Posts tagged Facebook’s
Facebook’s Instagram Buy ‘All About Mobile’
Apr 9th
The $1 billion purchase gives Facebook more ownership over the photo-sharing space. As Facebook has recently begun distributing ads via mobile, Instagram’s audience and technology should facilitate Facebook’s mobile monetization goals.
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Facebook’s Real Mobile Question, Post-Instagram: Can It Challenge Apple and Google?
Apr 9th
Facebook made a smart move today, acquiring red-hot mobile photo-sharing service Instagram for $1 billion. Not only does Facebook now own an important mobile property, but it also took its biggest threat – a thriving mobile-only social network – off the market. Brilliant.
But that’s just part of a bigger, unanswered question: Can Facebook become an important mobile platform, the way Apple’s iOS and Google Android have? And if so, what does that look like? How does Instagram fit in?
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Facebook, as we’ve seen over the years, seems too ambitious to be happy just being a social network. Google Chairman Eric Schmidt didn’t name it one of the tech industry’s “gang of four” – along with Apple, Amazon and Google – just because it’s a fun place to share status updates and connect with friends. Facebook likely has its sights set on being as important as Apple and Google are in today’s mobile industry, and as powerful as Microsoft Windows once was on the desktop.
So far, Facebook is doing OK in mobile. It has more than 400 million active mobile users, which is a lot. Its main Facebook app was listed as Apple’s most popular of all-time. Thousands of well-known mobile apps are “social” because of Facebook integration, so Facebook is acting as a platform of sorts there. And now, of course, it owns the mobile photo-sharing company that arguably represented its biggest threat, so that’s good.
But so far, Facebook isn’t exactly in a position of supreme power in mobile. It doesn’t yet have an operating system that handset makers are using as the basis for phones. It doesn’t own an app platform or distribution store yet. Its mobile products aren’t particularly inventive or addictive. Its users could potentially go away as quickly as they arrived – see: MySpace on the web. And it doesn’t make any money from mobile yet: Facebook does “not currently directly generate meaningful revenue” from mobile, it says in its IPO filing.
Expect to see more noise in these areas over the next year or so. Mobile is just too important for Facebook’s future for it to sit out and cede control to Google and Apple – especially given Facebook’s combative relationship with both companies, and the relative lack of success Facebook’s big partner Microsoft is having in mobile.
Whether it’s a proper Facebook mobile OS – forked from Android? – or a browser-based HTML5 app market, or something completely different, Facebook should start to attack the mobile platform market sometime sooner rather than later.
How does Instagram fit in? Given how quickly the deal reportedly happened – days, not weeks – it’s probably too early to say. There could probably be a version of Instagram ready to go for any Facebook phone platform that eventually launches. That wasn’t even something Google Android could say a week ago. Instagram may become part of the photo-sharing process in Facebook’s own app. Et cetera.
And knowing how well the Instagram team has built delightful mobile products so far, it could also be a smart idea to include them on the design process of future, broader Facebook mobile products.
Big picture summary of today’s news: The Instagram deal is a good one, but it’s a modest step in Facebook’s overall mobile plans. There’s still much more, much bigger progress to make.
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Welcome to Wall Street: The Instagram Buy Is All About Facebook’s Investors
Apr 9th
When Pepsi realized it had converted as many Coca-Cola drinkers as it was going to, it started acquiring fast food chains, including Pizza Hut, Taco Bell and Kentucky Fried Chicken (which were later spun off as Yum! Brands). It made sense, on the surface: each chain’s outlets were a new place to sell Pepsi products, analysts reasoned.
But, in reality, several of the chains and their franchisees already sold Pepsi products. Those deals were more about making pizza, tacos and fried chicken products that Pepsi sold in addition to soft drinks. And so it goes with today’s announcement by Facebook that it will acquire Instagram for $1 billion. Yes, Facebook may convert some of Instagram’s users who aren’t already on Facebook into Facebook users, but more than anything, this is an effort to show that Facebook can open new revenue streams even as its user growth levels off.
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Facebook’s acquisition – no matter what Mark Zuckerberg tells you in a press release – is less about better integrating Instagram’s services into the world’s biggest social network (which it already does quite nicely) and more about becoming a publicly traded behemoth. Publicly traded companies need to grow to keep investors happy, and if they can’t do so by adding new users or boosting new revenue streams, they do it by gobbling up rivals.
So we’re skeptical when Zuckerberg says things like, “We don’t plan on doing many more of these, if any at all.” It may not be Facebook’s decision for much longer: As we have maintained since Facebook announced its IPO in February, Facebook will change dramatically after its shares go public, and if investors want more acquisitions like the Instagram buy, Facebook will make those acquisitions.
Little Change for Facebook, Instagram Users
“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Zuckerberg wrote in announcing the deal. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”
But, as many have already noted, Instagram already plays nicely with Facebook. The biggest takeaway from Zuckerberg’s statement is that Instagram will continue to operate and be built independently: You won’t have to join Facebook or Instagram to use the other, and at least in the short-term – and most-likely the long-term – you probably won’t notice the two companies are now linked. As Instagram founder Kevin Systrom noted, Instagram is not going away.
If there are changes, they’ll be positive ones: Instagram, which was reportedly working on securing a secondary round of financing, can now focus on improving its product. Facebook, meanwhile, can abandon attempts to build a mobile sharing app that would top Instagram. Speaking of mobile, if Facebook plays this acquisition right, it may alleviate some investor concerns about how it will grow revenue on the mobile side of its business.
Instagram will be one of Facebook’s biggest acquisitions to date, but still tiny in comparison to the more than $100 billion in capitalization Facebook is looking to raise in its initial public offering next month. What has worried potential investors leading up to the IPO is Facebook’s relatively dismal advertising growth performance, and the fact that its user growth is slowing, and will eventually level off, and that for all practical purposes, Facebook appears to be a one-trick pony.
With social networking increasingly becoming a field dominated by the big three of Twitter, Facebook and Google+, it is niche social networks like Instagram that will become the space for growth in the future. Facebook is ultimately showing it can grow in those niche spaces even if it isn’t necessarily innovating Instagram-like networks.
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[SURVEY] Professional Investors Will Stay on Sidelines for Facebook’s IPO
Mar 30th
Shares of Facebook will reportedly begin trading in May, and professional investors expect the stock’s price to rise 12% in the first quarter, according to a survey by Maven.
Despite that upbeat assessment, just 12% of professional investors surveyed by Maven said they planned to invest in Facebook, with 44% saying they would take a wait-and-see approach and another 44% saying they have no plans to buy Facebook shares. Most professional investors – including portfolio managers, investment bankers and venture capitalists – see Facebook’s IPO as a “retail play.”
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“The market and headline risks outweigh the potential reward,” said Ryan Himmel, a registered security analyst, CPA and founder of BIDaWIZ.com, an online marketplace for professional financial and tax advice. “We would caution investors to wait at least 6 to 12 months until there’s better visibility on how the market values Facebook.”
Facebook is in a quiet period ahead of its offering and is declining comment on all questions related to its IPO. Among the red flags Facebook’s IPO is raising with investors:
Valuation
Facebook could be valued between $75 billion to more than $100 billion after its first day of trading, and those amounts are just far too high for professional investors. Himmel points out those valuations are 20 to 27 times more than last year’s revenue and 75 to 100 times more than the last 12 months’ net income, yet only 42 to 56 times higher than operating income.
Slowing Growth
In the Maven survey, 96% of respondents said they expect Facebook membership numbers to continue to grow over the next two years, but at a much slower rate. Unless Facebook can find a way to break into big markets where it is currently banned, like China, the company has largely saturated most of the markets it now operates in.
Reliance on Advertising Revenue
Facebook is finally making a push to increase mobile revenue, but it still by-and-large relies on advertising on its website for revenue. And the very nature of Facebook is to keep users on the site, meaning advertising click-through rates of 0.04%, less than half of the Internet average of 0.09%, according to tech stock investor Nicholas Pardini.
“Facebook can sell demographic data and page views to companies for research purposes, but growth in this sector is limited by potential privacy violation lawsuits and stiff competition in the data mining sector,” Pardini said, who also explored the Facebook IPO in a post for the investing website SeekingAlpha.
The one bright spot is that advertisers are still flocking to Facebook, at least for now. A separate Maven survey of social media professionals and marketing experts found that more than three-quarters plan to increase the amount they spend on Facebook advertising.
Increased Competition
Mark Zuckerberg grew his company to a $100 billion behemoth in less than a decade: an amazing feat, but also a reminder of how quickly the publicly traded Web space can change, Himmel said.
“Someone else could theoretically come into the market and create a network effect that could hurt Facebook’s growth and retention rates in the future,” he said.
And Facebook may end up hurting itself, in part because it is trying to please a new audience: Wall Street shareholders. Increased advertising, for example, may aggravate long-time users and prompt them to spend less time on Facebook. And one thing remains clear: Facebook will never be able to charge users directly.
“It cannot charge its customers because users will just migrate to another free platform to interact with friends, such as Google+ or a future ‘next Facebook,’” Pardini said.
Bottom Line: Professionals Are Just Saying No – for Now
“There could be violent swings in the stock price after it goes public,” Himmel said. “Sure, you could put aside some money that you’re willing to risk losing, but definitely be wise on how much of your portfolio you allocate until there’s a better understanding of the valuation.”
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What You Need To Know About Facebook’s New Privacy Policy
Mar 21st
Perhaps the first thing you need to know is that after Friday, Facebook will no longer be calling it a privacy policy. The name is being changed to “Data Use Policy.”
And most importantly, if you “use or access” Facebook on or after Friday, you are agreeing to that name change, as well as all of the changes Facebook is making to its policy. We were given public comment from Sarah Downey of Abine, which she describes as “an online privacy company in Boston that is concerned with anti-privacy behavior by Facebook and other companies.”
Her comments, which are being submitted to the FTC as part of the public-comment period that closes Friday, are a good breakdown of what the changes entail and a warning of why users may want to read the entire policy before agreeing to its terms.
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“This Statement is take it or leave it: users agree to it simply by using Facebook. Most of them will never know when or if the Terms change, let alone what they mean.” – Sarah Downey of Abine
We’ve asked Facebook to respond to the entire text of her statement and will update when we hear back from the company.
Many of the changes are to keep in accordance with an agreement with the Federal Trade Commission. But from where Downey sits, “the changes reflect the fact that Facebook is extending its data collecting tentacles in all directions: towards people who never even signed up for Facebook, activities that aren’t clearly defined as sharing, and mediums that aren’t clearly defined as advertising.
“There are also obvious imbalances of power throughout the Statement: for example, Facebook forces its app developers to adhere to privacy standards that Facebook itself doesn’t do, like making it easy to delete your account,” she said. “Furthermore, this Statement is take it or leave it: users agree to it simply by using Facebook. Most of them will never know when or if the Terms change, let alone what they mean.”
On a point-by-point basis, Downey raises the following red flags:
- Downey agrees with the name change, if only because it is more accurate of what the statement does: the statement is not about protecting the user’s privacy, but instead about how Facebook uses their information and data. “Facebook has always been after your data and you have very little privacy on the site,” she said. “It’s also telling: the way that Facebook and other companies use your data IS your privacy. They’re one in the same.”
- A change in section 2.3 of the policy essentially allows your friends to give apps permission to access your personal information. “Your friends’ activities can implicate your personal information, which seems counter-intuitive,” Downey said. “If I do not explicitly give an app permission to access my information, it should not have access to my information.”
- Overall, Downey said the policy makes it harder for companies like Abine, which develop apps to protect user privacy, to operate and offer service on Facebook.
- Facebook’s ban on multiple accounts and using a pseudonym may violate First Amendment protections in the U.S. “The courts have inferred a fundamental right to privacy from the Constitution, and anonymous speech is a recognized First Amendment right, online and offline,” she said. “Facebook can try to undermine the Supreme Court all it wants, but it’s not good policy and we should never accept it.”
- The new policy requires you to keep your profile and contact information up to date and acuarate. “Um, like hell I will,” Downey said. “Facebook’s just going to sell it and share it with who knows how many hundreds of partners, affiliates, third parties, and advertisers, and I’ll have no idea where it will end up.”
- Downey is concerned that language in certain sections of the policy has been changed from “users” to “users and non-users who interact with Facebook.” That could mean the policy can now extend to people who don’t even have a Facebook account.
The new policy should not just concern Facebook users, Downey said. Third party developers should also be worried, as Facebook is now requiring comply with rules that the social network itself does not comply with.
Directives for app developers include:
- “You will delete all data you receive from us concerning a user if the user asks you to do so, and will provide a mechanism for users to make such a request.”
- “You will not sell user data.”
- “We can require you to delete user data if you use it in a way that we determine is inconsistent with users’ expectations.”
- “You will make it easy for users to remove or disconnect from your application.”
“Kind of like how Facebook makes it nearly impossible to delete your account, making you weigh deactivation versus deletion, wade through dozens of pages and links, and wait 2 weeks,” Downey said. “Yeah, right.”
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Facebook’s Immunity to User Fatigue
Mar 6th
Lately, there has been a lot of talk about social media fatigue. Research has shown that some users are simply burnt out from the phenomenon many internet experts said was hear to say. This is not too shocking considering that quite a few users have been plugged in since the good old days when Friendster [...]
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Bing Search First to Test Facebook’s New Logout Page Ad
Mar 6th
Facebook is in the process of testing a new logout screen page ad unit that was unveiled last week. When you log out of your Facebook account you could be greeted with a full Bing home page, complete with a large photo and a search box.
View full post on Search Engine Watch – Latest
Daily Wrap: Facebook’s Offsite Mods May Know More Than You Think
Mar 5th
The offsite moderators for Facebook may have user information that might make some Facebook users uneasy. This and more in today’s Daily Wrap.
Sometimes it’s difficult to catch everything that hits tech media in a day, so we wrap up some of the most talked about stories. We give you a daily recap of what you missed in the ReadWriteWeb Community, including a link to some of the most popular discussions in our offsite communities on Twitter, Facebook, LinkedIn and Google+ as well.
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Reports Raise Questions About Who Has Access To Your Facebook Profile
Some Facebook moderation is performed by an external vendors. The employees of these vendors may have more information on Facebook users than some people expect. Beyond the flagged content, the moderators can see, in some cases, the user’s name and other identifying information.
From the ReadWriteWeb community:
jdavid_net — the problem is if facebook truly is a social utility, then, it becomes part of the infrastructure of human inter relationships.
Nick Stamoulis — It’s doubtful that the average Facebook user thoroughly understands Facebook’s privacy policies. Most probably haven’t even bothered to read it. Facebook is a “free” service, and it’s obvious that you are giving up something to use it. Really, it’s pretty simple. If in doubt, don’t share something on Facebook.
More Must Read Stories:
How Technology Changes Our Relationships
Ah, the Internet. The once magnificent and glorious tool has transformed from being a fast-paced information highway to that place where we all admit, rather begrudgingly, that we spend too much time on. Alone. We love the immediate answers, the idea of relying on Google as one aspect of our “external brain”. We crave instant gratification. We make important decisions (such as impulse buys) without a second thought. We are turning into Internet speed fiends, and we are doing it alone. (more)
Google Gets Into the Airline Ticket Business
Just in case it wasn’t clear Google is going into the business of selling airline tickets. It’s starting small with Cape Air, an independent New England-based regional airline. (more)
The Best SLA Ever
You no doubt are somewhat cynical about service level agreements (SLAs), those little-reviewed documents that promise the level of service from your hosting provider. Little-read that is, until something goes awry. Enter SingleHop, a Chicago-based provider that is trying to make a name for itself by actually delivering a solid “Bill of Rights” for customers and promising to pay when they don’t meet their SLA. It is an interesting idea. (more)
Now You Can Pin Quotes to Pinterest
Pinterest is the new home to images from around the Web. Artists, interior designers, fashionistas and excited brides-to-be are using Pinterest to organize and curate their aesthetic. Among the photos of vintage duffle bags and cheese plates, word-only images have begun to pop up. Toronto-based developer Adam Rotman saw the opportunity and jumped on it. His new site, PinAQuote.com, offers users a way to grab text they see somewhere on the Web and turn it into a sharable image for Pinterest. Drag the PinAQuote bookmarklet into your bookmarks bar, which works well in Firefox or Chrome. (more)
How Spam and the Cloud Can Save the Future of Email
Email is dead, according to some high profile figures.
Meanwhile, email use continues to grow steadily, and by some estimates nearly 80% of all business data can be found in email. Yet, even many of email’s greatest fans believe that after nearly 40 years of evolution, email has pretty much settled into its final form. I think they’re wrong – we have only seen the beginning of what email can do. (more)
Experts Weigh In On What Facebook Premium Means For Users, Advertisers
The premium advertising platform Facebook launched last week, which includes an increased emphasis on mobile, is getting mixed reviews from industry professionals.
“Bottom-line- this is gonna fail because People don’t want to recommend an ad,” said Natalie L. Petouhoff, a senior analyst at Forrester Research. “They want to recommend a product, service or company that they have had an amazing experience with. (Or they want to share great content.) That expression of joy, surprise, wonderment… is a natural thing that people share with each other.” (more)
Betting on the Future, Washington Post Hires Slashdot Founder
To say that journalism has changed in the last few years is putting it mildly. Those that watch the news industry and have a concern for its future are all too the familiar with the statistics. Dramatic drops in print advertising revenue are followed by layoffs, pay cuts and even the occasional closure of an institution that have informed the public for generations. Meanwhile, an entirely new digital news ecosystem is slowly emerging on the Web and mobile platforms, even if not everybody has figured out the best way to monetize it yet. (more)
Can Big Data Replace Domain Expertise?
One of the recurring themes last week at the O’Reilly Strata Conference in Santa Clara was the idea that skill with machine learning and analytics could trump domain expertise in getting results.
The argument goes something like this: Given the right data set, a data scientist with no domain expertise can out-perform experts that have been working in the field for decades. For example, providing weather insurance or marketing strategy. (more)
The Benefits and Pitfalls of ESPN’s new Developer Center
What do you do when you have a treasure trove of valuable data that developers would love to get their hands on? Release an API and let them create applications for you. That is precisely what sports network ESPN did today by announcing its Developer Center replete with multiple APIs for programmers. Developers can tap into ESPN’s reservoir of data on athletes, teams, media, stats and research to create sports apps with rich data for fans across the world. (more)
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Exposé Details Facebook’s Growing Pains
Mar 1st
Fortune magazine released an exposé of Facebook that portrays Chief Operating Officer Sheryl Sandberg as a leader who promoted friends over qualified Facebook employees and may have been too focused on “extracurricular” activities as the public face of the soon-to-be public social network.
“She encourages others to keep a low profile, but she embraces the spotlight, which ‘made some people unhappy and some jealous,’” a former executive told Miguel Helft and Jessi Hempel, the authors of the story that appears in the magazine’s March 19 issue and is also available for purchase on Amazon.
Facebook did not allow top executives from the company to be interviewed by Fortune. The story is built on mostly not-for-attribution interviews with current and former employees and may be one of the best looks yet into the inner workings of Facebook. The article reads more like a narrative page-turner than an analysis of Facebook’s potential return for investors.
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For example, the story’s introduction reveals that the now famous photo of Mark Zukerberg’s desk decorated with a sign reading “Stay Focused & Keep Shipping,” on the night Facebook announced its intial public offering were actually words Zuckerberg had told employees at an all-staff meeting 12 days earlier. Many had gathered for the meeting thinking Zuckerberg would finally give details about the IPO but instead, he urged employees to stay on top of their responsibilities.
Other details from the story:
- Newly-hired engineers undergo a six-week boot camp in which they’re taught to “think like Zuck.”
- The company mandates all-nighters and often has employees switch projects midstream. Those practices, while controversial, are credited with helping the company develop some of its core features, including Timeline and Chat.
- The Internet-transforming like button went through “dozens of iterations” before Facebook found something it was happy with.
- Dissent, including dissent with Zuckerberg, is allowed and even encouraged.
The story portrays Facebook as a company divided, with one half, the coder-driven half, being led by Zuckerberg, while the other half, led by Sandberg, becoming increasingly important as the company’s IPO approaches.
Even as the company rapidly grows, it is trying to remain nimble. Engineers are forced to leave their teams every 12 to 18 months and spend a month working on a different project. Even though most are allowed to return to their old teams after their month is up, one-third transfer to new teams, preventing “managers from establishing fiefdoms.”
The practice helps Zuckerberg stick to his hacker’s credo of always tinkering, always perfecting and, ultimately, avoiding a top-down management style. Indeed, if there is anything new or shocking to longtime Facebook followers in the report it is how much of the company’s successes are a collaborative effort, driven, but not necessarily inspired or mandated, by its 27-year-old founder.
But Zuckerberg still comes off as a perfectionist. In one anecdore, Helft and Hempel report Zuckerberg was discouraged four days after the December 2010 launch of a major redesign. It had nothing to do with the recent overhaul, but that the company had fallen behind in its next redesign effort.
Sandberg, meanwhile, is portrayed somewhat less flatteringly. Facebook employees refer to co-workers who are FOSS, or “Friends Of Sheryl Sandberg.” They are people she went to Harvard Business School with, or former co-workers from the U.S. Treasury Department and Google.
“You can’t really cross a FOSS,” one former senior manager was quoted as saying.
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Did Yahoo Tip The Press To Force Facebook’s Hand In Patent Dispute?
Feb 28th
Yahoo is playing the press while trying to force Facebook into licensing between 10 and 20 of its patents.
Yahoo is making fairly standard claims in Web tech circles: that a hotter, younger company is infringing on patents Yahoo registered years ago and now needs to cut the former Web behemoth in on some of the action. But how Yahoo is going about its fight reads more like the script from a political thriller, complete with reportedly dropping a dime to the New York Times.
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“Yahoo contacted us the same time they called The New York Times and so we haven’t had the opportunity to fully evaluate their claims,” Barry Schnitt, a spokesman for Facebook, said in a statement to the newspaper in other media outlets. Publicly, neither company is commenting on the patent dispute but the Times, which appears to have inside access to the story, quoted unnamed sources as saying the two companies met Monday.
We can understand why Facebook is claiming that Yahoo tipped off the Times: the timing does seem orchestrated. Recall that late last year Yahoo started issuing press releases and making public statements about the value of its patent portfolio, which numbers in the thousands. That was presumably part of its strategic review and came at a time when Yahoo was rumored to be looking to divest a chunk of itself to investors.
But it also may have been part of an effort to set the stage for the attack on Facebook. Legalities aside, the timing of Yahoo’s play comes as Facebook waits out a quiet period ahead of its initial public offering. Does the company rattle investors by picking a costly fight with Yahoo over the disputed patents, or does it quietly settle the issue, which reportedly focus on 10 to 20 patents dealing with advertising, Website personalization, social networking and messaging
“Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property,” a Yahoo spokesman said in an e-mailed statement, the company’s only public comment on the spat. “We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights.”
The Times won’t speculate on how much Yahoo is seeking, but its post on the Bits blog did point out recent Silicon Valley licensing deals, and noted this may be the first big test of intellectual property patents in the social networking space.
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