg May Face $2 Billion Tax Bill

CNN - Feb 8 - Facebook's upcoming IPO will make founder and CEO Mark Zuckerberg a billionaire -- but it will also stick him with an eye-popping tax bill that could reach as high as $2 billion. Zuckerberg currently owns almost 414M shares of Facebook, but he also holds options to buy another 120M shares at the bargain price of 6 cents a piece. Zuckerberg plans to exercise those options and will sell some of his shares during Facebook's initial offering to cover the tax bill. The type of options Zuckerberg holds are taxable as ordinary income when they're exercised, even if the shareholder hangs onto the shares and doesn't sell them. That means Zuckerberg will owe taxes on the difference between what he pays for his Facebook shares -- 6 cents -- and their market value the day he exercises the options. Facebook said in its IPO filing that it values its shares at $29.73. At that price, Zuckerberg's options windfall would be worth $3.6 billion.

by Stacy Cowley
See full article at CNN

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More Than Just Great Firewall Awaits Facebook In China

REUTERS - Feb 8 - Facebook said last week it was contemplating re-entering China, the world's second biggest economy, after being blocked nearly three years ago. But its offering would likely face intense competition, political meddling and little commercial success. "It's actually a bit late for Facebook," said Hong Kong-based CLSA analyst Elinor Leung, who added that the market was already quite saturated with local players such as Sina Corp, Renren Inc, Kaixinwang001 and Tencent Holdings. Facebook first launched its Chinese interface in 2008 but was blocked by Beijing in mid-2009 following deadly riots in the western province of Xinjiang that authorities say were abetted by the social networking site. Facebook would face same the factors that have led to the failure of many foreign internet companies in China: nimble local competition, murky government regulation and bureaucracy, and difficulty in adapting to local tastes. Facebook would have to manage and censor content heavily in order to gain Beijing's blessing for entry.

by Melanie Lee
See full article at Reuters

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Google, Facebook Remove Content As India Threatens Lawsuits

ASSOCIATED PRESS - Feb 6 - Google India has removed web pages deemed offensive to Indian political and religious leaders to comply with a court case that has raised censorship fears in the world’s largest democracy. The action follows weeks of intense government pressure for 22 Internet giants to remove photographs, videos or text considered “anti-religious” or “anti-social.” For India’s ~100M Internet users, the government says, U.S. Internet standards are not acceptable.

See full article at Washington Post

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Facebook’s Network In Offshore Tax Havens

THE SUNDAY TIMES - Feb 6 - Facebook has been funnelling hundreds of millions of dollars through its Irish operation in an apparent effort to reduce its tax bill. Facebook moved 15% of its global revenues through Dublin in 2010, according to the accounts for an Irish subsidiary. The accounting manoeuvre allows Facebook to exploit Ireland’s 12.5% corporation tax rate, against 35% in America. Facebook Ireland Limited (FIL) employed 151 people in its Dublin office in 2010, when it generated €229.6M in sales. It had a cash pile of €172M but paid only €232K in Irish corporation tax. Google saved about £2 billion in 2007-2009 by shifting profits through Ireland and Bermuda. In 2010 it paid £1.2M in British corporation tax on sales of £2.2 billion in this country. Facebook UK paid £397K in corporation tax in 2010 on profits of £1.1M. Facebook Ireland accounted for all its £15.3M turnover.

See full article at The Sunday Times

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Groupon Basks In Facebook Light, For Now

REUTERS - Feb 3 - Groupon shares jumped to their highest level of 2012 Thursday as the daily deal company got a boost from social networking euphoria sparked by Facebook's IPO filing. Facebook filed to raise about $5 billion Wednesday in what would be the largest Internet IPO ever. Shares of LinkedIn hit $77.84, the highest level in almost three months. Groupon shares jumped 8.3% to $23.28. The stock hit $24.22 earlier, the highest since December 16. Such gains may be temporary, especially for companies like Groupon that have less of a direct relationship to Facebook.

by Alistair Barr
See full article at Reuters

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Facebook Files For $5B In Biggest Internet IPO

BLOOMBERG - Feb 1 - Facebook filed to raise $5 billion in the largest Internet IPO on record. Facebook is considering a valuation of $75 billion to $100 billion. A $100 billion market capitalization would value Facebook at 26.9 times trailing 12-month sales, more than double Google’s valuation when the search-engine operator went public in 2004. Zuckerberg is the company’s top holder with 28.4% of the shares, the filing shows. He also has proxy agreements with fellow stockholders that potentially give him voting control over more than half the shares.

by Brian Womack
See full article at Bloomberg

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Facebook: 425 Million Mobile Users And No Money

PC MAG - Feb 2 - Facebook's mobile apps are frequently among the most popular downloads in the Android Market and Apple App Store. Facebook's Wednesday IPO filing revealed that the company had ~425M monthly active users during December 2011, or about half of its worldwide user base. But while that 425M number might be impressive, it's not making Facebook any money at this point. "We currently do not show ads or directly generate any meaningful revenue from users accessing Facebook through our mobile products", Facebook said.

by Chloe Albanesius
See full article at PC Mag

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This post also appears on OnlinePersonalsWatch.

How Facebook Made $3.71 Billion In 2011

MASHABLE - Feb 1 -  It’s not too surprising that Facebook generates a substantial majority of their revenue from advertising, though it also revealed just how much it makes via its partnership with Zynga (12%).

Facebook divides its revenue into two buckets:

   1. Money made from advertising
   2. Payments and other fees

Both revenue streams have been increasing over the past few years (ad revenue went from $764M in 2009 to $3.154 billion in 2011). Cash coming in from payments jumped up from $106M in 2010 to $557M in 2011. Facebook says the spike was because it forced all app partners to use Facebook Payments for transactions in July of last year.

by Peter Pachal
See full article at Mashable

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Facebook: Zynga Generates 12% of Our Revenue

MASHABLE - Feb 1 - Lots of interesting numbers emerged from Facebook’s IPO filing Wednesday — including that Zynga, accounts for 12% of the company’s revenue. Facebook generated $3.71 billion in sales last year; ~$445M of that came from its partnership with Zynga. Facebook made $1.97 billion in 2010.

by Lauren Indvik
See full article at Mashable

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Snap Interactive: Facebook's Fast Growing Social Media Company

SEEKING ALPHA - Feb 2 - With Facebook going public in 2012, the mobile and social media revolution will come to the forefront of investors' attention. Snap Interactive is the leading provider of social dating and location-based apps built on Facebook. Their core dating brand "Are YOU Interested?" has ~55M user installations, 8M monthly active users. Since being founded in 2005, revenues have grown at a torrid pace. As of the last 12 months ended September 30, 2011, the company has recorded $16.5M in sales. Quarterly revenues hit $5.1M (+198% YoY) in September, which puts the company on pace for~$20M in sales for 2011. The total market size for online dating is now in excess of $1billion.

by Ben Axler
See full article at Seeking Alpha

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This post also appears on SocialNetworkingWatch.

FTC Blasts Facebook, Google Over Violations Of Privacy

TALKING POINTS MEMO – Jan 26 – Federal Trade Commissioner Julie Brill spoke Tuesday morning at a cybersecurity forum in Washington D.C. and blasted both Google and Facebook for violating user privacy, saying they “learned it the hard way” not to change user privacy settings without express approval from users. In 2011, both Google and Facebook reached separate but similar agreements with the FTC to undergo 20-years of independent privacy audits. Both companies have been found guilty of violating user privacy agreements and managed to dodge fines and penalties, but have been required by the FTC to develop their own internal privacy programs, which will then be checked periodically to ensure compliance. Brill dodged questions about Google’s latest privacy policy change that will create one policy across all of its products.

by Carl Franzen
See full article at Talking Points Memo

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Facebook Killing World’s Local Social Networks

THE NEXT WEB – Jan 25 – Italian digital strategist Vincenzo Consenza just published his new edition of his World Map of Social Networks and not surprisingly, Facebook comes out at the top of the list across the world. The social network has the number one spot in 127 out of the 136 countries in the list. With over 800 million active users, Facebook is continuing to take the place of local offerings or other international competitors. In June 2011, they surpassed Hyves in Holland, and just this month edged out Orkut in Brazil to become the number one social network in the country. It’s also outpacing Japan’s popular mobile networks Gree, Mobage and Mixi. Europe currently dominates Facebook in number of users at 223M, followed by North America at 219M and Asia at 202M.

by Nancy Messieh
See full article at The Next Web

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Facebook Halts Secondary Markets Trading, IPO Coming Soon

MASHABLE - Jan 25 - Facebook halted trading of its shares in secondary markets for three days starting Wednesday, a possible indicator the company’s long-awaited IPO is coming soon, according to a report. According to a recent report, Facebook’s $100 billion IPO is expected to hit in late May. Facebook shares have been trading on the secondary markets for years. Under U.S. laws, such trading is possible if there are fewer than 500 investors.

by Todd Wasserman
See full article at Mashable

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Facebook Wants Ceglia To Pick Up $84,000 In Legal Fees

CNET NEWS - Jan 23 - Facebook lawyers have asked a judge to order Paul Ceglia to pick up more than $84K in legal fees. Ceglia, the man who claims a contract with CEO Mark Zuckerberg entitles him to a 50% stake in the social network, was fined $5K earlier this month over delays in making his e-mails available in his case against Facebook. He was also ordered to pay reasonable attorneys' fees.

by Steven Musil
See full article at CNet News

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