How Much Will Shady Alleged Tactics Cost Facebook's Zuckerberg?

If you've seen the Oscar-winning drama-mentary, The Social Network, then you've seen a caricature of Facebook founder Mark Zuckerberg. The film portrayed him as a savvy computer programmer, but a devious businessman who betrayed a number of people -- even his best friend -- to create and control Facebook. A pair of news stories this week spotlight the alleged misdeeds of Zuckerberg. How much could his actions cost him?

If you saw the film, then you probably remember those towering twins who allegedly had the idea for Facebook, the Winklevoss brothers. They're the ones who were whining to an unsympathetic Harvard President Larry Summers about Zuckerberg stealing from them. John Carney at CNBC's NetNet reports that a judge finally threw their case out of court -- but after they had already been provided a settlement in a prior court that will stick. In addition to $20 million in cash, they got 1.2 million in Facebook stock. Carney writes:

Perhaps more importantly, they are walking away very wealthy men. The shares were initially valued at $8.88 a share (the Winklevosses claim they were told they were worth almost $36 a share, hence the lawsuit). But these days they're probably worth far more than that--as much as $150 a share. The New York Times says that this puts the stock portion of the settlement at a $180 million valuation. Yesterday's decision means the Winklevosses are stuck with that $180 million.

That measly $200 million might not compare to Zuckerberg's net worth, but it's enough to ensure they won't have to worry about money for the rest of their lives.

In other news, remember that seemingly random guy from upstate New York who claimed he owned at least half of Facebook? Most people dismissed him as some wacko, but there may be more to his story than delusion. Henry Blodget at Business Insider has revealed some of Paul Ceglia's "breathtaking" evidence that he owns half of the website. Here's a glimpse:

Ceglia has produced more than a dozen of what he says are emails between him and Mark Zuckerberg from July 2003 to July 2004, the year in which Facebook was created.

In these purported emails, which we have included below, Zuckerberg and Ceglia discuss "the face book" project in detail. They discuss how Ceglia will fund the project. They discuss how Ceglia has funded the project (proof of payment). They discuss how Zuckerberg has met some upperclassmen--the Winklevosses, presumably--who are pursuing a similar project, and how Zuckerberg is "stalling" them. They discuss how Zuckerberg has failed to complete the "face book" project on time. They discuss the launch of the face book, which Ceglia agrees looks great.

The article goes on from there to explain how e-mails allegedly from Zuckerberg then appear to mislead Ceglia about the progress of Facebook, presumably to cut him out of the picture. If these e-mails are real, then Ceglia may become a very wealthy man. Even if he doesn't manage to secure half of the social network megasite, he could still end up with a nice settlement like the Winklevoss twins, if his story holds up.

Of course, that's a big "if." Facebook claims the e-mails are fake, but Ceglia's lawyers say they verified their authenticity through due diligence. As Bloget says, if these e-mails are fake, then it should be fairly easy to determine that. So Zuckerberg doesn't have to worry, unless there's some truth to Ceglia's claim after all. If you have some interest, read the full article at Business Insider, because it's fascinating stuff.

On one hand, these stories show that Zuckerberg's alleged questionable business tactics could end up costing him quite a bit of money. On the other hand, the benefit he ultimately derived from those shady alleged maneuvers could far outweigh the costs. If Facebook would never have been created without the Winklevosses and Ceglia, a couple hundred million dollars represents a very small price for Zuckerberg to pay for enabling the website to make him billions.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Video

The 86-Year-Old Farmer Who Won't Quit

A filmmaker returns to his hometown to profile the patriarch of a family farm

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

More in Business

Just In