Technology

The business and culture of our digital lives,
from the L.A. Times

Category: Jessica Guynn

Facebook IPO: Winklevoss twins could reap big payday

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Cameron and Tyler Winklevoss could have a lot to gain when Facebook begins selling its stock to the public: as much as $300 million.

The Menlo Park, Calif., social networking giant filed papers with the U.S. Securities and Exchange Commission on Wednesday, the first step to an initial public offering that could raise as much as $10 billion and value the company at $100 billion.

The Winklevosses rose to pop-culture fame claiming that they -- not Mark Zuckerberg -- invented Facebook. And they wanted to risk their windfall to prove it.

But their case got tossed, and now they may be all the richer for it.

The ambitious young Olympic rowers made famous in the Oscar-winning "The Social Network" contested an out-of-court settlement they reached with Facebook, saying they were duped into accepting less than they should have.

In the end, they took their settlement in stock, and now, even at the low end of a Facebook valuation, that stock would be worth $225 million.

Tyler Winklevoss declined to comment. But on Twitter, Cameron Winklevoss wrote: "We r excited 4the #FacebookIPO + wish the company + all involved the very best,an amazing accomplishment!"

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-- Jessica Guynn

Photo: Tyler Winklevoss, left, and his brother Cameron Winklevoss. Photo credit: Don Bartletti / Los Angeles Times

Facebook says Paul Ceglia should be ordered to pay attorney fees

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Facebook fired back at Paul Ceglia, the New York man who claims he's entitled to half of Mark Zuckerberg's multibillion-dollar stake in the social networking giant, saying he should pay the legal fees its lawyers are requesting.

In papers filed in federal court in Buffalo, N.Y., Facebook said its attorneys had "substantially discounted" and were asking for an amount "far less than what defendants actually paid." 

Ceglia, fined last month for failing to turn over evidence in his case against Facebook, is protesting the "stratospheric" legal fees from Facebook's lawyers.

Ceglia said he should not have to pay as much as $716 an hour to Facebook's highest-billing partner for a "garden variety" contract case.

U.S. Magistrate Judge Leslie Foschio said last month that Ceglia must reimburse Facebook for legal fees it incurred in trying to get him to comply with a court order in the partnership dispute.

Ceglia's lawyer, Dean Boland, said in court papers that the fees are unjustified.

Ceglia merited a mention in Facebook's registration statement filed Wednesday with the U.S. Securities and Exchange Commission. Facebook filed papers to sell its stock to the public and will likely begin trading in May.

"We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud,” the filing said.

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-- Jessica Guynn

Photo: Photo: The Facebook sign outside the company's new campus in Menlo Park, Calif. Credit: David Paul Morris / Bloomberg

Facebook IPO: Mark Zuckerberg says 'Stay focused & keep shipping'

Mark Zuckerberg's desk

Your company just filed papers to sell its stock to the public in what may be the biggest Internet IPO ever that will make you one of the richest people in the world.

So what are you going to do?

Here's Mark Zuckerberg's answer. This is a photo of his desk at Facebook's Menlo Park, Calif., headquarters that he posted Wednesday on his Facebook page.

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-- Jessica Guynn

Photo: Mark Zuckerberg's desk at Facebook's Menlo Park headquarters. Photo credit: Mark Zuckerberg

Facebook files for IPO

Facebook

Status update: Facebook has filed papers for what's expected to be the largest initial public offering ever to come out of Silicon Valley and one of the largest in U.S. history.

Ending months of breathless speculation, the 8-year-old social networking company has submitted registration documents with the U.S. Securities and Exchange Commission that set preliminary goal of $5 billion.

Facebook had discussed raising as much as $10 billion. Final pricing will not be set for months, and the size of the IPO probably will increase with investor demand.

The filing sets the stage for an IPO in May.

The important stats right off the bat: 845 million users; 483 million daily users; annual revenue of $3.7 billion; $1.8 billion in operating income and $1 billion net income.

Facebook selected Morgan Stanley as its lead bank to handle the IPO with assistance from four others. Morgan Stanley's resume of recent Internet IPOs includes Groupon and Zynga. Investment banks will receive as much as $500 million in fees depending on the valuation.

Now the frenzy to own a piece of Facebook, already off the charts on private trading exchanges, promises to get even more clamorous.

Facebook, one of the world's best-known brands, is an international phenomenon, touching the lives of more than 800 million people around the globe.

The IPO was inevitable. Facebook had tripped the regulatory wire that forces companies with more than 500 shareholders to disclose almost as much information as publicly traded companies.

The registration documents spell out how much the company intends to raise and what it intends to do with the money and gives the first official glimpse into the company's financial performance.

The IPO will create enormous wealth in Silicon Valley and more than 1,000 new millionaires among the company's 3,000 employees, which many hope will give a boost to the local economy including the housing market and car sales.

Everyday investors are also hoping that as friends of Facebook they will get a chance at a piece of the IPO.

Young technology companies like to say they do things differently. In June when Groupon filed for an IPO, founder Andrew Mason said: "We are unusual and we like it that way."

Google's owner's manual for investors contained a letter to investors from co-founders Larry Page and Sergey Brin offering a similar warning. "Google is not a conventional company. We do not intend to become one."

Page and Brin thumbed their noses at Wall Street by demanding an IPO that would be open to all investors. Google used a Dutch auction, which meant that the general public had a better shot at buying the stock before the shares began trading, rather than giving access only to the investors handpicked by the investment bankers.

Facebook is unlikely to hand over control to its Wall Street bankers and is expected to stay true to the vision that founder and Chief Executive Mark Zuckerberg dreamed up in his Harvard dorm room.

Facebook created a dual-class stock structure that ensures that Zuckerberg, a hands-on leader, will remain in firm control of Facebook and continue to make key decisions.

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-- Jessica Guynn

Photo: A spray-painted image of founder and Chief Executive Mark Zuckerberg at Facebook's Menlo Park, Calif., campus. Credit: Mark Boster / Los Angeles Times

Facebook charging 'stratospheric' attorney fees, Paul Ceglia says

Facebook

Paul Ceglia, fined last month for failing to turn over evidence in his case against Facebook, is protesting the "stratospheric" legal fees from Facebook's lawyers.

Ceglia, who contends he's entitled to half of Mark Zuckerberg's multibillion-dollar stake in Facebook, said he should not have to pay as much as $716 an hour to Facebook's highest-billing partner.

U.S. Magistrate Judge Leslie Foschio said last month that Ceglia must reimburse Facebook for legal fees it incurred in trying to get him to comply with a court order in the partnership dispute.

Ceglia's lawyer, Dean Boland, said in court papers that the fees are unjustified.

A Facebook spokesman declined to comment.

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-- Jessica Guynn

Photo: The Facebook sign outside the company's new campus in Menlo Park, Calif. Credit:  David Paul Morris / Bloomberg 

Google defends new privacy policy to Congress

Google

Google has been facing a barrage of questions about changes it plans to make to its privacy policy that affects how it handles the voluminous data it collects from hundreds of millions of people around the globe. 

Some of those questions have come from members of Congress who question if Google is sacrificing its users to boost its online advertising business as it pushes into new areas such as social networking and mobile devices.

The Internet search giant responded Tuesday in a letter, saying its new privacy policy helps users and is similar to those used by other Internet companies.

Google said it was just making its privacy policy easier to understand and said it was already sharing information about its users across services.

It also said the new privacy policy benefits users by helping them find the information they are looking for more quickly.

For example, Google says currently when someone signs into Google and searches for recipes, it can't recommend cooking videos on YouTube. That will change with the new privacy policy that takes effect March 1. That also means Google can show users even more finely targeted online ads.

Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas) on Friday asked the U.S. Federal Trade Commission to probe whether the changes violate Google's settlement last year over its now defunct Google Buzz social network. People have different options to evade this kind of tracking. They can open Google accounts not associated with their real names. Or they can just not log in.

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-- Jessica Guynn

Photo: A sign for Google is displayed behind the Google android robot, at the National Retail Federation, in New York on Jan. 17, 2012. Credit: Mark Lennihan/AP Photo

Facebook builds lead in display ads as its IPO approaches

Sheryl Sandberg is Facebook’s chief operating officer.

With the filing for its initial public offering expected any day now, Facebook Inc. is extending its lead in online display advertising, which makes up the bulk of its revenue.

The social networking giant’s share of the U.S. online display advertising market grew to nearly 28% for 2011, up from 21% a year earlier, according to research firm ComScore Inc.

Facebook has stayed ahead of Yahoo Inc., which has 11% of the display ad market — and far ahead of Google Inc. and Microsoft Corp.,  each of which has less than 5%, according to ComScore.

Facebook surpassed Yahoo for the first time in 2009, said Andrew Lipsman, ComScore’s vice president of marketing and industry analysis.

The new numbers show that Facebook is persuading Madison Avenue to funnel ad dollars into social media, he said. That success can be credited to Facebook Chief Operating Officer Sheryl Sandberg, a former Google executive who has been instrumental in convincing advertisers that ads on Facebook are far more persuasive because they come via a friend.

Facebook — which has more than 800 million users — also can target ads using personal information that people volunteer on their user profiles and information Facebook gathers on how people spend their time on the site. In addition, brands can form connections with consumers for free through fan pages they create on the service.

Lipsman said the ComScore research puts into perspective how Facebook has come to dominate display advertising.

“If we think back a couple of years, large brands were hesitant to use social media channels. Fast forward to today, and that has really reversed itself,” Lipsman said. “Almost 3 out of every 10 ads or so are on Facebook.”

That’s the kind of message Facebook wants to send to Wall Street as it prepares to file papers this week with the Securities and Exchange Commission for an initial public offering. The company is looking to raise as much as $10 billion in an offering that could make Facebook worth as much as $100 billion.

Facebook also collects revenue from its virtual payment system called Facebook credit.  And the company takes a 30% cut of revenue generated by game developers on its site.Facebook’s total revenue in 2011 was about $4.3 billion, according to estimates from research firm EMarketer.

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-- Jessica Guynn

Photo: Sheryl Sandberg, Facebook’s chief operating officer, is credited with driving the company’s online advertising business. Credit: Chris Ratcliffe / Bloomberg

Google plans to merge more user data across its products

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Google is alerting hundreds of millions of users of its products that it's changing the way it treats users' data, combining even more information it knows about them from all of its products, from Gmail to YouTube.

The Internet search giant is putting a notice on its home page and sending emails to users starting Tuesday. Google says the changes will give users a better, more consistent experience on Google products and will help advertisers better reach users who are interested in their products and services.

The changes to Google's privacy policy and terms of service take effect March 1. They remove legal hurdles Google had faced in combining information from certain properties such as YouTube or search history.

Google said the new privacy policy responds to demands from regulators around the globe that users have a simpler, more concise way to understand what Google does with their information. Right now users have to navigate a complex web of privacy policies and terms of service for different Google products.

Google says it's been combining information it gleans about users logged into Google for years to tailor search results and ads to their interests. Now it will be able to do that even more broadly. For example, if you search for skateboard tricks on Google and then hop over to YouTube, the video sharing site will recommend offerings from skateboard pro Tony Hawk.

Google says users can still control their information through the privacy dashboard and the Ads Preferences Manager.

Google says it's helping users. But it’s also clearly helping itself, said Danny Sullivan, editor of SearchEngineLand.com.

"This may cause more critics to complain that there is no escaping the clutches of Google," Sullivan said.

And it could throw more fuel on the already heated controversy over Google's recently launched Google Search plus Your World feature which combined information from Google+ into search results.

Under the leadership of Chief Executive Larry Page, Google has moved more aggressively to use its position as the dominant Internet company to promote its Google+ social network.

It's looking to slow the momentum of Facebook and to use personal data from Google+ and other Google products to improve search, maps and ads.

It’s a battle of the Web superpowers. Facebook, which is on the verge of an initial public offering that could raise $10 billion and value the Menlo Park, Calif., company at $100 billion, aims to own everyone’s online identity and already has a rich hoard of information about its users and deep insights into their connections and interests.

To counter Facebook's growing influence, Google is pouring massive resources into reengineering its approach to the Web and make it more social.

Like other major Internet players, it’s walking a fine line between respecting the privacy of users and mining as much information about them as possible.

Google has stumbled when it comes to privacy. Last year it reached a settlement with the U.S. Federal Trade Commission that subjects the company to 20 years of privacy audits. It also has drawn heavy regulatory scrutiny in Europe.

Google recently launched a privacy campaign to educate consumers about how it uses their information and how to protect themselves on the Web.

Privacy advocate Ryan Calo, who was given a sneak peek at Google's new privacy policy, says it's unlikely users will read it. Privacy policies are required by law, but few people pay attention to them, even when they are like Google's latest one: short, concise and written in plain English, he said.

"Sounds like Google's overall practices won't be that different; it's more that Google is owning up to how it thinks and what it does," said Calo, who’s with Stanford Law School's Center for Internet & Society, which gets some funding from Google.

But he’s less sure if Google isn’t risking turning off some users with what he calls the "creepiness" factor.

For example, Google says someday it may be able to alert you based on your location, your calendar and local traffic conditions when you are going to be late for a meeting. According to Google: "Google users still have to do too much heavy lifting, and we want to do a better job of helping them."

Do users want Google to do that? It depends, Calo said.

"It's different if I am going to a business meeting or to a strip club,” he said.

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-- Jessica Guynn

Photo: A sign for Google is displayed behind the Google android robot, at the National Retail Federation, in New York on Jan. 17, 2012. Credit: Mark Lennihan/AP Photo

Facebook wants Paul Ceglia to pay more than $84,000 in attorney fees

Facebook sign outside company's new campus in Menlo Park, Calif.

Facebook's lawyers are asking a judge to order Paul Ceglia to foot the bill for more than $84,000 in fees.

Ceglia, the New York man who claims he's entitled to half of Mark Zuckerberg's multibillion-dollar stake in Facebook, was fined for refusing to turn over email account information and ordered to pay reasonable attorneys' fees. 

Facebook's lawyers are also asking Leslie G. Foschio, the federal magistrate in Buffalo, N.Y., to order Ceglia not to file any additional "non-responsive papers or pleadings in the case" until he pays up.

Ceglia's lawyer, Dean Boland, said he has not had a chance to review the court filing in detail, but said he and his client would prepare a response over the coming week.

"If we feel it ought to be modified, we will respond accordingly," Boland said.

Boland, who's from Cleveland, took a shot at Facebook's lawyers for charging Manhattan hourly rates in a case unfolding in Buffalo.

"Cleveland and Buffalo are pretty identical demographically, and I can tell you that no lawyer would survive in the city of Cleveland charging that much an hour because no one would be able to hire him," Boland said.

Orin Snyder, the most senior Gibson Dunn partner, charged $716.25 an hour. His most junior associate charged $337.50 an hour, according to the filing.

Facebook, which is on the verge of an initial public offering that could value the world's most popular social networking company at $100 billion, can clearly afford it.

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-- Jessica Guynn

Photo: The Facebook sign outside the company's new campus in Menlo Park, Calif. Credit:  David Paul Morris / Bloomberg  

'I'm, like, Sheryl Sandberg,' Facebook exec tells Valley Girl

Never thought I'd hear Facebook's chief operating officer say: "I'm, like, Sheryl Sandberg." 

But that's what you get (and then some) from this entertaining interview with Jesse Draper, host of the Web's "The Valley Girl Show" (profiled last year by the San Francisco Chronicle) who rocks a pretty-in-pink wardrobe and lots of girly asides while interviewing Silicon Valley legends.

This week Draper is totally focusing on "Rockin' Women." So she paid a visit to Sandberg at Facebook's splashy new Menlo Park campus. Check out Sandberg's thoughts on the "stalled revolution" of women at the top of corporate America (Sandberg sits on the boards of Disney and Starbucks and pushing women to "sit at the table" is a cause she frequently champions) and her lesser-known erstwhile career as an aerobics instructor (leg warmers and all). 

Like, seriously.

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-- Jessica Guynn

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