Friday, December 31, 2010

The Winklevosses vs. Facebook

The New York Times has a good story on the business page about the Winklevoss twins and their effort to unwind the settlement they reached with Facebook.They claimed that they were deceived about Facebook's value when they signed the deal, and they are owed more than they got.

I am of two minds about this. On the one hand, as a legal matter, it's pretty technical, and depends on who said what to whom and when. I don't think all the emails and text messages have been disclosed and heaven knows what the legal requirements would have been on disclosure at the time the settlement was being hammered out. The twins may have a point. The article states,

"Yet days before the settlement, Facebook’s board signed off on an expert’s valuation that put a price of $8.88 on its shares. Facebook did not disclose that valuation, which would have given the shares a worth of $11 million. The ConnectU founders contend that Facebook’s omission was deceptive and amounted to securities fraud."
Well, who knows. Maybe it is.

But plainly the moral question is being raised again. "The principle is that Mark stole the idea," says one of the twins. And this is where my sympathies tend to go to Mark, for the simple reason that none of these guys invented the concept of a social network or using the Web to construct one, and even if they did, that's no reason for any of them to have exclusive control over those ideas. Those ideas were in the air at the time. So soon we forget! Friendster had almost two million members by October of 2003, and all the social complexities of when to accept friend requests and when to deny them were already the stuff of social discourse (see this Crimson column from the time, "Not a Friendster of Mine," for example). People "steal" other people's ideas all the time; that's the way the process of invention and discovery proceed. The people who succeed are the people who work at implementing the ideas. Bill Gates did not invent microcomputer operating systems, or word processors, or spreadsheet software either; that doesn't make him a thief.

As it happens, I had the sense in January of 2004, before Facebook was incorporated, that Zuckerberg was going to do something in the way of a social networking site, because he put me at the center of a prototype, "Six Degrees to Harry Lewis," in which the links were between people mentioned in the same story in the Harvard Crimson. David Kirkpatrick mentions this in his book about Facebook. (Mark asked me politely--I knew him already because he took the undergraduate CS theory class from me--if I would mind if he made the site public. He wanted to put me at the center of the network because I had been mentioned in a lot of Crimson stories. My response? "Sure. Seems harmless.")

Though it viewed Harvard through a distorted lens, I actually liked The Social Network (the movie) because of the way it toyed with this business of the movement and growth and execution of ideas, and when echoing an idea constitutes theft and when it is is the ordinary commerce in the gift culture that nurtures creativity. To complicate things, the movie throws in a scene in which Zuckerberg seems to be dishonest with his business partner, misrepresenting some documents he is asking him to sign. This is designed to make the viewer skeptical about Zuckerberg's integrity, but whether not this even happened has nothing to do with whether Zuckerberg "stole" the Winklevosses' idea. I tend to think he didn't.


  1. I first encountered Facebook at UCSB, when it was still a university-only thing. It was explained to me roughly this way: "It's like a live yearbook that anybody can update any time."

    Facebook was so grounded in college life that there was lots of skepticism and blowback when Mark opened its services to the world. But obviously this was a good idea. It was also not the Winkelvoss's idea. Facebook's success today is owed almost entirely to work done in the years since the service expanded beyond the college setting that Mark and the Winkelvoss brothers shared. And, as Larry Lessig makes clear here --,1 -- to the Internet itself.

    I don't know if Larry Summers actually said to the Winkelvosses what his character said in the Social Network script, but for me it was the best moment in the movie. Basically he told them to stop whining and move on. If they have a good business idea, go make it happen.

    They still have that opportunity, at least while the Internet is still open and free.

    Doc Searls

  2. Thanks for this interesting historical take, though it's a shame you ended on such a whimper:

    "...whether Zuckerberg "stole" the Winklevosses' idea. I tend to think he didn't."

    As you (nearly) pointed out, you can't "steal" ideas anyhow -- and not just in the academic "theft vs. infringement" sense. You can't even so much as "infringe" on an idea because you can attain neither copyright nor patent to it (overly broad business method patents not withstanding, but that's neither here nor there for this story). If there's a protected IP category of "idea" that'd be news to me.

    I can't fathom how the twins were able to squeeze a dime out of Facebook. It still makes me a little sick just thinking about it, and frankly, I couldn't care less about Facebook or Zuckerberg.

  3. Thanks for the comments, and thanks to Phil Malone for pointing people here. I I was using "steal" not in its legal meaning -- more in the sense a guy will complain that another guy "stole" his girlfriend. I tend to think (yes, I am hedging) that the Winklevosses' claim has about as much moral foundation. IANAL so I haven't a clue about the legal claim.

    One of the difficulties I face when sorting this out is that I admire humility. I always root for the guy who will tell you it is not about him. I love sports and hate endzone celebrations. My sympathies always go to the guy whose response to anything is to give credit to the team or to those who went before. I search this tale in vain for such a character, not that that makes it different from almost any other modern drama.