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Facebook in hot water over IP theft allegations
Author: Tim SmalleyPublished: 26th July 2007
Facebook could end up being shut down if the allegations are true.
The allegations come from rival social networking site, ConnectU, whose founders say that Zuckerberg stole the idea while he was contracted to develop part of ConnectU.
Cameron Winklevoss, one of ConnectU’s founders, says he has a record of 52 email exchanges and three meetings with his team and Facebook founder Zuckerberg.
Winklevoss and his team have complained to a federal court, ordering Facebook to be shut down. They want the court to assign control of the site and its profits to them.
Zuckerberg, on the other hand, has denied the allegations, saying that he had voluntarily agreed to work on the ConnectU site for six hours and didn’t know that it was going to be a social networking site. He and his co-defendants have asked the court to dismiss the case.
Facebook currently has more than 30 million users worldwide and is believed to be worth in the region of $10 billion USD.
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Comments (16)
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Just doing the maths ... 10.000.000.000 / 30.000.000 = 333 USD per registered user -- User are the only asset of such a site, right?
Now we know how much a user is worth. :D
cheerio.
lame! Sounds a bit pathetic to me. If they had such an awesome idea why did they allow themselves to be beaten to it? :)
It smells like jealousy, but IF he did it, they have the right to have a portion of the profit... not the whole site plus all it's income.
Some people are greedy beyond recognition :(
Adverts. There are no subscription fees, but every person counts as a user and every user will check Facebook once a day on average (at a guess). Thus, they get a HUGE number of page views and companies target them for adverts. Quite sensible really.
Also, Zuckerberg never worked for ConnectU, he did some work for Harvard Connection, which eventually morphed into ConnectU. It was ConnectU who filed the lawsuit, because that was what Harvard Connection had become.
Facebook also filed a countersuit in 2005, alleging that ConnectU hired hackers to hack into Facebook's site, steal e-mail details and then send them all an e-mail trying to entice them to come over to ConnectU.
Just another day in the corporate world
Social networks are AMAZING at generating traffic, but I would guess that the traffic generated is quite poorly filtered and low quality from an advertiser's point of view, so I'd be surprised if they were willing to pay much per impression.
The point of this is that you would need to look at an ENORMOUS number of ads to generate $333 worth of revenues for the site - think of it like this - the advertiser obviously won't want to spend more than they earn from your business. Let's say for simplicity they only advertise on FB and they spend 10% of revenues on advertising (quite a hefty margin). That means every FB user has to click through FB ads and spend $3,333 for FB to generate $10bn of revenues. By the time you factor in the cost of hosting all those millions of pages and billions of page views of bandwidth, they would have to generate more than $10bn in revenues to generate a return for an investor paying that much for the company. And I don't think they ever will. How many users will ever spend enough online to generate $333 worth of ad revenue for FB?
So, on the fundamentals, there is no way on earth FB is worth $10bn. Maybe like $300m ($10 per user). However, the fundamentals really don't matter in a bubble market - so long as there is another clown willing to pay $12bn a year down the track, $10bn is a bargain, right?
You forget advertising is a small part of the revenue. Most of the money comes from selling your details. Check the terms and conditions.
People put everything about themselves on facebook, favourite music, cds, people, how they vote, when they buy things, when they go out, birthdates, email address's, phone numbers, etc etc.