Friday, May 18, 2012
Gavin O'Malley, May 18, 2012, 11:47 AM
Facebook Hit With $15 Bil Privacy Lawsuit The Telegraph

While unlikely to dampen interest in Facebook’s first day of public trading, the company has been hit with a $15 billion class-action lawsuit.

Representing a number of Facebook’s users, the suit claims that it invaded their privacy by tracking their Web usage -- ironically, exactly how investors expect Facebook’s to further monetize its service. 

“As a public company, Facebook will be expected to grow its advertising revenues very rapidly, putting it under considerable pressure to collect more and more user data to help it target its ads,” The Telegraph reports.

“If the claimants are successful in their case against Facebook, they could prevent Menlo Park from collecting the huge amount of data it collects about its users to serve ads back to them,” ZDNet writes.

And, that’s exactly what the law firms are after. “This is not just a damages action, but a groundbreaking digital-privacy rights case that could have wide and significant legal and business implications,” David Straite, a partner at Stewarts Law -- one of the firms leading the case -- told Bloomberg News.

Already, “Facebook … has been scrutinized by regulators in the U.S. and Europe over how it protects users’ private data,” Bloomberg reminds us.

Like the previous lawsuits, Facebook is being accused of violating the Federal Wiretap Act, which provides statutory damages per user of $100 per day per violation, up to a maximum per user of $10,000.

The complaint also asserts claims under the Computer Fraud and Abuse Act, the Stored Communications Act, various California Statutes and California common law.

Yet, as ZDNet adds: “It’s worth noting that similar cases against Facebook and others filed under the wiretap law have been thrown out because browser cookies are simply not considered wiretaps and plaintiffs have difficulty proving any harm.”

Read the whole story...
  • Gavin O'Malley, May 18, 2012, 12:06 PM
  • Days after the news broke, we’re getting the inside story on why General Motors decided to stop spending ad money on Facebook. “GM's decision followed Facebook officials' failure to convince top marketing executives at the U.S. automaker of the benefits of Facebook's paid ads at a meeting that took place in the past few weeks,” reports Reuters, citing sources. Apparently, where Facebook officials really went wrong was by first focusing more on touting the social networking site's free pages. "It kind of backfires on them in a funny way," a source told Reuters. In the end, GM dropped its Facebook ads because they were less effective than other options, such as Google's AdSense, sources say. Facebook's ads reportedly garner about half the clicks per page view, a measure of effectiveness, compared with the average Web site. What’s more, Facebook's ad prices were expected to rise after the company's IPO. GM officially announced its decision to drop Facebook paid ads on Tuesday in what Reuters calls, “the first highly visible crack in Facebook's strategy and illustrated doubts about its perceived advantage over traditional media.”   Read the whole story...
  • Yahoo is reportedly almost ready to sell a large share of its stake in the Alibaba Group back to the company. The deal has yet to be officially approved by the boards of either companies, but sources tell AllThingsD that it is likely to be, and could be announced as early as Monday. It’s “a complex deal that is set to include a multibillion-dollar share buyback to investors of the Silicon Valley Internet giant and an eventual IPO of the Chinese company,” AllThingsD reports, citing source. If all goes according to plan, Yahoo will sell half of its roughly 40% stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion -- or 20 percent of Alibaba’s $35 billion enterprise valuation. “After taxes of upward of 35% are paid on the long-term gains … the company will likely use the funds to buy back its own shares,” AllThingsD predicts. “That stock has been caught in the mid-teens doldrums for quite a while.” Meanwhile, a shareholder dividend is also reportedly being considered.   Read the whole story...
  • By far, PayPal is the biggest payment processor on the Web, according to new research from New Relic, a Web app performance management company. Overall, the eBay-owned service processes 60% of Web transactions, New Relic found after reviewing 65,000 payment transactions by 21,000 Web applications. During the test period, PayPal processed over 66,000 payments, more than three times as many as the nearest competitor, Authorize.net. Google Checkout came in fifth with just over 3400 payments. As VentureBeat notes, “Google does win, however, in the speed category.” In fact, “Google Checkout’s average payment processing time was a blistering .26 seconds.” In less than a third of a second, New Relic spokesman John Essex said, Google has to “collect and transfer your payment information -- name, address, card number, purchase details, etc. -- to the financial institution”, and then query Visa or Mastercard to see if you are a good credit risk, get a response, and return it to the website’s e-commerce engine. By contrast, “PayPal’s performance was only mediocre, but hardly pokey, averaging just under one and a half seconds,” VB notes.   Read the whole story...