'Facebook paid £45m to settle lawsuit' claimLawy firm claims Facebook paid up to £45 to settle

13 February 2009


Facebook paid up to $65m (£45.7m) to settle a lawsuit filed by its founder's former classmates who claimed that he stole the idea, a law firm has claimed.

Details of a settlement - which were supposed to be confidential - were included in a newsletter sent out by the legal representatives of ConnectU, a smaller social networking site.

ConnectU's founders Divya Narendra and twins Tyler and Cameron Winklevoss allege that Mark Zuckerberg took their idea and technology while they were all students at Harvard.

Facebook lawsuit

A previously undisclosed settlement was reached last year, but in a newsletter sent out by Quinn Emanuel Urquhart Oliver & Hedges, the law firm boasts of netting a $65m dollar cash and stocks victory in the case.

Read the Which? reviews of 10 social-networking sites

Peter Calamari, an attorney at the firm, told the Los Angeles Times that the information was released unintentionally.

He told the newspaper: 'Our PR people released something, and it didn't get caught by the people who knew. We had a policy against commenting or talking publicly about this case.'

Facebook and Microsoft

News of the settlement comes as court files also show that Facebook's own appraisal of its worth was significantly lower than the $15 billion price tag implied by a 2007 Microsoft investment.

As part of an advertising deal with the software giant, the social networking site agreed to sell a 1.6% stake for $240m (£169m).

The Microsoft deal priced the overall company at $15bn (£10.6bn).

But in a court hearing last year Facebook argued that the investment could not be used to work out the company's worth. Its own analysis put the overall wealth of the site at $3.7bn (£2.6bn).

Under the details of the settlement, ConnectU received $20m (£14.1 million) in cash and 1,253,326 shares.

'The lawsuits and huge sums involved show how popular and important social networking sites such as Facebook are,' says Which? technology editor Matthew Bath. 'They are seen as a vital tool for companies to reach consumers, as well as offering a great way for people to stay in touch with friends and people with similar interests.'

© 2009 The Press Association

Which? RSS feed

For daily consumer news, subscribe to the Which? news RSS feed here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml . Find out more about RSS in the Which? guide to news feeds.

Sign up to the Which? technology focus email

Keep your finger on the pulse of digital technology with the weekly email from the Which? Technology team

Every Tuesday we'll send you the latest news and reviews of MP3 players, mobile phones, cameras, high-definition TVs and other gadgets. 

Packed with the latest product launches, First Look reviews, expert advice and some incredible deals - can you afford not to be the first to find out?

Plus there are regular prize draws - we've already given away a 32GB iPod Touch.