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Facebook in hot water over IP theft allegations

Facebook in hot water over IP theft allegations

Facebook could end up being shut down if the allegations are true.

The owner of Facebook, the popular social networking site, is facing allegations of stealing the idea from his fellow classmates at Harvard University.

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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16 Comments

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DougEdey 26th July 2007, 11:43 Quote
Money grabbing gits, they're just jealous that Facebook is good and this "ConnectU" (which sounds like some kind of sex club) is failing.
Jamie 26th July 2007, 11:47 Quote
Sounds like jealousy to me, facebook beat them and now they want a piece of the pie.
bilbothebaggins 26th July 2007, 11:55 Quote
Quote:
...30 million users worldwide and is believed to be worth in the region of $10 billion USD.

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.
RTT 26th July 2007, 12:07 Quote
Quote:
Originally Posted by connectu.com
We are sorry, but we had a problem connecting to the database server

lame! Sounds a bit pathetic to me. If they had such an awesome idea why did they allow themselves to be beaten to it? :)
SteveyG 26th July 2007, 12:07 Quote
Facebook is a load of crap anyway :)
flabber 26th July 2007, 12:28 Quote
Do I smell Napster, the return?

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 :(
mclean007 26th July 2007, 14:28 Quote
Quote:
Originally Posted by bilbothebaggins
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.
I was thinking the same - how on earth do they think they can monetise $333 out of every user with zero subscription charges? The values placed on these Web2.0 companies is absurd. Like Google paying $1.7bn or whatever for YouToooob. No way on earth can that be justified and I think time is going to tell when this second dot-com bubble bursts in the near future. In my view, everyone who has started up a successful Web2.0 business (success meaning hits and users, not trivial things like revenues and profit, obviously - that's way too "old economy" for these guys) take it to Google, Yahoo and MS right now and sell it to the one that makes the biggest offer, then retire happy and rich and leave the buyer with the challenge of making some money out of it.
DXR_13KE 26th July 2007, 15:20 Quote
isn't this a little to late?
CardJoe 26th July 2007, 15:25 Quote
Quote:
Originally Posted by mclean007
I was thinking the same - how on earth do they think they can monetise $333 out of every user with zero subscription charges? The values placed on these Web2.0 companies is absurd. Like Google paying $1.7bn or whatever for YouToooob. No way on earth can that be justified and I think time is going to tell when this second dot-com bubble bursts in the near future. In my view, everyone who has started up a successful Web2.0 business (success meaning hits and users, not trivial things like revenues and profit, obviously - that's way too "old economy" for these guys) take it to Google, Yahoo and MS right now and sell it to the one that makes the biggest offer, then retire happy and rich and leave the buyer with the challenge of making some money out of it.

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.
Flibblebot 26th July 2007, 15:27 Quote
Actually, the battle has been going on a for a couple of years now. It's just come into the press because a judge has told the Harvard guys to actually provide some evidence that Zuckerberg stole their ideas. The judge also thought that the purpose of the lawsuit was to get cash out of facebook, rather than any true legal dispute - hence the Gerry McGuire "show me the evidence" stance.

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
culley 26th July 2007, 16:17 Quote
"They want the court to assign control of the site and its profits to them" What the hell is that all about? That makes you laugh, they don't just want money, they want the whole company.
pendragon 26th July 2007, 19:00 Quote
i like Facebook. I hope this doesn't force it to go under. :(
mclean007 26th July 2007, 20:38 Quote
Quote:
Originally Posted by CardJoe
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.
Yes, but that is AFAIK their ONLY revenue stream. How much do you reckon they get per ad impression / click etc.? I can also imagine the impressions-to-clicks-to-purchase ratio is horrendously poor. At bit-tech, for example, you have tech related products advertised alongside tech related news. There is at least a reasonable chance that a person will be drawn to the site to read an article / review etc., see a related ad they like, click and buy. As such, bit-tech banners are probably of fairly high value to advertisers. Similarly with Google, when someone does a search for "golf clubs" there's a pretty reasonable chance that if you are a golf club manufacturer or store and your site is listed in the 'sponsored links' area, the searcher will click through to your site and make a purchase. With facebook, no-one is there to buy stuff. They are there to post silly pictures, poke one another, write inane ramblings on the walls of people they barely know and can't be bothered to meet up with face to face, and do all those other pointless things social networking addicts do. [EDIT - can you guess I'm not a fan of social networks?? :D]

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?
The_Beast 26th July 2007, 20:47 Quote
facebook is ok but I think myspace is better
dom_ 26th July 2007, 22:01 Quote
Quote:
Originally Posted by mclean007
Yes, but that is AFAIK their ONLY revenue stream. How much do you reckon they get per ad impression / click etc.? I can also imagine the impressions-to-clicks-to-purchase ratio is horrendously poor. At bit-tech, for example, you have tech related products advertised alongside tech related news. There is at least a reasonable chance that a person will be drawn to the site to read an article / review etc., see a related ad they like, click and buy. As such, bit-tech banners are probably of fairly high value to advertisers. Similarly with Google, when someone does a search for "golf clubs" there's a pretty reasonable chance that if you are a golf club manufacturer or store and your site is listed in the 'sponsored links' area, the searcher will click through to your site and make a purchase. With facebook, no-one is there to buy stuff. They are there to post silly pictures, poke one another, write inane ramblings on the walls of people they barely know and can't be bothered to meet up with face to face, and do all those other pointless things social networking addicts do. [EDIT - can you guess I'm not a fan of social networks?? :D]

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.
Cupboard 28th July 2007, 19:12 Quote
It would be funny if it did get taken down, after the 3 year battle we have had at school to get it unblocked :)
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