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Facebook Is Erasing Doubts on Mobile

July 24, 2013 by Leave a Comment

The social networking company said Wednesday that it had revved up its mobile advertising from virtually nothing a year ago to 41 percent of its total ad revenue of $1.6 billion in the second quarter.

“Soon we’ll have more revenue on mobile than desktop,” Mark Zuckerberg, Facebook’s founder and chief executive, said in a conference call with analysts.

Facebook’s results elated investors, who sent the company’s stock up nearly 17 percent, to $30.94, in after-hours trading.

Analysts said the strong performance dissipated lingering worries that the company could not adapt to the current Internet environment, in which users are relying more on mobile devices instead of personal computers to access the information they want.

Those concerns have dogged the company since its disappointing initial public offering in May 2012, in which it sold shares at $38 and then saw them fall by half.

“One of the biggest overhangs from their I.P.O. is that this company had been blindsided by mobile,” said Mark Mahaney, an analyst with RBC Capital Markets. “They caught up. Instead of being behind the curve on mobile, they are ahead of the curve.”

The company said it had net income of $333 million, or 13 cents a share, in the second quarter. Excluding stock-based compensation expenses, profits were $488 million or 19 cents a share, compared with $295 million, or 12 cents a share, in the second quarter a year ago.

The company’s revenue soared 53 percent, to $1.81 billion.

Facebook had particularly strong demand for ads that appear in its users’ news feeds, the flow of updates from friends that they see when they log on. About 1 in 20 posts in the news feed is an ad, and advertisers cannot seem to get enough of them.

The company expects those ads to continue to grow in the second half, its chief financial officer, David Ebersman, said in a conference call with analysts.

One concern for the future is whether Facebook will annoy its users if it significantly increases the number of ads in news feeds, said Debra Aho Williamson, an analyst with eMarketer, a research firm.

“How many ads will people tolerate?” she asked.

Mr. Zuckerberg said Facebook’s studies had shown that users were noticing ads more, and the company was working to improve the quality and relevance of ads.

Facebook is also studying when and how to introduce video ads, which are expected to command at least several hundred thousand dollars each.

“We have nothing to announce today,” Facebook’s chief operating officer, Sheryl Sandberg, said in an interview. But she said video was “tremendously important” for users as well as marketers. Videos made and shared through Facebook’s new video feature in Instagram are growing quickly.

The company’s results also show how its users are continuing to shift toward mobile phones and tablets to use the site instead of a computer’s Web browser. Although the company’s total number of active monthly users worldwide grew slightly from the first quarter, to 1.15 billion, the number of people who use its mobile versions at least once a month grew 9 percent, to 819 million in that time.

Total ad revenue, a crucial measure watched by Wall Street, was $1.6 billion, up 61 percent from the second quarter of 2012. Of total ad revenue, 41 percent came from mobile, up from 30 percent in the first quarter.

“I think this shows that all the questions that people might have had in the past about whether Facebook could monetize on mobile devices, they’ve settled definitively,” Ms. Williamson said.

Users’ preference for reading Facebook on the go has created special revenue opportunities, like ads that prompt users to install mobile apps like games. But advertisers are generally willing to pay much less for a mobile ad than they are for the desktop.

The company’s sharp revenue growth reflects increased competition among advertisers to reach Facebook’s large user base, said Rob Jewell, chief executive of Spruce Media, a firm that helps advertisers like McDonald’s and the insurer Progressive to buy ads on the social network and measure their effectiveness.

Facebook’s ad rates are generally set through a bidding process, and Mr. Jewell said that his clients paid about 10 percent more on average for ads in the second quarter than in the first quarter. Ads in the news feed, both on the desktop and mobile versions of Facebook, were in particularly high demand, with rates up about 75 percent from the first quarter for both categories, he said.

“Facebook is the best channel for mobile app advertisers to purchase advertising,” Mr. Jewell said.

In the second quarter of 2012, the company reported a net loss of $743 million, or 8 cents a share. But that figure included $1.3 billion in compensation expenses related to the company’s initial public offering. In the year ago quarter, Facebook’s revenue was $1.2 billion.

The company far exceeded Wall Street’s expectations. Analysts had predicted the company would report earnings of 14 cents a share, excluding stock compensation costs, on revenue of $1.62 billion, according to a survey by Thomson Reuters.

Facebook’s surprisingly strong second-quarter earnings contrasted with those of Google, which last week reported disappointing profits in mobile advertising.

While the two companies are not strictly comparable because Facebook is expanding its ads from a much a smaller base, Ronald Josey, an analyst at JMP Securities, said Facebook was doing extremely well in mobile categories like ads prompting users to install new mobile applications.

“This company is becoming more and more of a mobile company,” he said.

This article has been revised to reflect the following correction:

Correction: July 24, 2013

An earlier version of this article misstated the title of Rob Jewell. He is the chief executive of Spruce Media, not the president.

Article source: http://www.nytimes.com/2013/07/25/technology/facebook-beats-expectations-on-strong-mobile-growth.html?partner=rss&emc=rss

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Facebook Beats Expectations on Strong Mobile Growth

July 24, 2013 by Leave a Comment

The company said it had net income of $333 milion, or 13 cents a share. Excluding stock-based compensation expenses, profits were $488 million or 19 cents a share, compared to 12 cents a share in the second quarter a year ago. Revenue soared 53 percent to $1.8 billion.

“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” Mark Zuckerberg, Facebook’s founder and chief executive officer, said in a statement. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”

The company’s results show that its users are continuing to shift toward mobile phones and tablets to access the site instead of a computer’s Web browser. Although the company’s total number of active monthly users worldwide grew slightly from the first quarter to 1.15 billion, the number of people who use its mobile versions at least once a month grew 9 percent to 819 million in that time.

Of total advertising revenue, 41 percent came from mobile, up from 30 percent in the first quarter.

Users’ preference for accessing Facebook on the go has created unique revenue opportunities, such as ads that prompt users to install mobile apps like games. But advertisers are generally willing to pay much less for a mobile ad than they are for the desktop.

The company’s sharp revenue growth reflects increased competition among advertisers to reach Facebook’s large user base, said Rob Jewell, president of Spruce Media, a firm that helps advertisers like McDonald’s and the insurer Progressive to buy ads on the social network and measure their effectiveness.

Facebook’s ad rates are generally set through a bidding process, and Mr. Jewell said that his clients paid about 10 percent more on average for ads in the second quarter than in the first quarter. Ads in the news feed, both on the desktop and mobile versions of Facebook, were in particularly high demand, with rates up about 75 percent from the first quarter for both categories.

“Facebook is the best channel for mobile app advertisers to purchase advertising,” Mr. Jewell said.

In the second quarter of 2012, the company reported a net loss of $743 million, or 8 cents a share. But that figure included $1.3 billion in compensation expenses related to the company’s initial public offering. Excluding such one-time items, the company’s profit a year ago was $295 million, or 12 cents a share, and its revenue was $1.2 billion.

Wall Street analysts were expecting the company to report earnings of 14 cents a share on revenues of $1.62 billion, according to a survey by Thomson Reuters.

Article source: http://www.nytimes.com/2013/07/25/technology/facebook-beats-expectations-on-strong-mobile-growth.html?partner=rss&emc=rss

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David Karp Quit School to Get Serious About Tumblr

May 20, 2013 by Leave a Comment

But instead of trying to pry him away from his machine or coaxing him outside to get some fresh air, his mother, Barbara Ackerman, had another solution: she suggested that he drop out of high school to be home-schooled.

“I saw him at school all day and absorbed all night into his computer,” said Ms. Ackerman, reached by phone Monday afternoon. “It became very clear that David needed the space to live his passion. Which was computers. All things computers.”

Clearly.

Now 26 years old, Mr. Karp never finished high school or enrolled in college. Instead, he played a significant role in several technology start-ups before founding Tumblr, the popular blogging service that agreed to be sold to Yahoo for $1.1 billion this week. With an expected $250 million from the deal, Mr. Karp joins a tiny circle of 20-something entrepreneurs, hoodie-wearing characters like Facebook’s Mark Zuckerberg and Foursquare’s Dennis Crowley, who have struck it rich before turning 30.

“When I first met David he was 20 years old and wearing sneakers and jeans,” said Bijan Sabet, a general partner at Spark Capital, who was one of the first people to invest in Tumblr. “But I knew he was one of these rare entrepreneurs that grew up on the Web and who could come up with an idea, build it himself, and then ship it that night.”

Since founding Tumblr six years ago, Mr. Karp has been admired for his programming skills and Web site design acumen but at times has been a polarizing figure in New York tech circles because he so often blogged about his personal life and party-hopping. He has popped up in the New York Post’s Page Six Magazine, and has been a recurring target for the gossip Web site Gawker, where he was labeled a “fameball,” a derogatory term for someone who has an unquenchable desire for fame.

Tall and willowy, with a mop of brown hair and piercing blue eyes, Mr. Karp typically dresses in jeans, a T-shirt and sneakers. He speaks at a rapid clip and, often, for minutes without stopping. Technically, he never graduated from high school, which he cracked in an interview is “hopefully not a condition of Yahoo employment.”

After dropping out and working for a time in small New York tech outfits, Mr. Karp made his way to Tokyo, where he worked for several months for a start-up. He returned to the United States and became the chief technology officer for UrbanBaby, an Internet message board for parents. CNET Networks bought UrbanBaby in 2006, and Mr. Karp took the several hundred thousand dollars he made from the sale to start his own company, called Davidville. One of Davidville’s projects was a simple blogging service called Tumblr.

Mr. Karp’s run at Tumblr has not been without problems. He had trouble hiring in Tumblr’s early days, unsure how to even interview recruits. He often thought large companies were too big for their own good, proclaiming he could manage Tumblr with a team of four.

But Mr. Karp stepped out of the party scene and started dating his current girlfriend, a graduate nursing school student at New York University, four years ago. He also appeared to get more serious about his company as it grew from less than a dozen employees to more than 175 today. “David has grown up in Tumblr,” said Mark Coatney, who oversees Tumblr’s relationship with media companies.

Still, Mr. Karp’s unsure footing led to discussions about his taking a different role at Tumblr, according to two people who worked with the company and who agreed to speak on the condition of anonymity. Because revenue was not growing as fast as they would have liked, investors considered putting Mr. Karp in charge of Tumblr’s product development and finding a more seasoned chief executive.

Mr. Karp denied in an interview that there was a plan for him to give up the chief executive’s job. He said that when Tumblr’s chief operating officer left in the middle of last year, filling that job and other critical roles like head of marketing was “top of mind,” but he said there was no plan for him to step aside.

Like many who run so-called social Internet companies, Mr. Karp can teeter on reclusive. In an interview last year at the F.ounders conference in New York, he said he preferred to come to the office early to work alone, avoiding other people.

“Where I feel the most productive and engaged is when I’m buried in code, buried in some project, tweaking some designs,” he said. “I’m certainly introverted.”

Nicole Perlroth and Michael J. de la Merced contributed reporting.

Article source: http://www.nytimes.com/2013/05/21/technology/david-karp-quit-school-to-get-serious-about-start-ups.html?partner=rss&emc=rss

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Tech Firms Push to Hire More Workers From Abroad

April 11, 2013 by Leave a Comment

Mr. Sankhla got a master’s degree in electrical engineering nine years ago from the University of Southern California, followed by a job at Cisco, then at a start-up that attracted $4.5 million in financing from Silicon Valley investors. There was only one wrinkle: he was in the country on a temporary work visa, with no idea whether or when he would get permanent residence.

He remains in limbo, which preoccupies him almost as much as running his business. “It’s a constant distraction,” said Mr. Sankhla, who is 32. “You can’t really settle down because your visa status is uncertain.”

Silicon Valley is battling in Washington to make the immigration process easier for thousands of people like Mr. Sankhla, many of them Indian engineers, while also pushing to hire many more guest workers from abroad.

Rarely has the industry been so single-mindedly focused on a national policy issue, with executives like Mark Zuckerberg of Facebook and John T. Chambers of Cisco personally involved. Its efforts seem to be paying off, as a group of eight senators negotiate details of a comprehensive immigration deal to be announced early next week.

Several lobbyists and advocates who have spoken to Senate staff members say they are optimistic about at least two items high on their wish list: a fast-track green card line for math and science graduates like Mr. Sankhla, no matter which country they come from, and a near doubling of the visas for temporary workers.

“I think we are going to get a balanced outcome, which takes advantage of the value that immigrants bring to the economy and be protective of U.S. workers,” said Scott Corley, director of Compete America, an industry coalition that includes Google and Intel.

The contentious piece of this is the potential increase in temporary workers from abroad. Critics fear that is a ruse for lowering wages. Those critics are likely to get at least one boon from a revamped law: a requirement that companies try to find qualified American workers before hiring from abroad. The law may also make it more expensive to bring in guest workers.

The new immigration measure will almost certainly fix a situation that keeps people like Mr. Sankhla stuck in limbo for so long. The current law limits how many green cards can be issued to people from any single country, no matter how populous.

That effectively means that applicants from countries like India and China, with a large supply of young engineers often educated in American universities, wait far longer for permanent residence than those from almost every other country. The temporary employment visa, usually an H-1B, has become a kind of way station for them.

The Senate is considering eliminating the per-country quotas for those who graduate from United States universities with math, science and engineering degrees. The debate in Congress perfectly illustrates how immigration law, codified in 1965 and last revamped substantially in 1990, has lagged behind the demands of a rapidly changing economy. Unemployment in the technology industry hovers below 4 percent, far less than the national average.

In that climate, temporary visas are in such heavy demand that the total number available for the coming year — 65,000 for skilled workers and 20,000 for those with a master’s degree or higher — were snatched up in less than five days. The United States Citizenship and Immigration Services said Monday that it had received 124,000 applications in that time and had resorted to a lottery to make the final cut.

The measure being considered by lawmakers could nearly double the H-1B visas allotted yearly and possibly admit more temporary workers during periods of high demand, said several advocates who have discussed the matter with Congressional staff members and who declined to be named because the final language has not yet been released.

“If you were the human resources vice president of the United States, you would want to have a rule that says if things get busy and you need skilled people you can bring in people,” said Dan Siciliano, a law professor at Stanford. “At the same time you would want a way to bring highly skilled people in and perhaps at your choosing convert them to status that lets them stay much longer.”

Article source: http://www.nytimes.com/2013/04/12/technology/tech-firms-push-to-hire-more-workers-from-abroad.html?partner=rss&emc=rss

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Media Decoder Blog: Facebook’s Play for the Smartphone Screen

April 4, 2013 by Leave a Comment

Mark Zuckerberg on Thursday.Jim Wilson/The New York Times Mark Zuckerberg on Thursday.

9:20 p.m. | Updated Added more details and analysis.

MENLO PARK, Calif. — Cellphones have long been Facebook’s Achilles’ heel. With its users flocking to mobile phones by the millions — and many of its newest users never accessing the services on computers at all — the company has struggled to catch up to them.

On Thursday, Facebook unveiled its latest, most ambitious effort to crack the challenge: a package of mobile software called Facebook Home that is designed to draw more users and nudge them to be more active on the social network.

The new suite of applications effectively turns the Facebook news feed into the screen saver of a smartphone, updating it constantly and seamlessly with Facebook posts and messages.

In so doing, Facebook has cleverly, perhaps also dangerously, exploited technology owned by one of its leading rivals, Google. Facebook Home works on Google’s Android operating system, which has become the most popular underlying software for smartphones in the world.

The Facebook News Feed appears as soon as the phone is turned on. Pictures take up most of the real estate, with each news feed entry scrolling by like a slide show. Messages and notifications pop up on the home page. To “like” something requires no more than two taps. Facebook apps are within easy reach, making the phone essentially synonymous with the Facebook ecosystem.

“Today, our phones are designed around apps, not people,” said Mark Zuckerberg, Facebook’s chief executive, said at a news conference here at the company’s headquarters. “We want to flip that around.”

Facebook Home will be available for download from Google’s app store, Play, on April 12 for four popular, moderately priced phones that use Android and are made by HTC and Samsung. A fifth one, a new model called the HTC First, will be sold by ATT for $100 with the software already loaded.

For the time being, Facebook will not show ads on the phone’s home screen, which Facebook is calling Cover Feed. Since advertising revenue is crucial to the company’s finances, however, it will almost certainly display ads there in the future.

Facebook Home is also clearly designed to get Facebook users to return to their news feeds even more frequently than they do now. Every time they glance at their phone at the supermarket checkout line or on the bus to work, they will, in essence, be looking at their Facebook page.

“It’s going to convert idle moments to Facebook moments,” said Chris Silva, a mobile industry analyst with the Altimeter Group. “I’m ‘liking’ things, I’m messaging people, and when ads roll out, I’m interacting with them and letting Facebook monetize me as a user.”

Krishna Subramanian, the chief marketing officer at Velti, a San Francisco-based company that buys targeted advertisements online on behalf of brands, pointed out that even without showing ads on the mobile cover feed, Facebook Home could prove to be a lucrative tool.

By nudging its users to do more on the social network, he said, the company will inevitably get “an explosion of mobile data that can be tied back into desktop advertising” to Facebook users.

A majority of Facebook’s one billion-plus users log in on their cellphones. Most Americans now have an Internet-enabled phone, and smartphone penetration is growing especially fast in emerging market countries, where Facebook has substantial blocs of its users.

At Thursday’s press event, Mr. Zuckerberg repeatedly signaled that he wanted the new product to enable a mass, global audience to connect to Facebook, especially those have yet to get on the Internet. “We want to build something that’s accessible to everyone,” he said.

Although HTC is rolling out the first new phone with Facebook Home installed, and ATT has agreed to sell it, other phone makers and carriers may be reluctant to load the software.

Jan Dawson, a telecom analyst at Ovum, said that Apple’s iPhone and many Android smartphones already do a good job of integrating the Facebook application into their phones. And he said phone carriers were unlikely to give a Facebook phone made by HTC much support because the Taiwanese phone maker’s past attempt at a Facebook phone — the ChaCha, which had a physical button for posting photos on Facebook — sold poorly.

“HTC may be desperate enough to do this, but carriers aren’t likely to promote it heavily,” Mr. Dawson said. “As a gimmick, it may bring customers into stores, but they’ll mostly end up buying something else.”

At Facebook headquarters Thursday, HTC’s chief executive, Peter Chou, showed off a model of his new Facebook phone, called HTC First, in lipstick red. “HTC First is the ultimate social phone,” he said. “It combines the new Facebook Home and great HTC design.”

Whether consumers will embrace a phone that emphasizes Facebook over everything else also remains to be seen. Some are likely to have concerns about how much personal information they are being asked to share with Facebook. Additionally, checking Facebook dozens of times every day could result in hefty data use charges, unless users are connected to a Wi-Fi network or negotiate special packages with carriers.

Facebook and ATT executives said they had taken that into account. Users will be notified when they are about to reach their data limits. The software can also be set to download data-heavy content like video only when the user is connected to a Wi-Fi network, and then save it in its memory.

The software’s most powerful feature is to turn the cellphone into a starkly personal gadget.

Facebook employees, current and past, were invited to the product announcement, a sign of how crucial it has been for Facebook to crack the mobile puzzle. Silicon Valley has whispered for months about the prospects of a Facebook phone. Mr. Zuckerberg has consistently denied building one.

Thursday’s announcement signaled that Facebook had stopped short of even building an operating system. Instead, it had simply altered its rival Google’s technology.

The Android platform, Mr. Zuckerberg said, was built to be open to new integrations. Asked at the news conference whether he feared that Google executives would change their mind about Facebook using it to advance its mobile aims, he turned somewhat testy.

“Anything can change in the future,” he said. “We think Google takes its commitment to openness very seriously.”

Google, for its part, was notably genteel. “This latest collaboration demonstrates the openness and flexibility that has made Android so popular,” the company said in an e-mailed statement. “And it’s a win for users who want a customized Facebook experience from Google Play — the heart of the Android ecosystem — along with their favorite Google services like Gmail, Search and Google Maps.”

Brian X. Chen contributed reporting.

Article source: http://mediadecoder.blogs.nytimes.com/2013/04/04/facebook-software-puts-it-front-and-center-on-android-phones/?partner=rss&emc=rss

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Bits Blog: Facebook Seeks to Be Mobile ‘Home’ of Android Users

April 4, 2013 by Leave a Comment

Mark Zuckerberg on Thursday.Jim Wilson/The New York Times Mark Zuckerberg on Thursday.

2:58 p.m. | Updated Added more details and analysis.

MENLO PARK, Calif. — Mark Zuckerberg, the co-founder and chief executive of Facebook, announced on Thursday that the company had developed new software, called Home, to showcase the social network on mobile devices using Google’s Android operating system.

“Today our phones are designed around apps, not people,” Mr. Zuckerberg said at a news conference at Facebook’s headquarters. “We want to flip that around.”

Home converts the Facebook news feed into the home screen on the user’s phone. Pictures take up most of the real estate, with each news feed entry scrolling by like a slide show. Messages and notifications pop up over the home page. To “like” something on the news feed requires no more than a double-tap. Facebook apps are in easy reach.

The company will not show ads immediately on the phone home screen, which Facebook is calling the Cover Feed, but it is very likely to do so in the future.

The first phone with the new package installed will be made by HTC and will be sold in the United States with ATT service for about $100, starting April 12. Users of some other HTC and Samsung Android phones will also be able to download the software starting on that day, with Facebook planning to roll it out more broadly to other Android devices in the coming months.

It will be available in Europe soon with Orange as the carrier, Mr. Zuckerberg said. He stressed that he wanted the new product to enable a mass, global audience to connect to Facebook, especially those who have yet to go on the Internet. “We want to build something that’s accessible to everyone,” he said.

The new product is also intended to prompt Facebook users to return to their news feeds even more frequently than they do now. Every time they glance at their phones, at the supermarket checkout line or on the subway to work, they will effectively look at their Facebook pages.

“It’s going to convert idle moments to Facebook moments,” said Chris Silva, a mobile industry analyst with the Altimeter Group. “I’m ‘liking’ things, I’m messaging people, and when ads roll out, I’m interacting with them and letting Facebook monetize me as a user.”

Mr. Silva added that the no-frills Samsung and HTC phones that will support the new interface suggest that Facebook wants to target consumers who have yet to buy an Internet-enabled phone, both in the United States and abroad. After the United States, the largest blocs of Facebook users live in emerging markets like Brazil and India, and their numbers are growing much faster there than in Facebook’s home market.

But getting millions of less-affluent global users glued to Facebook will not be easy. The service will rack up huge data charges for users, unless Facebook manages to negotiate affordable packages with carrier companies.

It is also unclear whether anyone, including the phone carriers, will be enthusiastic about the device.

Jan Dawson, a telecommunications analyst at Ovum, said that the iPhone and many Android smartphones already do a good job of including Facebook. And he said phone carriers are unlikely to give an HTC-made Facebook phone much support because HTC’s past attempt at a Facebook phone — the ChaCha, which had a physical button for posting photos on Facebook — sold poorly.

“HTC may be desperate enough to do this, but carriers aren’t likely to promote it heavily,” Mr. Dawson said. “As a gimmick, it may bring customers into stores, but they’ll mostly end up buying something else.”

At Facebook headquarters Thursday, HTC’s chief executive, Peter Chou, showed off a model of his new Facebook phone, called HTC First, in lipstick red. “HTC First is the ultimate social phone,” he said. “It combines the new Facebook Home and great HTC design.”

The new interface places a heavy emphasis on photos, much like the recent changes made to Facebook’s news feed feature on the Web.

“We think this is the best version of Facebook there is,” Mr. Zuckerberg said.

Brian X. Chen contributed reporting.

Article source: http://bits.blogs.nytimes.com/2013/04/04/facebook/?partner=rss&emc=rss

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DealBook: A Dubious Case Found Lawyers Eager to Make Some Money

October 30, 2012 by Leave a Comment

Paul Ceglia, who prosecutors said filed a bogus lawsuit claiming a stake in Facebook.John Anderson/Wellsville Daily ReporterPaul Ceglia, who prosecutors said filed a bogus lawsuit claiming a stake in Facebook.

It always seemed like a scam.

For the last two years, Facebook’s founder, Mark Zuckerberg, had been locked in a bizarre battle with a suspected huckster, Paul Ceglia, who claimed that he owned as much as 84 percent of the social networking site. Mr. Ceglia produced a series of contracts and e-mails as proof of the deal he said he struck in 2003 with Mr. Zuckerberg, who was then still a student at Harvard.

Facebook called the evidence “phony” and “fraudulent.” Yet the media couldn’t get enough of the case, often taking it very seriously, in part, because Mr. Ceglia had what appeared to be an all-star cast of lawyers by his side, vouching for the credibility of the case.

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There was DLA Piper, the largest law firm in the nation, whose former chairman was Senator George Mitchell. Dennis Vacco, the former New York State attorney general, also took Mr. Ceglia as a client. Mr. Ceglia had also signed up, albeit only briefly because the firm quickly dropped him, Kasowitz Benson Torres Friedman, which has counted as clients the Federal Housing Finance Agency and the private equity firm Apollo Management.

Terry Connors, a respected former federal prosecutor, took on Mr. Ceglia and then dumped him as well.

Last Friday, Mr. Ceglia was charged with fraud, accused of forging the documents at the heart of the case. The United States attorney in Manhattan, Preet Bharara, stated: “By marching into federal court for a quick payday based on a blatant forgery, Paul Ceglia has bought himself another day in federal court for attempting a multibillion-dollar fraud against Facebook and its C.E.O.”

But guess who has come away seemingly unscathed?

The lawyers who represented Mr. Ceglia and — with dollar signs in their eyes — seemingly aided his cause.

Some of the law firms that worked for Mr. Ceglia not only took on the case, they argued volubly that they had vetted Mr. Ceglia’s evidence.

“I would not have gotten involved and DLA would not have gotten involved if we had any doubts about the facts or evidence in the case,” Robert Brownlie, a partner at DLA Piper, told The American Lawyer last year.

Mr. Brownlie ultimately withdrew from the case, but only after Kasowitz Benson dropped Mr. Ceglia first and wrote Mr. Brownlie a letter saying that it was “withdrawing from the case based on a determination that the purported contract at issue is a fraud,” according to a court filing. Still, it took Mr. Brownlie two more months before he chose to sever ties with Mr. Ceglia. What took him so long after it became clear his own client was suspected of engaging in fraud? The once-chatty Mr. Brownlie is not returning calls from reporters.

Mr. Vacco declined to comment, citing attorney-client privilege as the reason he could not explain why he no longer represented Mr. Ceglia.

Lawyers who initially agreed to take Mr. Ceglia’s case clearly hoped that they would make tens of millions if not billions of dollars as a result of a settlement, similar to the one that Mr. Zuckerberg reached with the Winklevoss twins and Eduardo Saverin, an early investor and friend of Mr. Zuckerberg’s. The twins were paid at least $65 million; Mr. Saverin, reportedly more than $1 billion.

When Mr. Ceglia was first looking for a high-powered lawyer to represent him, he had a local lawyer, Paul Argentieri, based in Hornell, N.Y., draft the equivalent of a promotional memo meant to attract other lawyers to the case. Mr. Argentieri indicated that he would be prepared to agree to a contingency fee arrangement — which would probably give any lawyer representing Mr. Ceglia a big chunk of any verdict or settlement in his favor. The memo also explicitly highlighted Mr. Zuckerberg’s previous settlements with Mr. Saverin and the Winklevosses, even though “they had no written agreements” with Mr. Zuckerberg, according to the memo.

As for the documents in Mr. Ceglia’s case, any lawyer worth his salt would have been quickly skeptical. According to the fraud case against him, Mr. Ceglia replaced one page of a two-page contract with Mr. Zuckerberg with a fake. Mr. Ceglia had a contract with Mr. Zuckerberg to do work on a site called StreetFax, not Facebook. “The spacing, columns and margins of page one of the alleged contract are different from the spacing, columns and margins of page two of the alleged contract,” the complaint says. In addition, Mr. Ceglia is accused of forging a series of e-mails that sounded rather fantastical on their face.

His lawyers, however, turned a blind eye until they had no choice but to withdraw — but not before burning through millions of dollars and the integrity of the justice system.

“Now that Ceglia is being brought to justice for his crimes, Facebook intends to hold accountable all of those who assisted Ceglia in this outrageous fraud,” Orin Snyder, a lawyer for Facebook and Mr. Zuckerberg, said in a statement on Monday. “Facebook will send a strong message that it does not tolerate legal shakedowns and will take aggressive action against all those who file abusive lawsuits against the company.”

Now that the big law firms have dropped Mr. Ceglia, who is representing him?

Dean Boland, a Lakewood, Ohio, lawyer who was once ordered to pay $300,000 to two minors for using their pictures in making a digitally crafted image of child pornography.

Reached by telephone, Mr. Boland said, “If I thought this was a fraud, I would have bailed out two seconds later,” adding that he’d “be the first one marching to the court” to turn Mr. Ceglia in. He said he was convinced that Mr. Ceglia had a strong civil case, which is still continuing, against Mr. Zuckerberg and Facebook.

Mr. Boland went so far as to say that the criminal complaint against Mr. Ceglia “will help in the civil case,” arguing that the government’s complaint suggests that the second page of Mr. Ceglia’s two-page contract with Mr. Zuckerberg is authentic.

Asked why so many other law firms had withdrawn from the case, Mr. Boland said, “You’d have to ask them.”

Asked to comment on the child pornography case he was involved in, he said, “I’m not getting into that. It’s on appeal.”

Article source: http://dealbook.nytimes.com/2012/10/29/a-dubious-case-found-lawyers-eager-to-make-some-money/?partner=rss&emc=rss

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Bits: Privacy Isn’t Dead. Just Ask Google+.

July 18, 2011 by Leave a Comment

Mark ZuckerbergJim Wilson/The New York Times Facebook, run by Mark Zuckerberg, has suffered a number of privacy mishaps over the years.

Some people have a very hard time trusting Facebook.

After dozens of privacy problems over the years, they’ve grown extremely weary of what the company is doing with my personal information.  I, for one, rarely use Facebook anymore, beyond a rare comment or “Like.”

My Facebook fears stem from the several instances when the company has added new features to the site and chose to automatically opt-in hundreds of millions of users, most of whom don’t even know they’ve been signed up for the new feature. I’ve also been sapped by the company’s hyper-confusing privacy policy, which requires users to navigate a labyrinth of buttons and menus when hoping to make their personal information private.

For Facebook, these breaches on people’s personal privacy rarely result in any repercussions: the negative press is usually temporary, and users have mostly stayed with the service, saying that there isn’t a viable alternative social network to talk to family and friends.

That is, until now.

Enter Google+, which started last month and has already grown to 10 million users. Rather than focus on new snazzy features — although it does offer several — Google has chosen to learn from its own mistakes, and Facebook’s. Google decided to make privacy the No. 1 feature of its new service.

I learned this lesson accidentally last week. When I signed up for Google+, I quickly posted a link to a New York Times article I wanted to share with people. Several hours later my Google+ link lay dormant. No comments. No +1 clicks. And no resharing the link.

It wasn’t until later that I realized that my post had been made private by default; a Google+ user has to specifically say they want to share a post publicly. By doing this, Google has chosen to opt users out of being public, rather than the standard practice by most other services to automatically opt users in.

This isn’t to say Google is perfect. Last year the company has had its fair share of privacy problems. This happened most recently when it started Google Buzz, a social networking service, which turned into a privacy disaster and resulted in calls in Congress to investigate the company.

With Google’s latest offering, it seems that the company not only learned its lesson about the importance of privacy for consumers online, but also realized that Facebook hasn’t learned about the importance of this issue either.

Article source: http://feeds.nytimes.com/click.phdo?i=48bbfed1034c7ea3159aa35c2ea6118d

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Facebook Introduces Video Chat in a Partnership With Skype

July 6, 2011 by Leave a Comment

It’s a way to connect with friends other than just posting messages, said Mark Zuckerberg, Facebook’s founder and chief executive, who announced the service on Wednesday here at the company’s headquarters. Facebook’s foray into video chatting comes a week after Google introduced Google+, its latest and most serious challenge yet in social networking. That service, which had its debut last week in a limited test, includes video chatting for up to 10 people in an area of the site called Hangouts.

To a certain extent, Facebook is playing catch-up. The new Facebook service does not allow for group video chats, for example. It also is not available on mobile phones, unlike Skype’s ordinary service. At Wednesday’s event, Mr. Zuckerberg also announced that Facebook now had 750 million users worldwide.

Details of how the new video chatting will work are posted on Facebook’s blog. It will be available to all users in the next few weeks, the blog says.

For Skype, the partnership with Facebook is a chance to give its service greater visibility beyond its 170 million users. Recruiting some of Facebook’s users as potentially paying customers is undoubtedly a crucial motivation.

Making calls from computer to computer through Skype is free. But people who use Skype to call landline or mobile phones must pay.

Facebook’s alliance with Skype expands an existing partnership between the two companies. Their cooperation started last year when Skype let its users connect with their Facebook friends from Skype and get news feeds.

Last month, the partnership grew when Skype added a Facebook contacts tab and let Skype users send instant messages to their Facebook friends and comment on their friends’ status — all without leaving the Skype window.

Microsoft is closing in on its acquisition of Skype for $8.5 billion. The purchase, announced two months ago, will give Microsoft a bigger footprint in online communications, an increasingly important business aimed at both consumers and corporate customers.

Microsoft, through its Skype acquisition, will also strengthen its ties to Facebook. Microsoft invested in Facebook in 2007 and provides search results.

Article source: http://feeds.nytimes.com/click.phdo?i=a31be69a51a7e6693a0d52725f6047fe

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Abrupt Turn as Facebook Battles Suit

April 18, 2011 by Leave a Comment

Before the cinematic Winklevoss twins battled with Mark Zuckerberg over the origins of Facebook, and before the company’s co-founder Eduardo Saverin became estranged from his friend Mr. Zuckerberg, there was Paul Ceglia.

In one of the strangest tales to hit Silicon Valley in years, Mr. Ceglia, a wood-pellet salesman from upstate New York, last year filed suit saying that a 2003 work-for-hire contract between him and Mr. Zuckerberg, then 18, entitled him to an 84 percent stake in Facebook.  

Mr. Ceglia’s own history did nothing to lend credibility to his improbable claim. In 1997, he pleaded guilty to possession of hallucinogenic mushrooms in Texas, and last year, he was arrested, charged with fraud and had his business shut down by Andrew Cuomo, then the New York State attorney general. 

But the skepticism and scorn initially heaped on Mr. Ceglia’s claims turned to astonishment last week when he added some ammunition to his case. Mr. Ceglia filed an amended complaint in federal court in New York written by lawyers from DLA Piper, a law firm with offices around the world. It includes excerpts from e-mails purportedly exchanged between him and Mr. Zuckerberg and that, if authentic, could become a major headache for Facebook.

So far, neither Mr. Ceglia nor his lawyers have produced originals of the e-mails or the contract. Facebook says the e-mails were fabricated, and that although there was a 2003 contract, it was doctored. The company has called the lawsuit a fraud.

“This man is a convicted felon with a history of fraud charges,” said Orin Snyder, a partner at Gibson, Dunn and Crutcher, which is representing Facebook. “His revised complaint is simply his latest scam — supported by a doctored contract and fake e-mails.” 

Still, the details laid out in the new complaint, as well as Mr. Ceglia’s new legal team, which also includes a former attorney general of New York, are giving skeptics pause.

“It is a little harder to dismiss him out of hand,” said Scott C. Dettmer, a longtime Silicon Valley lawyer who has advised start-ups and founders for decades.  Even so, Facebook watchers point to a series of inconsistencies and unanswered questions in the case. For one, the 2003 contract was signed about a year before Facebook was created, and most historical accounts of the company say Mr. Zuckerberg had not yet conceived the social networking site at that time.

Skeptics have also asked why Mr. Ceglia waited so long to come forward with his claims. Mr. Ceglia , through his lawyers, declined to be interviewed for this article and he did not respond to a Facebook message asking for comment. But last year, he told Bloomberg News that he had simply forgotten about the contract with Mr. Zuckerberg. The explanation did not satisfy most skeptics, given that well before last year, Facebook was worth billions, and had become ensconced in popular culture. Also, some of the other disputes over its origins had been well publicized by that time.

 When asked by The New York Times to produce the original documents backing up Mr. Ceglia’s complaint, Robert W. Brownlie, a partner at DLA Piper, declined.   “That will come out during the course of litigation,” Mr. Brownlie said. “Anyone who claims this case is fraudulent and brought by a scam artist will come to regret those claims.”  

Mr. Ceglia’s new legal team includes Dennis C. Vacco, a former New York attorney general now in private practice in Buffalo, who did not respond to requests for comment. Mr. Brownlie said he was skeptical about Mr. Ceglia’s claims initially, but performed due diligence to ensure the documents were authentic. He said that he had not seen the originals himself, but that others on the team had and that he was confident of their authenticity.

If Mr. Ceglia’s tale is real, it would be a significant rewriting of Facebook’s early history, as documented in one movie, two books and scores of newspaper and magazine articles.

Article source: http://feeds.nytimes.com/click.phdo?i=db8b2a8c942cc2e8557e0d07a18a0ae6

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