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article imageFacebook paid ConnectU $20M and 1.2 million shares in settlement

By Chris V. Thangham     Feb 12, 2009 in Business
The case between Facebook and ConnectU has been ongoing for a number of years, but it's not finally settled. Reports now show Facebook agreed to pay ConnectU founders $20 million and 1,253,326 shares of common stock of the company.
The ConnectU founders, Cameron and Tyler Winklevoss (who are twins) and Divya Narendra had filed a lawsuit accusing Marc Zuckerberg, founder of Facebook, of ripping off their idea for a college-based social network.
The ConnectU founders claimed Zuckerberg was given an assignment to develop web designs for their site and instead Zuckerberg went and started his own Facebook site based on their idea.
The two parties decided to settle and end their feud. Initially, it was reported by ConnectU’s law firm Quinn Emanuel Urquhart Oliver & Hedges that Facebook paid ConnectU $65 million and millions of shares, but the AP’s report reveals it was only $20 million and 1,253,326 shares.
The documents were supposed to be confidential, but the AP was able to get their electronic records which show the above settlement amount. Those numbers were based on the Facebook’s valuation of the company at $3.7 billion. In 2007, a Microsoft investment in Facebook valued the social network at $15 billion, but it seems as though the value has come down to more realistic figures. The stock given to ConnectU is worth $11 million.
And now comes the obvious part: Facebook wouldn't have settled with ConnectU had ConnectU not had valid evidence to their claims. Zuckerberg's credibility is taking a hit, but still everyone thinks he is a wunderkind and his company continues to do well.
You can see the complete PDF report of the settlement here.
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