Facebook IPO: banks to be investigated for allegedly keeping negative news secret
22.05.2012, 20:16:00
Morgan Stanley, JP Morgan and Goldman Sachs are said to have shared with big investors while keeping public in the dark Financial regulators are to investigate whether the banks in charge of Facebook's initial stock offering broke the rules by selectively releasing negative news about the company before shares went on sale. The financial industry regulatory authority (Finra) is looking into allegations that Morgan Stanley and other banks released reduced revenue forecasts for Facebook to big investors - but not the general public - before Friday's IPO. Such activity could constitute a violation of securities law. Mary Schapiro, chairwoman of the securities and exchange commission, said it also had concerns. Speaking to reporters outside a Senate banking committee hearing into JP Morgan's financial reporting, she said: "I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook." Facebook stock charted a lackluster performance in its first day of trading before falling steeply at the start of this week. News of the Finra investigation drove the stock down more than 8% Tuesday. It is the second regulatory investigation tied to the Facebook IPO. The SEC announced Friday that it was looking into reports of breakdowns in trading mechanisms at the Nasdaq exchange as the stock went on sale. And the SEC investigation isn't the only headache for Nasdaq after the Facebook IPO. An investor is suing the exchange, accusing it of negligence in handling trades that resulted in losses for traders, Reuters reports. All three banks that worked on the Facebook deal - Morgan Stanley, JP Morgan and Goldman Sachs - will be investigated for allegedly sharing the negative news with institutional investors but not the public at large, Finra chairman Richard Ketchum told Reuters. "If true, the allegations are a matter of regulatory concern to Finra and the SEC," Ketchum said. The Facebook underwriters already had come under criticism for rolling out the stock at a price the market could not sustain, although the aggressive pricing netted $16bn for Facebook owners. Barry Ritholtz, the widely followed financial blogger and chief market strategist at Fusion IQ in New York, criticised all sides - Facebook, Morgan Stanley and Nasdaq. "Thus, what we see are a series of bad decisions made by Facebook's executives going back many years," he wrote on his blog Tuesday. "The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange," Ritholtz said. Facebook Internet Technology startups Securities and Exchange Commission Morgan Stanley JP Morgan Goldman Sachs United States Internet IPOs Tom McCarthy guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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Google's Chrome isn't the leading browser - yet
22.05.2012, 14:52:00
Claims that Google Chrome has passed Internet Explorer turn out to be wrong according to Statcounter's data - but it won't be long. Firefox turns out to have a surprising dominance on our map, though Chrome is challenging Microsoft's Internet Explorer as the world's most-used desktop browser, having passed Firefox, according to new data collected by Statcounter, which samples the browser-agent string used of thousands of sites. The data for the "world" region on StatCounter for the month so far shows IE just ahead, at 32.42% against Chrome's 32.29%. That share varies by day as well, because a number of people use IE at work and then Chrome at home. Update: StatCounter has asked us to clarify: while StatCounter's weekly stats show Chrome passing IE on a worldwide basis (and fluctuating a great deal if you look at weekends, when Chrome tends to get a "bounce"), the data here are based on the data for the month so far . Weekly (and daily) data can fluctuate a great deal depending on events, which is why we prefer to take a longer sample. It's a remarkable triumph for Google's browser, which was only launched in September 2008 - and attests both to its quality and, arguably, the benefits of being advertised on the front page of the world's most-visited search engine, where a "Download Chrome" button marked the only time the company has advertised any product rather than a charitable offering such as blood donation (as it did after the US 9/11 attacks in September 2011 2001). Chrome is one of a new generation of browsers, conceived from the ground up to be both more stable and more secure than those which preceded it. Thus for example every separate tab or window runs as a separate process which can be killed individually; and if one of them crashes, it won't bring the other tabs/windows down. (This can make it memory-hungry, but on modern desktops and laptops that's not a significant constraint.) It has also proven to be very secure, surviving its first two years at the Pwn2own contest - although this year it was the target of focussed attention by "grey hat" hackers who found and exploited flaws. (Google fixed them soon after.) But while the headline figure is straightforward, once you start to dig into the figures the story becomes more intriguing. Here's the world map, country by country, drawn from the StatCounter data. IE is blue; Firefox is brown; Chrome is green. All the data relates to the month so far and shows only the leading browser for each country, no matter how narrow the lead - so in that sense this gives you an overview that's rather like "first past the post" voting. No, it's not perfectly representative. But it's indicative. It's also only for this month, up to 21 May, so it's the freshest snapshot we can get. (Thanks to Pete Warden's wonderful OpenHeatMap for letting us render this map. Go to the site and buy one of his books, why not.) You can also view this map directly on OpenHeatMap . You might expect that Chrome would enjoy its strongest position, and have taken the lead, in the US - since that is after all Google's home. In fact, according to Statcounter, IE is the leader in the US and Canada. On reflection, that makes sense, since those countries will have the largest and oldest installed base of PCs, and those are most likely to be corporate, and locked down to using IE. In fact the "regional" breakdown according to StatCounter for May is as follows: Worldwide: IE 32.4%, just ahead of Chrome 32.3%; Firefox 25.4%, Africa: Firefox 40.6%, Chrome 29.9%, IE 23.6% North America: IE 38.3%, Chrome 25.3%, Firefox 21.9%. (It's also the only region with an appreciable Safari usage, at 12.5%.) South America: Chrome 49.4%, IE 26.6%, Firefox 21.4% Europe: Firefox 30.7%, Chrome 29.4%, IE 28.5% (the closest three-way fight) Asia: Chrome 37.6%, IE 32.5%, Firefox 24.3% Oceania (Australia/Pacific): IE 34.9%, Chrome 25.5%, Firefox 22.5%. Antarctica: Firefox 75.1%, IE 15.6%, Chrome 5.8% Statcounter does IP detection so that it knows where a browser request originates - so if someone from China, say, is browsing a page in Germany, that counts as a Chinese request, not a German one. In fact the highest regional share for Chrome is found in Asia, although Russian's adoption won't have hurt either. In Europe as a region , Chrome is second, after (surprise!) Firefox. But here again there are variations. In the UK - which is Google's largest market outside the US (more than $1bn revenues per quarter), IE still holds sway, 36% to Chrome's 28% (but ahead of Firefox at just under 20%). In countries such as Germany and France, it's Firefox. Conclusions? I'm going to go back and do a historical comparison to see how Chrome has risen, but the obvious conclusion seems to be the countries which have the newest installations of PCs, and which have the least in terms of legacy installations or reliance on burnt-in IE products (hello, ActiveX) which do best. Quite probably Chrome will pass IE for world share by the end of this month. For Google, that's a benefit: it gets data from users about what they're searching for and where they're going. Butin return users get a fast, secure browser which is being constantly updated and for which Google has a cross-platform plan to integrate it with its Android OS. Special update for Opera lovers: if you zoom in on the map, you'll find that Ukraine is the only country where Opera is the most-used browser. I don't know why it hasn't coloured it differently, sorry, But you'll find its value is different from the surrounding countries. Web browsers Google Internet Software Internet Explorer Microsoft Firefox Charles Arthur guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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BT 'monopolising' UK's superfast broadband
22.05.2012, 19:30:02
Telecoms company may need to be split into two, says shadow business minister Chi Onwurah BT may need to be split into two companies, the shadow business minister, Chi Onwurah, has warned, because the company is carving out a new monopoly in superfast broadband."BT must be made to understand that if superfast broadband is a monopoly, they will not be allowed to enjoy it," Onwurah told the House of Lords in evidence before a select committee inquiry into broadband. "I think structural separation is something we are going to have to look at," she said. "It's a significant intervention and BT would rightly complain but monopoly provision of superfast broadband just isn't an acceptable option." A total of £980m has been earmarked to improve Britain's broadband network, upgrading old copper wires to fibre, including £530m during this parliament which will be spent by local councils to ensure every households gets a basic 2Mbps connection. Rivals have complained that this money is likely to go to BT. Japanese group Fujitsu and BT are the only two companies on the list competing for contracts with the 35 councils that have signed up to a framework agreement being run by the government's Broadband development UK (BDUK) team. Nine councils are running their own bidding process, and BT has snapped up both of the contracts awarded so far from this second pool. "The government is doing so much to get competition into the NHS where nobody really wants it, and doing so little to get competition into telecoms where everybody agrees it is the best way," said Onwurah. She said ministers risked "sleepwalking into another monopoly." The UK could follow New Zealand and Australia, she said, where governments have forced the separation of copper and fibre networks from the customer facing arm of the national telecoms companies in order to pump money into better broadband connections. Australia is spending £23bn, of which £18bn will come from taxpayers, on pushing fibre-optic cables from telephone exchanges to 93% of homes by 2021, and has put incumbent Telstra's network into a government-owned company that will carry out the work. A BT spokesman said, structural separation was not the answer unless politicians wish to place the whole multi-billion pound burden on the taxpayer, as they have controversially done in Australia. The fact is that the UK is making very good progress with superfast broadband and will be a European leader in a few years time. and there was no monopoly as Virgin's network covers half the country and BT's is open to all companies to use on an equal basis. Competition is thriving. BT is spending £2.5bn of its own money to upgrade connections between telephone exchanges and street cabinets, replacing copper with much faster fibre-optic cables, in an area covering two thirds of the UK population by 2015. It has already reached 10m homes. Government money is meant to extend the upgrade to the final third of the population by 2017. However, Onwurah argued more investment was needed to ensure that fibre runs direct from the exchange to homes, saying this was the only way to achieve future proof speeds. "Fibre to the home is the ultimate aim. Limitless communications capability is going to transform our lives and save costs." She also called on UK telecoms watchdog Ofcom to do more. Copper prices are regulated so that BT's competitors pay a similar price to its own retail arm to access the network, but fibre prices have been left un-capped in order to encourage BT to invest in the technology. "Ofcom need to make clear that they are committed to competition in superfast broadband," she said. BT Telecommunications industry Broadband Internet Juliette Garside guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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How California can pay its debt
22.05.2012, 10:24:38
After a flurry of recent Valley IPOs, it's time for a 75% tax and for people to drop the bling I think I've found a cure for California's financial and cultural deficits. First, the symptoms. Financially, California is close to being bankrupt, it spends more than it makes and runs a huge $361bn debt, as illustrated by the online, live Debt Clock . Unemployment is high ; infrastructure is neglected ; the pride of California, its UC Colleges, must raise tuition beyond the reach of the very people it was supposed to bring into higher education; California's state parks, another treasure, are neglected and being closed . Fortunately, there's a solution - and it's right in our neighbourhood. We've seen the wealth created by a flurry of recent Valley IPOs, and we've watched the rise in share price of more established companies. From Apple to Zynga, Facebook, and LinkedIn, we have a fresh crop of McBillionaires ready to help. So, here's what we're going to do. First, let's all agree: $100K in monthly compensation is plenty. Beyond that, a 75% tax rate will help replenish the Golden State's coffers. Second, millionaires and billionaires won't suffer much from a small yearly tax on their assets: 0.25% from $1.5m to $5m, half a penny on every asset dollar from $5m and up. Simplifying a bit, if you have $10m in assets you'll pay about $50K in asset taxes every year, $100m yields $500K, $1bn (think Facebook IPO) brings in $5m, and so on. A pittance for the great feeling of helping one's fellow Californians. Then there's culture. Californians are perceived as a bunch of materialists obsessed with bling, cars, tans, IPOs, wineries, private jets, and various types of cosmetic augmentation and reduction. Outsiders deride our materialism, they call us nekulturny , they joke that the difference between yoghurt and California is that yoghurt has a living culture. We can change all this by adding a simple clause to our asset tax code: works of art are non-taxable. This would result in an explosion of art purchases and patronage. Sculptures, paintings, installations would grace every home and office of substance; artists from all over the world would flock to California, a Villa Medici for the 21st century. Finally, we have to take care of our abused high-tech workers. Think of the poor Facebook programmers who had to spend yet another night in front of their computers before the IPO. Management profiteers attempt to ennoble this abuse by calling it a hackathon and parading the participants before the media, but we're not buying it. Let's put an end to these destructive and demoralising practices. Instead of a single 70-hour work week, we'll create two jobs, hire two employees, each working 35 hours per week. And to promote a serene atmosphere, let's agree that companies with 50 employees or more will have a "worker council" to oversee decisions such as staffing changes, compensation levels, group activities, layoffs, and the like. Of course, as with any bold reform, some unintended, counter-productive side-effects may need to be considered. Let's start with the asset tax scenario. You work at a successful Valley company, you make good money and decide to help younger entrepreneurs by recycling your gains into their creations. You invest $1m in a startup and get 20% of its shares. As expected, you have to pay the asset tax on that investment, every year. The company attracts new investors at a higher valuation. Great, your initial $1m is now worth, say, $10m ... on paper. You will now pay 10 times as much asset tax as before, $50K every year. Unfortunately, after years of valiant struggle, the company shuts down. You lose your investment - and the cumulated asset tax. You would have been better off buying art instead. Less angst, more civic pride (although, admittedly, less investment and innovation, fewer jobs). You've long figured out I'm not serious. A 75% tax bracket, an asset tax, a 35-hour work week and worker councils - such naive measures would create a massive flight of money and talent out of California and into neighbouring states that would be delighted to benefit from our bone-headed reforms. And you've also figured out that the measures I've outlined, in a slightly oversimplified form, are or will shortly be in force in France. The asset tax is almost 30 years old and its current rate is likely to increase; the 75% income tax bracket is an election campaign promise and, believe it or not, the works-of-art exception is real. This has resulted in a number of unfortunate countermeasures: High-tech execs pull up stakes and head to London or Brussels; European headquarters move out of Paris and Lyon or are created elsewhere. All because, to paraphrase François de Closets , French demagogues see no difference between Steve Jobs's fortune and traders' loot. The 35-hour work week experiment failed to stanch French unemployment. The code that complicates the management of companies employing 50 or more people, as Frédéric noted two weeks ago , has resulted in an abnormally high number of companies with 49 workers or less . From the outside, this is puzzling: Instead of attracting talent and capital, France creates a combination of fact and perception working against the very interests it purports to protect. In addition to the flight of taxable assets, this will accelerate the Brain Drain French officials often rail against. In the US - and particularly in California - we welcome French entrepreneurs, engineers, business people - and money. Do French politicians understand the real world, or will they continue to closet themselves in the French Exception 's virtual reality? -- JLG@mondaynote.com Technology startups Computing Jean-Louis Gassée guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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US man fights for his right to download
22.05.2012, 21:13:00
Joel Tenenbaum was ordered to pay $675,000 for 30 songs he downloaded a decade ago after being sued by four labels The supreme court has refused to hear the appeal of a former Boston University student who was ordered by a lower court to pay $675,000 for 30 songs he downloaded in high school. Joel Tenenbaum was ordered by a jury in 2009 to pay $675,000 - $22,500 per song - after the Recording Industry Association of America sued him on behalf of four labels. The trial judge, citing constitutional concerns, reduced the fine by 90% . The companies - Sony BMG, Warner Bros Records, Atlantic Records, Arista Records and UMG Recordings - subsequently appealed to the first circuit, which reinstated the original fine. Tenebaum petitioned for the US supreme court to review the case, claiming the US Copyright Act, which he claims is unconstitutional. Without comment, the court refused to hear Tenenbaum's challenge. The case will now return to a federal judge in Boston, who will decide whether the fine against Tenenbaum will stand. "They're trying to create an urban legend out of me - the kid who downloaded music," he told the Guardian. Though Tennenbaum is being charged for downloading and distributing 30 songs, including Eminem's My Name Is and Beastie Boys' (You Gotta) Fight for Your Right (To Party), Sony gave evidence that Tenenbaum was downloading and distributing thousands of songs over the course of several years. RIAA focused on only 30 songs for efficiency. "We're pleased with the decision," an RIAA spokesperson said in a statement. Tenenbaum, now 28, who graduated on Sunday from BU with a doctorate in statistical physics, is one of more than 12,000 people the Recording Industry Association of America sued in the mid-2000s for illegally sharing music. All but two of those cases were either dismissed or settled out of court. Jammie Thomas-Rasset, the only other person to go to trial for copyright infringement, has been in and out of court since 2007. A judge last year reduced the penalty imposed on Thomas-Rasset from $1.5m to $54,000, and an appeals court has scheduled arguments next month for her. (Both Thomas-Rasset and Tenenbaum have Iris by the Goo Goo Dolls on their prosecution playlist.) RIAA wrote that they offered Tenenbaum to settle for $5,000 at the start, but claim he rejected all their settlement offers. Tenenbaum told the Guardian he offered RIAA $5,250, but the RIAA wanted $12,000. "That didn't strike me as a negotiation," Tenenbaum told the Guardian. "That struck me as them dictating terms without fair trial or process." In court documents, the record companies say that Tenenbaum continued downloading for two years after they sent him a letter notifying him that his conduct was illegal and warning him of impending legal action. The Electronic Frontier Foundation, a non-profit membership organization working to protect the rights of technology users, filed a brief oh behalf of Tenenbaum in the original case. "One thing that for sure is that it didn't put a dent in the exponential growth of peer to peer file-sharing," Corynee McSherry, intellectual property director at the EFF, told the Guardian. Downloads Filesharing Piracy Digital music and audio Amanda Holpuch guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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Pakistan blocks Twitter amid blasphemy fears
20.05.2012, 14:59:38
Twitter closed after it refused to remove tweets promoting a page urging people to post images of prophet Muhammad Pakistan's rambunctious Twitter users have been briefly silenced after the government closed the site amid fears blasphemous pictures might be circulated. Muhammad Yaseen, chairman of the Pakistan Telecommunication Authority, said the micro-blogging site had been shut down on Sunday after it refused to remove tweets promoting a Facebook page encouraging people to post images of the prophet Muhammad. He said Facebook agreed to address Pakistan's concerns but officials had failed to persuade Twitter to do the same. "We have been negotiating with them until last night, but they did not agree to remove the stuff, so we had to block it," Yaseen said. Officials from Facebook and Twitter were not immediately available for comment. The ban was made largely irrelevant by tech-savvy users. Twitter members, many aided by online articles in the Pakistani media explaining how to circumvent the curbs, installed proxy servers to shield their web browsing. Once back online, many posted angry tweets about the shutdown. One poster wondered how a known terrorist "can roam and operate freely in Pakistan whilst social media is banned!" Farieha Aziz, of the Bolo Bhi advocacy group, said the government was repeating the mistake of 2010, when Facebook was blocked for two weeks because of a group page called Everybody Draw Mohammed . Although there had been protests in the runup to the event last year, Aziz said the ban gave the group more publicity, particularly in Islamic countries outside Pakistan. "This year, however, everyone had been completely oblivious to this," she added. "Shutting down Twitter will just drive more traffic to them." According to the government, about 20% of Pakistan's 180 million people have access to the internet, while 64% have connections through their mobile phone. The web is increasingly important among the country's fast-growing urban middle class. A campaign run by Imran Khan, the former cricketer turned politician, who has more than 270,000 followers on Twitter, has been particularly popular. In addition to blocking Facebook and Twitter, the government has in the past tried to control derogatory text messages insulting government figures and has considered a national firewall to potentially screen all web traffic. Emrys Schoemaker, director of iMedia, a research organisation that studies social media in Pakistan, said attempts to control the internet reflected a shift from the media freedoms introduced by the former president Pervez Musharraf. "This is a very defensive, dated response to politics in the digital era," Schoemaker said. "Closing down debate simply makes the voices louder." Pakistan Twitter Freedom of speech Blogging Social networking Internet Facebook Jon Boone guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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Improve efficiency: switch off your phone
19.05.2012, 23:05:54
The 'always-on' connectivity of email on smartphones has become a life-destroying monster. You need help... One of the great cautionary adages of our culture is: "Be careful what you wish for; you might just get it." And it applies in spades to the kind of instantaneous, always-on connectivity that many of us now enjoy, courtesy of the internet and mobile phones. Except that enjoy is perhaps not quite the right word. Talk to any busy person nowadays about the joys of email, for example, and the most common response is a rueful shrug. A technology that was once a magical tool for communicating has somehow become a millstone round people's necks. It was bad enough when email was confined to desktop PCs. But, once the smartphone arrived, first with the BlackBerry then via the iPhone and Androids, email had the power to penetrate into the deepest recesses of the day - and night. The result was an inexorable lengthening of the working day, especially for those working in high-pressure jobs, because of an expectation that they could always be reached by email - and a corresponding expectation that any message would receive a speedy response. Email has become the central communications channel of all modern organisations, to the point where none of them could now function without it. But there's increasing evidence - both anecdotal and empirical - that it has become dysfunctional. It eats into people's working and thinking time, for example, distracts them from doing "real" work and generates guilt feelings that ratchet up stress levels to unsustainable levels. In the old world of desktop PCs, you could at least leave it behind when you left the office. But the advent of the smartphone changed all that. Email has now infiltrated leisure time, family time - even sleep time. It's become a monster that's destroying our lives. Deep down, most of us know this. But we daren't talk about it out loud, for fear of seeming inadequate. After all, our colleagues seem to be able to cope. So each individual comes to see his or her inability to cope with the email torrent as a personal failing, and therefore as a problem to be solved on a personal level. We make resolutions to be more efficient, to respond immediately (and as succinctly as possible) to each message as it arrives, to archive and file messages at regular intervals, and so on. These personal strategies appear to work for a week or two, but they're doomed to failure. This is partly because the more efficient you are at responding to email, the more quickly your inbox fills up in return. But it's mainly because the email problem is a systemic one rather than a manifestation of the inadequacies of individuals. If you work in an organisation that is dysfunctionally addicted to email, no action that you take on your own is going to solve that; indeed, it may have serious downsides for you. Which brings us to some intriguing research by a Harvard academic, Leslie Perlow . Four years ago, Professor Perlow conducted a pilot experiment with a six-person team at the Boston Consulting Group , an elite business consulting firm. The team was a classic example of "always-on" professionals who were caught in what Perlow christened the "cycle of responsiveness". "The pressure to be on," she writes , "usually stems from some seemingly legitimate reason, such as requests from clients or customers or teammates in different time zones. People begin adjusting to these demands - adapting the technology they use, altering their daily schedules, the way they work, even the way they live their lives and interact with their families and friends - to be better able to meet the increased demands on their time. Once colleagues experience this increased responsiveness, their own requests expand. Already working long hours, most just accept these additional demands - whether they are urgent or not - and those who don't risk being branded as less committed to their work." Perlow persuaded the team to try an experiment - collectively to agree to disconnect from their smartphones and computers for a few predetermined hours every week. She called it Predictable Time Off (PTO). The results surprised both her and them. The consultants reported that they felt more motivated, had increased job satisfaction and were more satisfied with their work-life balance. They also reported that they had become more efficient, effective and collaborative as a team. The PTO experiment was then replicated across most of the teams working in the BCG's north-eastern US offices - with results that confirmed the findings of the pilot study. Perlow has now published an extensive account of her research in a new book, Sleeping with Your Smartphone , which should be required reading for any senior executive concerned about the dysfunctionality of "always-on" connectivity. It shows that, while the email monster might be impossible to slay, it can be tamed by collective action. And that's definitely something worth wishing for. Smartphones Email BlackBerry iPhone Android Internet Health & wellbeing Sleep Harvard University Computing Work-life balance John Naughton guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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Pinterest valued at more than $1bn
17.05.2012, 11:37:08
Popular social network valued at between $1bn and $1.5bn following a $100m round of funding Move over, Facebook. Pinterest, the social site that lets people "pin" pictures and content to create collections of interest, has become the latest company to be valued at more than $1bn (£630m), following a $100m round of funding. While estimates of the effective valuation implied by the investment vary between $1bn and $1.5bn, they highlight the fact that Pinterest has already discovered a business model in which it collects an "affiliate" payment on purchases people make via the site. The new valuation is at least a fivefold leap in value since October 2011, when a previous financing round put it at $200m. The company has shot to stardom in the past few months to become the 16th most-visited site in the US, according to measurement company Alexa. In April it had more than 20 million users, up from 1 million in July 2011, according to ComScore, another ranking company. Its traffic soared after August 2011 when it was named one of the 50 best websites of 2011 by Time magazine, and by December it was getting 11m visitors worldwide a week, according to Hitwise. Now it has received a fresh round of funding led by the Japanese online retailing giant Rakuten, and with particiapants including its existing investors Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, and a number of angel investors. In October 2011 it received a $27m funding round that valued it at $200m. The site only opened for business in March 2010. Although the company has not disclosed its revenues, they are probably less than $10m according to modelling carried out in March by Rags Srinivasan , a strategic marketing expert. But with user numbers still growing fast, that could be advancing rapidly. A growing number of brands are using Pinterest to advertise their wares effectively for free, with the aim of driving sales via the displays. That could offer a future means for Pinterest to charge, either for position or visibility. However, legal experts have queried the site's liability for copyright lawsuits because it effectively allows the copying of images that are often copyrighted. While some brands may not mind if it drives sales, photographers and commercial organisations could be less pleased. Rakuten has invested in a number of online retailing companies around the world, including the British retailer Play.com. "While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining," said Rakuten chief executive Hiroshi Mikitani. "We see tremendous synergies between Pinterest's vision and Rakuten's model for e-commerce." In an interview with the FT , Mikitani revealed that he had also become an e-commerce advisor to the site, and said: "Having a good grasp of images is becoming more important for e-commerce. It's more straightforward and appealing to the instinct of human beings than text. That is the strength of Pinterest, I think." He added that Rakuten had wanted to fund the entire round, but Pinterest's board already had agreements with existing investors. He was enthusiastic about the prospects because, he said, traffic going to shopping sites from Pinterest would have high conversion rates [to sales] because people would have high interest in products. Of the copyright risks, he said: "I think, on the whole, they will overcome those issues. Their intention is not to damage any brand." Mikitani added that Rakuten-owned sites would in future use the Pinterest "Pin it" badge to add content. "Pinterest is the future - we know we are going to have a more tight integration for all the e-commerce sites we have." Pinterest Internet E-commerce Technology sector Social media Social networking Charles Arthur guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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