Tag Archive for Zynga

| August 8, 2011
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Tech Regulatory Capture

ATech Regulatory Captures I have noted from my Bach Seat, the revolving door or regulatory capture between the federal government and the tech titans isn’t new. The tech titans like Google (GOOG), Facebook, and Apple (AAPL) hire former feds to protect their turf while their web 2.0 applications attract attention from lawmakers and regulators concerned about issues like privacy, competition, pricing, and other aspects of the online economy.

Tech Firms Capture White House Staffers

Tech Firms Hiring White House Staffers“These companies are at the crosshairs of privacy and policy issues and they see people in the White House and federal government as protectors of their plans to expand into new markets,” Jeffrey Chester, an online privacy advocate and executive director of the Center for Digital Democracy told the Washington Post. “These are uber influence-makers they are hiring.”

Three examples of this in the Washington Post article are:

  • Google’s green energy initiative hired consultant Colin Crowell, who is both a former senior adviser to the FCC’s chairman and a former aide to Rep. Edward J. Markey (D-Mass.).
  • AT&T’s (T) lobbying leader James Cicconi, is a former staffer for George W. Bush. Mr. Cicconi has a long track record of regulatory success at the FCC and approval of several mergers for AT&T.
  • AT&T also hired Bill Clinton spokesman Mike McCurry heads Arts & Labs, a group that has lobbied against Internet access rules known as net neutrality, for AT&T, Verizon and cable companies.

Facebook Hires Former Clinton Spokesman

Facebook logoThe Washington Post reports that Facebook recently hired former Clinton White House spokesman Joe Lockhart to its communications team, as the company faces increased scrutiny caused by the company’s global expansion and treatment of data shared by the site’s more than 600 million users and its privacy practices. Mr. Lockhart, who served as press secretary for President Bill Clinton will be vice president of global communications. Mr. Lockhart will be located at the company’s Silicon Valley headquarters and report to Elliott Schrage, VP of global communications, marketing, and public policy.

Facebook has also hired former George W. Bush deputy chief of staff, Joel Kaplan, to head its D.C. federal lobbying and policy shop. The Facebook office had just one employee in 2007 and now has a dozen on staff.

Larry Summers to Join VC Firm

Andreesen Horowitz logoSilicon Valley venture fund Andreesen Horowitz has added former White House economic director Larry Summers as an exclusive “long-term” special adviser. The Washington Post reports. Marc Andreesen, a co-founder of the venture capital investment firm, said the appointment brings the former government official’s international economic expertise to a fast-changing high-tech industry where Internet companies are quickly expanding overseas and fundamentally changing the way business markets work. Summers doesn’t have experience in tech, but that’s not why the venture firm wants him, they said. As the former Treasury secretary and a noted economist, the venture firm wants his economic knowledge to help companies think more broadly about how they can break into new markets and bring their services to various industries.

Andreesen Horowitz, with investments in Facebook, Digg, and Zynga, said Mr.Summers will receive “long-term” compensation, which would probably include a stake in companies or the fund, but Andreesen declined to give more details on their arrangement.

AT&T Gave Cash to Merger Backers

ATT logoEliza Krigman at POLITICO.com reports that AT&T (T) is lining up support for its acquisition of T-Mobile from a slew of groups with no obvious interest in telecom deals, except that they’ve received big piles of AT&T’s cash.

AT&T says it supports nonprofit groups because it’s the right thing to do — and not because of any quid pro quo. “For decades, AT&T has proudly supported numerous diverse groups and organizations,” a company spokesperson told POLITICO.

But not everyone’s buying it according to the article, “The money that nonprofits receive from their corporate sponsors sticks not only in their bank accounts but in their minds,” Ellen Miller, executive director of the Sunlight Foundation, told POLITICO.com. “This is what I think of as deep lobbying — there is an expectation that when push comes to shove, these groups will come out in favor of their benefactors.”

Politico logoAT&T’s corporate giving arm, the AT&T Foundation, doled out $62 million in 2009 to support a variety of arts and education programs, charities, and organizations according to the article. Jim Cicconi, AT&T’s senior vice president and top lobbyist, chairs the foundation. some of the payments AT&T has made include

The NAACP received a $1 million contribution from AT&T in 2009 and has received funding in the six figures dating to 2006, according to the group’s annual reports. The NAACP was one of the first groups to announce public support of the T-Mobile acquisition. William Barber, head of the North Carolina chapter of the NAACP, told POLITICO that AT&T’s financial support did not influence his group’s decision to write to the FCC in support of the merger.

GLAAD which has received $50,000 from AT&T, recently backed the merger deal. Rich Ferraro, a GLAAD official, told POLITICO, “We do not make policy decisions based on what’s best for our corporate sponsors.”

The Columbia Urban League received a $25,000 grant from the AT&T Foundation in 2009 to offer “underserved populations with resources to help their children achieve academic success,” according to the foundation’s IRS Form 990. On May 27, the group’s president and CEO, James McLawhorn, wrote to urge the FCC to approve AT&T’s acquisition of T-Mobile.

Some public interest groups question whether AT&T is now cashing in on its status as one of the country’s biggest corporate donors. I wrote about AT&T’s habit of showering everyone with money here

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.

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| April 16, 2011
Comments Off on Wall Street Investing Like It’s 1999

Wall Street Investing Like It’s 1999

Wall Street Investing Like It’s 1999 The New York Times reports that banks are pouring money into technology funds, wealthy clients and institutions are clamoring to get pieces of start-ups, expectations of stock market debuts building. As the Wall Street machinery kicks into second gear, some investors with memories of the Internet bust a decade earlier are wondering whether this sudden burst of activity spells danger for the industry once again.

With all this exuberance, valuations are soaring. Investments in Facebook and Zynga have more than quintupled the implied worth of each company in the last two years. The social shopping site Groupon is considering an initial public offering that would value the company at $25 billion. Less than a year ago, the company was valued at $1.4 billion.

“I worry that investors think every social company will be as good as Facebook,” said Roger McNamee, a managing director of Elevation Partners and an investor in Facebook, who co-founded the private equity fund Silver Lake Partners in 1999 at the height of the boom. “You have an attractive set of companies right now, but it would be surprising if the next wave of social companies had as much impact as the first.”

WebvanThe NYT points out the example of the online grocer, Webvan. WebVan was one of the most highly anticipated I.P.O.s of the dot-com era. The business had raised nearly $1 billion in start-up capital from institutions like Softbank of Japan, Sequoia Capital, and Goldman Sachs. Goldman, its lead underwriter, invested about $100 million. On its first day, investors cheered as Webvan’s market value soared, rising 65 percent to about $8 billion at the close. Less than two years later, Webvan was bankrupt.

Thomas Weisel, the founder of an investment bank called the Thomas Weisel Partners Group that prospered in the first Internet boom, says he is “astounded” by the amount of money now flooding the markets. “I think it’s much greater today,” he told the NYT. “The pools of capital that are looking at these Internet companies are far greater today than what you had in 2000.”

Yet there are notable differences between the turn-of-the-century dot-com boom and now. For one, the tech start-ups that have attracted so much interest from investors have real businesses — not just eyeballs and clicks. Companies like Facebook have fast-growing revenue. Groupon, which has been profitable since June 2009, is on track to take in billions in revenue this year reports the paper. And since 1999, when 248 million people were online (less than 5 percent of the world’s population), broadband Internet and personal computing have become mainstream. About one in three people are online, or roughly two billion users, according to data from Internet World Stats, a Web site that compiles such numbers.

Today, the collective amount of money that Wall Street banks are pumping into Internet start-ups, on top of the surging cash piles from venture capital groups, hedge funds, and private equity, is a major concern for some investors.

Over the last five months, the NYT says many venture capital players have raised giant amounts of capital. One Facebook investor, Accel Partners, is about to raise $2 billion for investments in China and the United States, while Bessemer Venture Partners will be closing in on $1.5 billion for a new fund. Greylock Partners, Sequoia Capital, Andreessen Horowitz, and Kleiner Perkins Caufield & Byers have collectively raised more than $3 billion in the last six months.

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I can do my job without the social networker, I think the infographic above show that the VCs are no better than Wall Street, moving in a herd to Facebook. At least in 1999, the VCs were all over the place now they have settled on 5 firms.

They certainly have not made it easy for any other new ideas to get funded. The VC community has also concentrated its risk on these firms. All of these firms may be sexy on the coasts, but the only one that is relevant to me in Detroit is LinkedIn.

What do you think?

Is it 1999 again?

 

Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.

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| October 24, 2010
Comments Off on Facebook Privacy Fail Again

Facebook Privacy Fail Again

Facebook Privacy Fail Again -Updated 11-01-10- Facebook has completed its internal investigation into reports from The Wall Street Journal that Facebook applications were violating its user privacy. The WSJ says FB is sharing unique user IDs with advertising agencies and data collection companies. According to the firm’s blog, some developers were sharing Facebook UIDs with data brokers for a fee, “this violation of our policy is something we take seriously,” Facebook engineer Mike Vernal wrote in the corporate response.

The Social Networker is reportedly taking action against developers who violated the Facebook policies by “instituting a 6-month full moratorium on their access to Facebook communication channels, and we will require these developers to submit their data practices to an audit in the future to confirm that they are in compliance with our policies” according to the corporate blog.

The blog also states that Facebook has struck a deal with Rapleaf (Which I wrote about here), the data-mining firm that has tied Facebook ID information collected by Facebook applications to a database of Internet users it sold. “Rapleaf has agreed to delete all UIDs in its possession, and they have agreed not to conduct any activities on the Facebook Platform (either directly or indirectly) going forward.”

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Last May Facebook was caught using “referrers” to send users’ ID information to advertising agencies every time the users click on ads. In response, the social networker changed some of the code that allowed this and issued a half-hearted apology. Now, the Wall Street Journal has found that third-party applications or “apps” on Facebook have been guilty of the same thing.  The WSJ says the privacy breach affects tens of millions of Facebook app users, including people who set their profiles to Facebook’s strictest privacy settings.

Facebook logo“Apps” are pieces of software that let Facebook’s 500 million users play games or share common interests with one another. The company says 70% of users use apps each month. The WSJ found that all the 10 most popular apps on Facebook were transmitting users’ IDs to outside companies including:

  • FarmVille,
  • Phrases,
  • Texas HoldEm,
  • FrontierVille,
  • Causes,
  • Cafe World,
  • Mafia Wars,
  • QUiz Planet,
  • Treasure Isle
  • IHeart.

The WSJ says that Zynga Game Network Inc.’s (ZNGA) FarmVille, with 59 million users has also been transmitting personal information about a user’s friends to outside companies.

The information being transmitted includes the unique “Facebook ID” number assigned to every user on the site. Since a Facebook user ID is a public part of any Facebook profile, anyone can use an ID number to look up a person’s name even if that person has set all of his or her Facebook information to be private. For other users, the Facebook ID reveals information they have set to share with “everyone,” including age, residence, occupation, and photos. The apps reviewed by the WSJ were sending Facebook ID numbers to at least 25 advertising and data firms, several of which build profiles of Internet users by tracking their online activities.

The Journal found that data-gathering firm, RapLeaf Inc., (Which I wrote about earlier) had linked Facebook user ID information obtained from apps to its own database of Internet users, which it sells. RapLeaf also transmitted the Facebook IDs it obtained to a dozen other firms including Google’s Invite Media, the Journal found.  “We didn’t do it on purpose,” said Joel Jewitt, vice president of business development for RapLeaf to the WSJ.

Facebook has again issued a statement that it will look into the matter and correct the code and has in the meantime disabled thousands of applications. According to the WSJ, the applications transmitting Facebook IDs may have breached their own privacy policies. Zynga, for example, says in its privacy policy that it “does not provide any Personally Identifiable Information to third-party advertising companies.” A Zynga spokeswoman told the WSJ, “Zynga has a strict policy of not passing personally identifiable information to any third parties. We look forward to working with Facebook to refine how web technologies work to keep people in control of their information.”

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Mark ZuckerbergOnce again, Facebook has a user privacy breach on its hands. The social networker keeps promising to protect its customers’ personally identifiable information but never seems to get it right.

Perhaps the question Facebook users should be asking is does Facebook really want to protect their user’s privacy?

 

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.

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