Facebook Wants to Supply Your Internet Driver's License

And new security measures protect everyone's data.

Although it's not apparent to many, Facebook is in the process of transforming itself from the world's most popular social-media website into a critical part of the Internet's identity infrastructure. If it succeeds, Facebook and Facebook accounts will become an even bigger target for hackers.

As security professionals debate whether the Internet needs an "identity layer"—a uniform protocol for authenticating users' identities—a growing number of websites are voting with their code, adopting "Facebook Connect" as a way for anyone with a Facebook account to log into the site at the click of a button.

Facebook introduced Connect back in July 2008, offering third-party websites tools to coordinate with the user information that Facebook holds, including logins. Thus websites had the option of allowing Facebook users to identify themselves with their Facebook identities.

So, for instance, the Web statistics vendor Alexa gives new users the choice of creating an account by entering a username and a password or by simply clicking the "Connect with Facebook" button. Well-known websites that also use Connect include the Internet Movie Database, Ask.com, and ESPN. Others will almost certainly jump on the bandwagon in 2011.

Facebook's identity system might very well supply something that VeriSign, Microsoft, Yahoo, and Google have all struggled to offer: a single "driver's license" for the Internet. (This leaves aside the question of whether it's a good thing for one company to hold such a position of power.)

A unique combination of factors makes Facebook well suited to being the repository for people's identities on the Internet. Unlike many popular websites, it requires users to register and log in. And Facebook's terms of service require that "users provide their real names and information"—indeed, Facebook has terminated accounts that were created with seemingly fake names or for fictional characters. Since Facebook users invest their accounts with a tremendous amount of durable personal content—including photographs, contact information, and connections to their social network—they are likely to keep a long-term relationship with the site.

This persistence of real identity puts Facebook in a position to solve one of the most pressing problems on the Internet today—the proliferation of user names and passwords.

Contrary to today's practice, there is no reason for most websites to force their users to create usernames and passwords. Most websites don't need or even want or need to manage the identities of their users—they simply want a way to reliably identify their users over time. Media websites, for instance, want to be able to attribute comments and limit spam. Personal-finance websites want to give users a way to monitor highly personal information securely—for example, a portfolio of stocks that the user might enter.

What's more, maintaining a user-identity infrastructure has its risks—as was made painfully clear last month when hackers broke into servers operated by Gawker Media and downloaded the user names and passwords for more than a million of Gawker's accounts. Even though the passwords were encrypted, many were easy to guess, so the accounts could be readily cracked, according to an analysis of the attack by security researchers at the University of Cambridge. Following the attack several unrelated websites, including LinkedIn and Woot, sent e-mail to their users warning them to change their passwords if these were the same ones as they used for Gawker.

Facebook Login lets any website on the planet use its identity infrastructure—and underlying security safeguards. It's easy to implement Facebook Login, simply by adding few lines of code to a web server. Once that change is made, the site's users will see a "Connect with Facebook" button. If they're already logged into Facebook (having recently visited the site), they can just click on it and they're in. If they haven't logged in recently, they are prompted for their Facebook user name and password.

An interesting side benefit for website operators is that Facebook Login provides the site with users' real names (in most cases) and

Facebook to unveil financials, raises $ 1.5 billion (Reuters)

SEATTLE (Reuters) – Facebook is preparing to open its books this year or early in 2012 to give investors a glimpse into the financial workings of the world's No. 1 social network, after it sealed an oversubscribed $1.5 billion round of financing led by Goldman Sachs.

The financing, $1 billion of which is from Goldman Sachs' overseas clients and $500 million from Goldman itself and Russian investment firm Digital Sky Technologies, gives the company a projected value of $50 billion, setting the stage for what could be one of the largest initial public offerings next year.

Facebook, founded in a Harvard dorm room in 2004, said it would begin to file public financial reports no later than April 30, 2012, in a statement detailing the new investment.

United States securities regulations require companies with more than 499 shareholders to disclose financial information whether they are publicly traded or not. Facebook expects to exceed that number some time this year.

The new funding was organized by investment bank Goldman Sachs, which raised $1 billion from non-U.S. investors in a fund that Facebook said was oversubscribed.

Goldman Sachs originally pitched the investment to U.S. investors, but switched focus to overseas clients as concerns grew that intense media coverage surrounding the offering could run afoul of U.S. securities laws.

Initial projections from Goldman Sachs in documents circulated to potential investors earlier this month indicated it was looking to raise up to $1.5 billion.

Facebook said it made a "business decision" to limit the offering to $1 billion, without explaining further. It said it had no immediate plans for using the money raised.

The company earned $355 million in net income in the first nine months of 2010 on revenue of $1.2 billion, according to a document distributed by Goldman Sachs to potential investors earlier this month, the only source of financial data on the company.

In December, Digital Sky Technologies, Goldman Sachs and some funds managed by Goldman invested $500 million in Facebook.

Facebook has more than 500 million users and is challenging big Web businesses like Google Inc and Yahoo Inc for users' time online and for advertising dollars.

Investors are increasingly eager to buy shares of Facebook and other fast-growing Internet social networking companies on private exchanges.

(Reporting by Bill Rigby; Editing by Bernard Orr)

Facebook Raises $1.5 Billion, at a Valuation of $50 Billion (PC World)

Facebook has raised US$1.5 billion in its latest funding round, putting its total valuation at $50 billion and leaving no doubt about its swift ascent in recent years to become a major Internet player and challenger to Google.

Facebook will use the money to boost its cash reserves and gain "financial flexibility" without significant dilution to current shareholders, the Palo Alto, California, company said Friday.

Not long ago, industry observers worried that Facebook wouldn't be able to turn its massive popularity into a business strong enough to withstand competition from Google and others, as well as acquisition attempts.

Facebook raised $500 million from Class A common stock in December, bought by Digital Sky Technologies (DST), The Goldman Sachs Group and funds managed by Goldman Sachs.

On Friday, Goldman Sachs completed an "oversubscribed offering" for clients abroad who invested in $1 billion of Facebook Class A common stock. The two investments together value Facebook at about $50 billion.

"Our business continues to perform well, and we are pleased to be able to bolster our cash position with this new financing," said David Ebersman, Facebook's chief financial officer, in a statement.

Initially, Facebook intended to let U.S. investors participate in the funding round, but Goldman Sachs decided later to limit it to investors abroad, afraid that the media attention might make it illegal under U.S. securities laws, the bank told the Wall Street Journal this week.

Because Facebook is exceeding the 500-shareholder mark, it plans to start filing public financial reports no later than April 30 of next year, Facebook said.