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November 24, 2009 2:59 PM PST

Facebook changes stock structure: IPO on the way?

by Caroline McCarthy
  • 8 comments

Facebook is changing the structure of its company stock to a dual-class system, a move that hints the company may be looking toward an initial public offering--even though it says it has no plans to do so yet.

Here's how it works. Existing Facebook shareholders currently have Class A stock. That'll be converted to Class B stock, which has 10 times the voting power of Class A. Should those shareholders sell their stock when Facebook goes public, they'll be converted back into Class A stock--otherwise, they'll stay the way they are.

The story was first reported by The Wall Street Journal, which added the detail that this stock structure change will give founder and CEO Mark Zuckerberg more power unless he opts to sell stock during an IPO. But while Zuckerberg and other executives have said that they eventually plan to take Facebook public, they continue to say that there are no concrete plans for it. Two years ago, Zuckerberg said that it was "years out."

"This revision to the stock structure should not be construed as a signal the company is planning to go public," a statement from Facebook read. "Facebook has no plans to go public at this time."

November 23, 2009 1:49 PM PST

LinkedIn's platform loosens up

by Caroline McCarthy
  • 2 comments

Professional networking site LinkedIn's platform, previously a closed offering for select partners, has opened up to developers at large, according to an announcement Monday on the company blog.

Well, sort of. Building an embeddable widget on LinkedIn, unlike Facebook's, still requires a stringent application process. But LinkedIn's own code has now been opened up so that developers can integrate it into their own sites. It's launched a developer site for those interested in features that let site users access their LinkedIn profile and contacts externally. They still have to request a key to get into the platform's application program interface (API), which means that LinkedIn widgets likely will not be coming to office prank-calling Web sites any time soon, despite that they could make it much easier to robo-call your boss and ask if his refrigerator is running.

One of the first participants, for example, is desktop Twitter client TweetDeck, which says that it will soon allow users to plug in their LinkedIn contacts' status updates alongside Twitter, Facebook, and MySpace contacts.

LinkedIn has about 50 million users as of last count.

November 22, 2009 11:59 PM PST

'Jurassic Park' kid cast as Facebook co-founder

by Caroline McCarthy
  • 6 comments

The Winklevoss twins will probably be scary, too. This is a 'Jurassic Park' promo shot of actor Joseph Mazzello, who was recently cast as Facebook co-founder Dustin Moskovitz. NB: He's nearly two decades older now.

(Credit: Amblin Entertainment/filmdope.com)

This isn't particularly Earth-shattering news, but it's sort of hilarious.

Dustin Moskovitz, one of Facebook's co-founders and its head of engineering until he left last year, will be played by the little boy from "Jurassic Park" in the tell-all flick "The Social Network."

According to details in the Internet Movie Database, the role of Moskovitz has been filled by Joseph Mazzello, the actor best known for playing Timmy, the skinny 8-year-old who fell out of trees, nearly got electrocuted, and narrowly escaped getting eaten by all kinds of meany dinosaurs in the 1993 blockbuster. In other words, he already has experience as a member of the supporting cast of over-the-top movies about high-tech innovations.

Mazzello is now 26, which should make you feel very old.

Moskovitz was instrumental in Facebook's origins, but in "The Social Network" (helmed by "Fight Club" director David Fincher with a screenplay by Aaron Sorkin) he has a relatively minor role. The film is not supported or authorized by Facebook or Mark Zuckerberg, its CEO and co-founder. And the book that the movie is based on--Ben Mezrich's "The Accidental Billionaires"--relies on sourcing, much of it anonymous, from other figures early in Facebook's history. We can confirm that Moskovitz, who has been loyal to the company even after leaving, was not one of them. Putting too much of him in there could lead to legal problems.

The young cast of the movie has proven to be an amusing blend, with "Adventureland" star Jesse Eisenberg starring as Mark Zuckerberg (likely a very good fit), pop star Justin Timberlake playing Silicon Valley entrepreneur Sean Parker (really?), and "Gossip Girl" actor Armie Hammer playing both Cameron and Tyler Winklevoss, the identical twins who claimed Zuckerberg's founding of Facebook amounted to a theft of their own idea.

November 19, 2009 3:57 PM PST

Offerpal revises terms amid continued scandal

by Caroline McCarthy
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Offerpal Media, one of the companies at the center of a bitter dispute over misleading advertisements on social networks, on Thursday launched a revised policy designed to "forbid any offers that are misleading, deceptive or otherwise objectionable."

Companies like Offerpal are enlisted by many of the big gaming companies built on social networks like Facebook; they help those companies make money by letting game players earn points and virtual goods by completing offers and surveys rather than paying real money.

They make a lot of money doing so. So do the game companies, like Zynga and Playfish (recently acquired by Electronic Arts), which in turn advertise heavily on the likes of Facebook to recruit new players.

But then the negative press started to emerge: many of these "free" offers and surveys actually had hidden costs attached to them that weren't adequately disclosed. Some companies like Zynga started backtracking and going so far as to ban offers altogether. Facebook and MySpace, the two biggest social-network platforms, made very public revisions to their policies. But the controversy continued, and both Facebook and Zynga were named as defendants in a federal class-action lawsuit.

Offerpal, which replaced its CEO amid the controversy, has now come out and said that while it's setting a basic standard for advertisement quality, game makers and publishers enlisting Offerpal's services can opt to be even more stringent. "Offerpal will rate all offers by quality and allow its partners to select a quality level of compliance ranging from 'Level 1' for minimal restrictions to 'Level 5' for highly conservative restrictions," a release explained.

Will the new restrictions keep angry bloggers and consumers--not to mention lawmakers--at bay? More importantly, are they going to amount to anything more than smoke and mirrors? We'll see.

November 17, 2009 4:04 PM PST

Chase commits $5 million to Facebook charity campaign

by Caroline McCarthy
  • 3 comments

Chase announced Monday a partnership with Facebook to power the finance company's inaugural "Community Giving" campaign, which will allocate a total of $5 million to small, local nonprofits voted on by Facebook members.

The campaign takes the form of--you guessed it--a Facebook Platform application, in which members can choose their favorite of more than 500,000 nonprofits. Naturally, then, they're encouraged to use the hallowed "social graph" to encourage their friends to do so as well.

The winner gets $1 million in a grand-prize announcement slated for February 1; five runners-up get $100,000 apiece, and then the entire top 100 receives $25,000 apiece. There's an advisory board consisting of celebrities and Chase execs, as well as Facebook vice president of communications Elliot Schrage.

The publicity effort for Community Giving, which reached out to celebrity Twitter users in both the entertainment and nonprofit space in addition to the mainstream press to spread the word, says it's been an early success: over 12,000 Facebook members signed on in the first day.

That's not quite as many as the hundreds of thousands who rallied to support a prospective Stephen Colbert presidential campaign in the matter of a week, or the tens of thousands who opted to follow actor Neil Patrick Harris in his first 24 hours on Twitter, but for something that's a legitimate charity effort rather than a goofy viral meme, it's respectable.

Facebook has traditionally been hands-off about partnerships on its application platform, but nonprofit and public interest-related projects have been the exception: the social network forged several media-outlet deals during the 2008 presidential election, partnered with nonprofits to create virtual gifts for its "Facebook for Good" campaign, and synced up with the Huffington Post for a "social news" experiment.

It was less than two years ago that Facebook founder Mark Zuckerberg said that corporate philanthropy wasn't an immediate goal for the social network because, at the time, it simply didn't have the profits.

November 9, 2009 10:46 PM PST

Twitter, LinkedIn team up for self-promotion free-for-all

by Caroline McCarthy
  • 4 comments

Corporate tools take note: You can tell Twitter exactly what you're doing, and it'll tell LinkedIn too.

Chalk one up for the cringe-worthy marketing term "personal branding": there is a new partnership between Twitter, hub for informing the world exactly what you're doing and thinking at all moments of the day, and LinkedIn, the business-networking tool on steroids. In an announcement Monday, the two companies explained that LinkedIn status messages can sync with Twitter.

"The business use case of Twitter is turning out to be very important, and more and more people are finding that the persona they create for themselves on the Web is part of their resume in many ways," Twitter co-founder Biz Stone said in a joint video with LinkedIn founder Reid Hoffman that was posted to the LinkedIn blog.

So, in short, LinkedIn's "status" feature now syncs with Twitter with an optional check box--a feature that the two companies say should be rolling out over the next few days. Likewise, can set your Twitter status as your LinkedIn status by using the hash tag #li or #in, so that you can rest assured that your tweet about "watching Gossip Girl and eating cold pizza" won't immediately show up to potential clients or employers trawling your LinkedIn profile. (Full disclosure: This was my Twitter status tonight. If you believe that it renders me professionally unsound, please feel free to let me know.)

All snark aside, this is probably a very good bet for LinkedIn, which continues to grow fast and make money but which hasn't yet really jumped into the latest social-networking trend of real-time, streaming information. Inking a partnership with Twitter is much easier than launching some other kind of initiative to get members to update their statuses more often. Tweets sent to LinkedIn, presumably, could also be grouped in with LinkedIn status messages to form some kind of business-intelligence live stream. The sort of information that people want to share specifically with colleagues and professional associates could be of interest to high-end advertisers or the market research community.

Twitter, meanwhile, is going to want to stay in the limelight of the business community as it considers a long-term business model--one of the microblogging service's potential moneymakers has been launching a "dashboard" of analytics for people and companies who use it primarily for professional purposes rather than, you know, filling the world in on which beer was just discovered in the back of the fridge.

Also for Twitter, this is yet another potential source of tweets as it attempts to become the world's foremost repository of real-time information. Earlier this year, MySpace announced an official way to sync Twitter and MySpace status, and in a matter of weeks its link-shortening service had become the second most popular on Twitter (trailing Twitter's preferred Bit.ly).

Facebook, meanwhile, appears to have been more reluctant: a Twitter app on its platform has pulled tweets into status messages for some time, and an unofficial app lets members tag selective tweets with the hashtag "#fb" to cross-post them to Facebook, but the only time that Facebook has put out a big, official announcement about syncing with Twitter was when it added an easy-sync feature for "fan pages," profiles for brands and marketers.

Not surprising. Twitter is a hot name in marketing these days, and in order for Facebook to establish fan pages as an ideal spot for brands to build a presence, an easy Twitter sync is a selling point. But in the long run, it's an advantage for Facebook, which once tried to buy Twitter and was snubbed, to keep its treasure trove of what-the-world-is-thinking somewhat to itself. After all, it can get away with it: with well over 300 million active users, Facebook is significantly bigger than Twitter, and could be diluting its own product by openly sourcing status messages out to Twitter. LinkedIn, better known for its networking features than any kind of status updating, isn't running that kind of risk.

Until then: "At SFO airport at bookstore. Deciding between @gladwell and @tferriss. Need real, serious insights. Thoughts? #li."

November 5, 2009 6:38 PM PST

Facebook: We're going after scammy ads, too

by Caroline McCarthy
  • 3 comments

The industry P.R. frenzy over scams in ads and offers on social networks goes on: Facebook announced on Thursday evening in a post on its developer blog that since it updated its developer platform terms of service this summer, it has disabled two ad networks that it says were running deceptive advertisements.

This comes in the wake of allegations that some companies that power offer- and survey-related moneymaking operations for social-gaming applications on platforms like Facebook's have effectively been scamming users into paying for services without disclosing those costs. One of them, Offerpal Media, has been particularly visible in the crosshairs.

"This battle is not new and it's far from over," the post by Facebook's Nick Giano wrote. "We faced stimulus scam ads on our own system earlier this year and pushed them off the site with rigorous enforcement. We did the same months later when deceptive ads from third-party ad networks appeared in applications. We're doing that again now as we see them appear in the form of offers."

Additionally, Facebook--which has said for quite some time that many of the activities highlighted in the "app scam" controversy are already banned by its terms of service--included in the post that more than 100 developer applications have been either "suspended or brought into compliance" over advertising issues, and that more than half of them were used by at least 1 million Facebook members per month. It's not clear whether these were all related to scams, or to other advertising-related infringements like the Burger King marketing campaign that encouraged users to "unfriend" their contacts in exchange for a free cheeseburger.

Facebook representatives declined to name which ad networks or applications it has banned. But the company did ban two companies in June, Social Hour and Social Reach, citing ad network policy violations. It's possible that the two ad networks mentioned in Facebook's blog post were banned months ago, given the "since July" language.

Earlier this week, MySpace--another big destination for social-network apps--announced that it had updated its terms of service to ban app scams. Prior to that, several prominent application manufacturers announced that they had banned potentially deceptive offers, despite the fact that they are responsible for a big chunk of virtual-goods revenues.

An update was made to this post at 7:51 a.m. PT on November 6 to note that Facebook banned two ad networks in June.

November 5, 2009 2:54 PM PST

Offerpal Media mess gets stickier

by Caroline McCarthy
  • 1 comment

It looks like the brouhaha surrounding social-app moneymaker Offerpal Media is bigger than founder Anu Shukla's "sh*t, double sh*t, and bullsh*t" response to the accusation that its business is built on scamming consumers. It's got upcoming developments in two lawsuits, one in which it's the plaintiff and one in which Shukla is a defendant.

VentureBeat's Dean Takahashi reported Thursday that a lawsuit was filed in an Alameda County, Calif., superior court against Shukla and co-founder Michael Liu on behalf of Kevin Halpern, who alleges that he helped found the company and was then shut out. In a court complaint, Halpert says that in exchange for offering his social-networking expertise to what would become Offerpal, Shukla promised him a 15 to 20 percent stake in the company that never came to fruition.

The defendant's motion to dismiss the breach-of-contract suit is scheduled for November 24, according to public court documents. On Wednesday, Offerpal had announced that Shukla would be leaving her post as CEO and would be replaced by digital-ad veteran George Garrick.

But that's not the only legal dispute that Offerpal is in. There's a judicial settlement conference scheduled for Friday in the trademark infringement lawsuit that Offerpal filed against Kickflip, a former customer that went on to create a competing business, called Gambit, according to a person familiar with the court details. The suit was originally filed in April, and the status of a potential settlement is currently unclear because most of the events thus far, as well as Friday's scheduled meeting, have been behind closed doors.

But the reason why Offerpal has been in the news so much as of late has been because of Shukla's public altercation with TechCrunch's Michael Arrington at last month's Virtual Goods Summit in San Francisco. In response to Arrington's allegations that Offerpal's profitable business, used by many social-gaming companies as a way for users to earn virtual goods in-game, actually misleads players into signing up for paid offers and subscriptions.

Following the Arrington-Shukla spat, a number of high-profile names in the gaming and social-networking world came out against developer-app scams and misleading ads. Offerpal maintains that it runs a legitimate business. But it's clear that this company's issues run quite a bit deeper than a single PR fiasco.

November 4, 2009 4:51 PM PST

After onstage spat, Offerpal replaces CEO

by Caroline McCarthy
  • 5 comments

Offerpal Media, a company that helps social-network app creators make money from offers and surveys, on Tuesday announced that it had replaced its CEO in the wake of a high-profile onstage argument at a conference and subsequent press over whether it's scamming consumers who fill out offers in order to earn virtual goods in social games.

Anu Shukla, who founded the company and had been serving as CEO since its 2007 launch, will be replaced by George Garrick, who has served as the CEO of Flycast Communications, Wine.com, Jingle Networks, and Mochi Media. Shukla "will still be involved and help guide the company," an Offerpal representative told CNET News.

A statement from Shukla makes it sound like the company's been CEO-hunting for months ("I have known George for a long time...After many months of searching, I believe that George is the best CEO to scale the company to new heights. I am looking forward to working with him closely"). But the timing is a little too good to be coincidental: a firestorm erupted over Offerpal and other companies in its niche after TechCrunch's Michael Arrington confronted Shukla while she was on a panel at the Virtual Goods Summit in San Francisco last month. Arrington accused Shukla of running a scam operation that tricks consumers into unwittingly spending money--and of course, he then blogged about it.

Shukla's response to Arrington was "sh*t, double sh*t, and bullsh*t."

But the industry has taken the controversy seriously. Social game makers like the massive Zynga have come out and said that they would ban potentially shady and misleading offers, even though those might make up a sizeable chunk of revenue, and on Tuesday social network MySpace joined the debate and said that it had modified its terms of service to outlaw "app scams."

Shukla was interviewed by VentureBeat's Dean Takahashi in a lengthy article published on Tuesday.

This post was expanded at 4:55 p.m. PT.

October 29, 2009 1:33 PM PDT

Facebook spells out updated privacy policy

by Caroline McCarthy
  • 4 comments

Facebook head of communications Elliot Schrage posted a company blog entry on Thursday inviting members to review proposed updates to the social network's privacy policy, and much of it deals with what happens to the content of accounts that members have opted to delete.

"Specifically, we've included sections that further explain the privacy setting you can choose to make your content viewable by everyone, the difference between deactivating and deleting your account," and the process of memorializing an account once we've received a report that the account holder is deceased," Schrage wrote. Earlier this week, Facebook detailed the process of "memorializing" an account, which leaves the profile intact to current friends but hides potentially sensitive information.

Now, in the proposed new policy, which members are invited to review and comment on until November 5, Facebook explains to users that they can "deactivate" their account, which hides it but keeps information stored for potential reactivation, or alternately choose to delete it for good.

"Even after you remove information from your profile or delete your account, copies of that information may remain viewable elsewhere to the extent it has been shared with others, it was otherwise distributed pursuant to your privacy settings, or it was copied or stored by other users," the new wording explains. It's referring to content like posts and comments on other members' profile 'walls.' "However, your name will no longer be associated with that information on Facebook."

It's been a long and twisted road for Facebook's privacy regulations. The new policy was put into place after a complaint from the Canadian Privacy Commission called into question what would happen to member profile data if a user deactivated an account.

That fiasco followed outrage over changes to Facebook's terms of service that implied Facebook claimed an "irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license" to member content even if the account had been deleted. One privacy advocacy group readied a federal complaint, and Facebook backed off and returned to its old terms of service.

In July, Facebook cleaned up its user privacy controls as it prepared to open up more of its profile content to public access and search engines.

But the Canadian Privacy Commission had also taken issue with how much Facebook profile information could potentially be shared with third-party developers or advertisers. Facebook made additional modifications to its user privacy controls in August in response to concerns about the developer platform, and in Thursday's post about the new privacy policy Schrage highlighted that the social network does not intend to share personal data with advertisers.

"The information we provide to advertisers is 'anonymized,' meaning that it can't be traced back to you as an individual in any way," Schrage's post explained.

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About The Social

CNET News' Caroline McCarthy is a downtown Manhattanite who believes that, despite popular opinion, the Web can actually help your social life. She's happily addicted to fun social-media tools from Twitter to Yelp to Facebook, sends an inordinate number of text messages, and has a tendency to waste time at the office reading restaurant blogs. Here, she explores all facets of the Web's gregarious side, as well as the unique tech culture in her home city of New York. (Don't call it Silicon Alley.)

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