Zynga, Facebook close in on IPOs

Binjaitech--Zynga, the company behind popular social gamesCityVille and Farmville, is expected to file its final initial public offering prospectus as soon as today, paving the way for a stock offering by mid-December, said a person familiar with the matter, who requested anonymity because the plans are private.

The San Francisco-based company intends to start an IPO roadshow on Monday in New York, the source said. Zynga's IPO is expected to debut at $8 to $10 per share, and raise $900 million on a $10 billion valuation. Zynga declined to comment.

Zynga is one of the social-networking world's success stories, with 227 million monthly users. Through September, it has notched $829 million in revenue, twice as much as in the same period a year earlier. Zynga has earned $121 million since the start of 2010, according to its S-1 filing.

The IPO fortunes of Zynga are a crucial litmus test for the tech IPO market. Despite the success of LinkedIn, IPOs for Groupon and Pandora have sputtered. Groupon closed its first day of trading in early November at a $16.5 billion valuation but has lost nearly 40% since and is now valued at about $10 billion.

Zynga's performance will also weigh on the outlook for Facebook, which is expected to go public in the first half. As the largest gaming company on Facebook, Zynga is a major contributor to Facebook's revenue. Zynga purchases advertising on the site and shares a portion of virtual goods purchases with the social network.

Facebook is expected to file for an IPO in April, when it is required to disclose financials now that it has reached 500 shareholders. A public offering could reach a valuation of up to $100 billion and raise $10 billion, according to a source familiar with the matter who is not authorized to speak on behalf on Facebook.

Facebook's revenue will climb to $4.3 billion this year, double the $2 billion it rang up in 2010, estimates market researcher eMarketer. Advertising will comprise a huge chunk — $3.8 billion — as it did in 2010, when Facebook registered $1.86 billion in advertising revenue.

By 2013, Facebook is expected to earn $7 billion in advertising revenue, according to eMarketer.

Facebook's challenge, after a public stock offering, will be to grow revenue to match IPO expectations, says Internet analyst Greg Sterling. "There will be pressure to use more ads, and convert (members') personal data into revenue," Sterling says.

Zynga also faces issues, including its heavy reliance on Facebook, which grabs 30% of any revenue Zynga generates by the selling of virtual goods that users buy when playing its games. In addition, CEO Mark Pincus, who owns 38.5% of Zynga's voting power, exerts a great deal of control over the business.

Zynga is making moves to wean itself off Facebook as a platform where most of its customers play its games. In October, Zynga discussed plans for its own platform, code-named Project Z. Zynga has a deal with Facebook that runs through 2015. Ustoday

FTC slaps Facebook for privacy concerns, what does it mean to you

Binjaitech--Okay, everybody: raise your hands if you believe Facebook’s latest promise not to violate their users’ privacy . . . ?

I didn’t think so. But it’s nice that they still care enough to respond to a formal complaint by the FTC, isn’t it?

The red-star words in the FTC complaint describe Facebook’s statements to its users regarding privacy as “Unfair” and “Deceptive.” It’s worth the read. The complaint raises many complaints in detail. Much of it centers around the fact that the company repeatedly assured its users that if they’ve enabled privacy controls on the stuff they post to Facebook, then there’s no way, no how, no foolin’, for ad networks or Facebook apps to get access to it. Meanwhile, the truth turned out to be more like “Yes, Of Course, and Why The Hell Not?”

Plus, in instances where Facebook promised to streamline privacy settings and make them more effective, the online tools they provided would in many cases cause the user to reveal even more information to advertisers and the public.

Plus, deleting your Facebook account did not, as promised, remove your content from the service.

If only it were this one complaint, too. No, this comes after repeated instances in which Facebook -- in the process of building and deploying new features -- automatically exposed its users’ private content and data instead of asking the user if they explicitly wanted to opt into the new feature.

We’ve heard it all before, and usually in the form of a sometimes maddeningly-casual explanation/apology on the official Facebook blog. CEO Mark Zuckerberg has posted a new one to add to your memory quilt. He’s nice enough to point out that Twitter and Google have also received talkings-to by the FTC recently, implying that the Commission is simply making the rounds. But is it really the same thing? The FTC’s problem with Twitter was its lax security. With Google, the Commission was targeting the memorable (and now discontinued) Google Buzz social service. Google wasn’t clear enough about what sort of data you were exposing if you opted into Buzz. If you opted out, Google was still examining the contents of your Gmail inbox, which ran counter to Gmail’s emphatic statements that such a thing would never happen.

The document that outlines the FTC’s issues with Facebook is a fairly exhaustive smackdown of the entire service, and the company’s whole attitude towards user privacy. In light of this, it seems as though Zuckerbergs’ latest post doesn’t really address anything. With five minutes of simple cut-and-paste editing, the post could become a full-page ad that proudly boasts of the popularity of Facebook and its apps.

Facebook agreed to settlement terms in which they must fix the problems targeted by the FTC and are also required to have an outside auditor certify that their new privacy program complies with the terms outlined by the complaint. The first certification must occur within six months after the agreement is finalized, and then again every two years for the next twenty. Any fault in compliance can result in a fine of $16,000 per violation per day.

Will this agreement actually cause Facebook to change its ways? Who the hell knows. I’m skeptical, because I don’t think they understand on an institutional level that the things they’ve done are in any way a big deal. I suspect that Facebook’s repeated problems protecting user privacy don’t stem from a line in the super-double-top-secret version of Facebook’s business plan that reads “Do the most evil things we can possibly think of, just short of kidnapping children, magically turning them into donkeys, and forcing them to work in our coal mines.”

No, the problem is simply that water tends to flow downhill. When these high-profile problems happen, you can say “that’s completely wrong” and you can install dams and pumps to keep the water out of the valley. Every time the homes at the bottom of the hill get flooded, there can be apologies and a new set of plans and initiatives for preventing that from ever happening again.

Great . . . but!

Water flows downhill. It’s gravity. It’s the nature of a fluid. It never, ever stops and thinks “What’s so great about down? Why don’t we try staying up here at the top?” It’s always going to do what’s in its nature to do.

In the Facebook corporate universe, the universe with laws of physics that they themselves chose and implemented, the natural force of gravity pulls private information into the hands of the public. It’s the principle upon which its one product and the entire company was founded: sharing information. It’s imprinted behavior. Until a tectonic shift hits Facebook, every decision the company makes will be either subtly or explicitly directed towards the desire to remove as many obstacles as possible between a piece of information and its audience.

It’s just like all of those migrating ducks who, to this very day, believe that their mother is the motorized ultralight aircraft that was the first thing they saw after they hatched. It doesn’t matter that they’re now sensible grownup ducks with ducklings of their own and they now know better. There’s still something about the puttttt-putttt-putttt of a two stroke engine and the flapping of ripstop nylon that fills them with a yearning to run after it and fall into formation.

I leave you with this image of adorable fluffy baby ducks because it’s certainly a more pleasant way to end this piece than by warning you that it’s wise to assume that anything you ever put on Facebook is available to anybody who wants to see it, despite your best efforts to keep it under wraps. Suntimes