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Exclusive: Professional social network LinkedIn has shut down API access to a number of developers for terms of service violations, according to the company. The six developers whose access to LinkedIn’s API include Facebook-focused professional network BranchOut, Monster’s social recruiting app Beknown, brand management app Visible.me, resume service Daxtra, professional reputation manager Mixtent and CRM-Gadget.

The shut down of access for BranchOut and Monster’s similar (and recently launched) app BeKnown are particularly surprising. According to LinkedIn, BranchOut, which has been compared to a LinkedIn for Facebook, violated the network’s API TOS with its plans for a premium enterprise recruiting search tool. Charging fees for access to LinkedIn’s content, is a no-no, says the network.

LinkedIn says that it cut off access to its API for BeKnown because the app was using the LinkedIn APIs to send messages to promote BeKnown (and thus profit from the API). LinkedIn is also concerned that BeKnown will be charging for enterprise services related to the API, similar to BranchOut. Mixtent and Visible.me were also shut down for the same reasons. And CRM-Gadget and Daxtra were both shut down for storing LinkedIn member data.

In the case of BranchOut and BeKnown, it’s hard not to think of the whole Twitter-UberMedia debacle, in which Twitter shut down API access to UberMedia for TOS violations, including trademarks, privacy and monetization violations. UberMedia is a direct competitor to Twitter, with it army of third-party clients.

Likewise, BranchOut (and now BeKnown) are competitors to LinkedIn in some ways. BranchOut, which is backed by Accel, Norwest, Floodgate, and Redpoint, allows you to network and find jobs through your friends on Facebook. The company also allows you to import skills, education, and job history from LinkedIn as well. And the company is allowing brands and organizations to post jobs to users. The startup has been growing in a territory that LinkedIn has not yet invaded—Facebook.

LinkedIn, which has 20,000 developers using its APIs, has been on fairly good terms with its developers minus a few stumbles. In January, LinkedIn shut down access to CubeDuel, a service that mixes the best (or worst) of Hot or Not with the professional social network. Apparently CubeDuel exceeded LinkedIn’s API limits, but it was actually the startup’s fault.

LinkedIn says it is open to reinstating its APIs to these developers and startups if they comply with the network’s TOS. LinkedIn has partnership deals with some developers where startups pay fees for the API (which they can monetize off of).

But LinkedIn could probably learn a thing or two from Twitter’s tenuous situation with its developers, and should definitely navigate these waters very carefully.

Update:

BranchOut issued this statement in response to LinkedIn’s move:

At BranchOut we consider the next generation platform for professional networking to be Facebook. Changes to the LinkedIn API have little impact on the BranchOut experience, as it was only being used by a small fraction of our users. That said, we believe user data should be owned by the user, and that people should be allowed to share their data with the new services and contexts that provide the most utility.

We’ve analyzed our statistics, and it has led to a pretty exciting discovery for us—namely that we are causing a groundswell within a much larger audience than that addressed by the prior generation of career services. BranchOut users encompass not only the professional networker, but also the far larger base of 700 million Facebook users worldwide who would like to use their social graph to help them in business, recruiting, sales, and job search. For example, in addition to white collar professionals, our users are college students, workers in retail, manufacturing, hospitality, military, government, and others who have yet to find a professional voice within a social network. We are excited to be the first to give this larger global audience a relevant professional networking solution.

And here’s Monster’s response:

We are surprised and disappointed by LinkedIn’s decision, which we believe not only goes against the interests of LinkedIn users, but also contradicts what LinkedIn claims to stand for – openness and connectivity. Professional networkers are social in nature and LinkedIn has just limited their ability to connect when and where they want. They’ve taken away users’ rights to control how and when they can share their own profile data and personal contacts. We also note that it was within days of Monster’s launch of BeKnown that LinkedIn decided to block the API when there have been other networking-oriented apps using the API for months.While this move by LinkedIn creates an inconvenience for their users, BeKnown members will continue to build their networks from all the largest online sites including Facebook, Yahoo, Google and Monster.

Exclusive: Professional social network LinkedIn has shut down API access to a number of developers for terms of service violations, according to the company. The six developers whose access to LinkedIn’s API include Facebook-focused professional network BranchOut, Monster’s social recruiting app Beknown, brand management app Visible.me, resume service Daxtra, professional reputation manager Mixtent and CRM-Gadget.

The shut down of access for BranchOut and Monster’s similar (and recently launched) app BeKnown are particularly surprising. According to LinkedIn, BranchOut, which has been compared to a LinkedIn for Facebook, violated the network’s API TOS with its plans for a premium enterprise recruiting search tool. Charging fees for access to LinkedIn’s content, is a no-no, says the network.

LinkedIn says that it cut off access to its API for BeKnown because the app was using the LinkedIn APIs to send messages to promote BeKnown (and thus profit from the API). LinkedIn is also concerned that BeKnown will be charging for enterprise services related to the API, similar to BranchOut. Mixtent and Visible.me were also shut down for the same reasons. And CRM-Gadget and Daxtra were both shut down for storing LinkedIn member data.

In the case of BranchOut and BeKnown, it’s hard not to think of the whole Twitter-UberMedia debacle, in which Twitter shut down API access to UberMedia for TOS violations, including trademarks, privacy and monetization violations. UberMedia is a direct competitor to Twitter, with it army of third-party clients.

Likewise, BranchOut (and now BeKnown) are competitors to LinkedIn in some ways. BranchOut, which is backed by Accel, Norwest, Floodgate, and Redpoint, allows you to network and find jobs through your friends on Facebook. The company also allows you to import skills, education, and job history from LinkedIn as well. And the company is allowing brands and organizations to post jobs to users. The startup has been growing in a territory that LinkedIn has not yet invaded—Facebook.

LinkedIn, which has 20,000 developers using its APIs, has been on fairly good terms with its developers minus a few stumbles. In January, LinkedIn shut down access to CubeDuel, a service that mixes the best (or worst) of Hot or Not with the professional social network. Apparently CubeDuel exceeded LinkedIn’s API limits, but it was actually the startup’s fault.

LinkedIn says it is open to reinstating its APIs to these developers and startups if they comply with the network’s TOS. LinkedIn has partnership deals with some developers where startups pay fees for the API (which they can monetize off of).

But LinkedIn could probably learn a thing or two from Twitter’s tenuous situation with its developers, and should definitely navigate these waters very carefully.

Update:

BranchOut issued this statement in response to LinkedIn’s move:

At BranchOut we consider the next generation platform for professional networking to be Facebook. Changes to the LinkedIn API have little impact on the BranchOut experience, as it was only being used by a small fraction of our users. That said, we believe user data should be owned by the user, and that people should be allowed to share their data with the new services and contexts that provide the most utility.

We’ve analyzed our statistics, and it has led to a pretty exciting discovery for us—namely that we are causing a groundswell within a much larger audience than that addressed by the prior generation of career services. BranchOut users encompass not only the professional networker, but also the far larger base of 700 million Facebook users worldwide who would like to use their social graph to help them in business, recruiting, sales, and job search. For example, in addition to white collar professionals, our users are college students, workers in retail, manufacturing, hospitality, military, government, and others who have yet to find a professional voice within a social network. We are excited to be the first to give this larger global audience a relevant professional networking solution.

And here’s Monster’s response:

We are surprised and disappointed by LinkedIn’s decision, which we believe not only goes against the interests of LinkedIn users, but also contradicts what LinkedIn claims to stand for – openness and connectivity. Professional networkers are social in nature and LinkedIn has just limited their ability to connect when and where they want. They’ve taken away users’ rights to control how and when they can share their own profile data and personal contacts. We also note that it was within days of Monster’s launch of BeKnown that LinkedIn decided to block the API when there have been other networking-oriented apps using the API for months.While this move by LinkedIn creates an inconvenience for their users, BeKnown members will continue to build their networks from all the largest online sites including Facebook, Yahoo, Google and Monster.

Earlier this week while visiting Seattle, Facebook CEO Mark Zuckerberg tipped off Seattle press that the company would be launching an “awesome” new product next week that has been built by Facebook’s Seattle team. The press invitations to that event went out today, saying nothing more than “Please join us for an event at Facebook” on July 6.

So what is the new product? MG Siegler speculates here that it might have a desktop component given all the desktop software hiring going on in Seattle.

And he’s right. This isn’t the main project that team is working on, but next week, says a source with knowledge of the partnership, Facebook will launch a new video chat product, powered by Skype, that works in browser. Suddenly those chat icons in the invitation have a lot more meaning.

The product has been built on Skype and will include a desktop component. It’s not clear to me whether that means it will just work if a user has Skype already installed on the computer, or if additional software will need to be downloaded even if the user already uses Skype. But it’s clear that there’s very deep integration between the products, and from the user’s perspective, the product will be an in browser experience.

Facebook and Skype have already been working together, including integration of various Facebook features into the Skype service.

But this is something else entirely. The partnership could substantially increase Skype usage. Facebook has more than 750 million active users. Currently Skype has just 170 million. And it will certainly help Facebook become even stickier for users as they start to have voice and video chat as an option to communicate.

And this also brings Facebook even closer to Microsoft, which is a Facebook shareholder and has a pending acquisition of Skype. The guys in Redmond must be smiling today, something that happens far too infrequently at Microsoft HQ.

Zynga filed for its much awaited $1 billion IPO this morning, revealing some impressive revenue and profit numbers. And it looks like recent tech IPOs Pandora and LinkedIn are seeing some major increases in stock value in morning trading after a rocky few weeks.

LinkedIn, which opened at $83 per share in May, has hovered between $60 and $75 per share for the past month, dipping as low as $60 per share. Over the past few days, LinkedIn stock has climbed upwards, closing at $89.94 yesterday. And today, stock reached as high as $94.99 this morning, giving LinkedIn a $9 billion valuation.

Pandora, which opened at $20 per share, has dropped as low was $12.10 per share, and has hovered between $12 and $15. Today, Pandora’s stock rose as high as $21.20, giving Pandora a $3.4 billion valuation.

We’ll see if Pandora and LinkedIn can sustain these stock values beyond today.

Zynga just filed for its much-awaited $1 billion IPO and now we know how much founder Mark Pincus and the company’s investors own in the company. Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.

Pincus is the largest shareholder of Zynga, with 16 percent of the company (all in terms of Class B shares). Kleiner Perkins owns 11 percent of the company; IVP owns 6.1 percent; Union Square Ventures owns 5.5 percent; Foundry owns 6.1 percent, Avalon Ventures owns 6.1 percent and DST owns 5.8 percent.

Pincus makes a salary of $300,000, and Van Natta earns a salary of $200,000.

Pincus actually sold 7,840,836 shares for a total of $109,458,070 in March. Union Square Ventures, Foundry, Kleiner Perkins, Avalon and IVP all sold shares back to Zynga earlier this year (see chart below).

Late last night, it was revealed that Nortel had picked a winner for their patent portfolio. To the surprise of many, that winner was not Google, which had put up the initial “stalking horse” bid to get the ball rolling. Instead, the winner was a “consortium” of industry players — a consortium that includes Apple, RIM, Microsoft, Sony, and others. In other words, this sounds to us like the absolute worst possible scenario for Google. It’s not just that one of their major rivals won the rights to the over 6,000 patents. It’s that all of them did.

Unsurprisingly, Google is not happy.

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers,” Kent Walker, Google’s Senior Vice President and General Counsel said in a statement that Google sent out to members of the press.

Okay, but come on, that’s a bit bland. If I were Google, I’d be more than “disappointed”, I’d be pissed off. Again, they’re the ones who got the ball rolling with a $900 million opening bid. Meanwhile, things weren’t looking too hot for Apple. While the DoJ quickly cleared Google to make a run on the patents, they weren’t so sure about Apple. And then Microsoft started complaining that if Google won the rights to the patents they could nullify the existing agreements Nortel had in place for licensing out those patents (which may or may not have even been true). It looked like Google was in the drivers seat.

But now it sure looks like that while all of this interference was going on, Google’s competitors were getting together behind the scenes to come up with a combined offer — $4.5 billion — that Nortel couldn’t refuse (and Google likely couldn’t in their right mind, match).

And the truth is that Google is pissed off. How do you we know? Because while they’re releasing muted statements, they’re also trying to have off-the-record conversations to further express their displeasure. And they’re pointing us to pieces like Mike Masnick’s which features wording like:

So, Microsoft apparently got together with Apple, EMC, Ericsson, RIM and Sony… and coughed up an insane $4.5 billion. It’s kind of brilliant in a nefarious way. With six companies together, they could each spend less than the $900 million initially pitched by Google… and then just all agree not to sue each other, but leave open the option to sue anyone else.

And they’re pointing out what they believe to be similarities between this situation and the one involving Novell patents, which the DoJ looked into and decided to force changes — pointing out that the open source community was not happy. Of course, this has nothing to do with the open source community. But it certainly is possible that the DoJ will not like this consortium bid on the Nortel patents one bit. The courts in both the U.S. and Canada still have to approve the bid for it to clear, and it certainly is possible that changes will be forced once again.

We’ve told Google we’re happy to have an on-the-record conversation about all of this. I’m just not sure what the point of venting off-the-record is at this point. Google is pissed off, and they should be! And they should express that openly!

Minutes ago, social gaming giant Zynga filed its much-anticipated S1, beginning the path to an IPO in which it’s looking to raise $1 billion. We’re currently combing through the document, which lays out some of the company’s key statistics and financials for the first time. And there’s a clear trend: the word ‘Facebook’ appears in the document some 204 times (Google clocks in at 10).

The reasons for that should be obvious to anyone that’s tracked Zynga’s rise to success: the company is tied at the hip to Facebook Platform. It relies on Facebook’s viral channels, like News Feed and Notifications, to help its games grow. It’s reliant on Facebook’s Credits for monetization (Facebook now forces all games to use Credits). And it’s subject to whatever changes Facebook makes to its terms of service, or tweaks it makes to the way applications can interact with users. In other words, Zynga is warning investors that if Facebook changes the terms of their relationship, they’ll suffer.

But there’s one possible catch: an addendum that is repeatedly referred to throughout the S-1 that guarantees a 70/30 split between Zynga and Facebook on items purchased using Facebook Credits. The fact that an agreement exists isn’t news — Zynga and Facebook announced that they’d forged one last year after Zynga threatened to leave the platform. But the terms of their deal have been a mystery. And it seems like they still are.

Here’s the section that goes into most detail about the financial terms of the agreement:

Facebook Credits is Facebook’s proprietary virtual currency that Facebook sells for use on the Facebook platform. Under the terms of our agreement, Facebook sets the price our players pay for Facebook Credits and collects the cash from the sale of Facebook Credits. Facebook’s current stated face value of a Facebook Credit is $0.10. For each Facebook Credit purchased by our players and redeemed in our games, Facebook remits to us $0.07, which is the amount we recognize as revenue. We recognize revenue net of the amounts retained by Facebook because we do not set the pricing of Facebook Credits sold to our players.

That’s pretty straightforward (all developers are currently offered the 70/30 cut), but the S-1 alludes to some other aspects of the deal that are not described in the S-1 — namely, that it operates under modified Terms and Conditions compared to other developers (emphasis mine).

In 2010, we entered into an addendum with Facebook that modified Facebook’s standard terms and conditions for game developers as they apply to us and that govern the promotion, distribution and operation of our games on Facebook. In July 2010, we began migrating to Facebook Credits, and by April 2011, we had migrated all of our games on Facebook to Facebook Credits.

Whatever those adjusted terms are, they clearly don’t negate Zynga’s current reliance on Facebook.

All of the S-1′s financials are reported after first subtracting Facebook’s 30% cut whenever relevant, but it doesn’t look like Zynga breaks out just how much of their revenue is generated through Facebook, which is almost certainly a vast majority. I’m sure investors will be curious about that — and I’d also be eager to know just what kind of advantages the addendum gives Zynga over its competitors. Because on Facebook, even features that sound minor, like access to certain notification channels, can make all the difference in helping a game rise to massive popularity.

Of course, Zynga isn’t exactly without leverage. The company’s games continue to be a huge draw for users, and Facebook would suffer greatly if Zynga left the platform (especially if its games were available on a rival service, like the newly-launched Google+). Zynga’s deal with Facebook runs through 2015 so that doesn’t seem likely, but, again, it’s not clear exactly what that deal guarantees for both parties.

Here’s one relevant passage outlining how Zynga views its relationship with Facebook:

We have benefited from Facebook’s strong brand recognition and large user base. If Facebook loses its market position or otherwise falls out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our games, which would consume substantial resources and may not be effective. In addition, Facebook has broad discretion to change its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us. For example, in 2010 Facebook adopted a policy requiring applications on Facebook accept only its virtual currency, Facebook Credits, as payment from users. As a result of this change, which we completed in April 2011, Facebook receives a greater share of payments made by our players than it did when other payment options were allowed. Facebook may also change its fee structure, add fees associated with access to and use of the Facebook platform, change how the personal information of its users is made available to application developers on the Facebook platform or restrict how Facebook users can share information with friends on their platform. Beginning in early 2010, Facebook changed its policies for application developers regarding use of its communication channels. These changes limited the level of communication among users about applications on the Facebook platform. As a result, the number of our players on Facebook declined. Any such changes in the future could significantly alter how players experience our games or interact within our games, which may harm our business.

Late last night, it was revealed that Nortel had picked a winner for their patent portfolio. To the surprise of many, that winner was not Google, which had put up the initial “stalking horse” bid to get the ball rolling. Instead, the winner was a “consortium” of industry players — a consortium that includes Apple, RIM, Microsoft, Sony, and others. In other words, this sounds to us like the absolute worst possible scenario for Google. It’s not just that one of their major rivals won the rights to the over 6,000 patents. It’s that all of them did.

Unsurprisingly, Google is not happy.

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers,” Kent Walker, Google’s Senior Vice President and General Counsel said in a statement that Google sent out to members of the press.

Okay, but come on, that’s a bit bland. If I were Google, I’d be more than “disappointed”, I’d be pissed off. Again, they’re the ones who got the ball rolling with a $900 million opening bid. Meanwhile, things weren’t looking too hot for Apple. While the DoJ quickly cleared Google to make a run on the patents, they weren’t so sure about Apple. And then Microsoft started complaining that if Google won the rights to the patents they could nullify the existing agreements Nortel had in place for licensing out those patents (which may or may not have even been true). It looked like Google was in the drivers seat.

But now it sure looks like that while all of this interference was going on, Google’s competitors were getting together behind the scenes to come up with a combined offer — $4.5 billion — that Nortel couldn’t refuse (and Google likely couldn’t in their right mind, match).

And the truth is that Google is pissed off. How do you we know? Because while they’re releasing muted statements, they’re also trying to have off-the-record conversations to further express their displeasure. And they’re pointing us to pieces like Mike Masnick’s which features wording like:

So, Microsoft apparently got together with Apple, EMC, Ericsson, RIM and Sony… and coughed up an insane $4.5 billion. It’s kind of brilliant in a nefarious way. With six companies together, they could each spend less than the $900 million initially pitched by Google… and then just all agree not to sue each other, but leave open the option to sue anyone else.

And they’re pointing out what they believe to be similarities between this situation and the one involving Novell patents, which the DoJ looked into and decided to force changes — pointing out that the open source community was not happy. Of course, this has nothing to do with the open source community. But it certainly is possible that the DoJ will not like this consortium bid on the Nortel patents one bit. The courts in both the U.S. and Canada still have to approve the bid for it to clear, and it certainly is possible that changes will be forced once again.

We’ve told Google we’re happy to have an on-the-record conversation about all of this. I’m just not sure what the point of venting off-the-record is at this point. Google is pissed off, and they should be! And they should express that openly!

Zynga filed for its much awaited $1 billion IPO this morning, revealing some impressive revenue and profit numbers. And it looks like recent tech IPOs Pandora and LinkedIn are seeing some major increases in stock value in morning trading after a rocky few weeks.

LinkedIn, which opened at $83 per share in May, has hovered between $60 and $75 per share for the past month, dipping as low as $60 per share. Over the past few days, LinkedIn stock has climbed upwards, closing at $89.94 yesterday. And today, stock reached as high as $94.99 this morning, giving LinkedIn a $9 billion valuation.

Pandora, which opened at $20 per share, has dropped as low was $12.10 per share, and has hovered between $12 and $15. Today, Pandora’s stock rose as high as $21.20, giving Pandora a $3.4 billion valuation.

We’ll see if Pandora and LinkedIn can sustain these stock values beyond today.

Earlier this week while visiting Seattle, Facebook CEO Mark Zuckerberg tipped off Seattle press that the company would be launching an “awesome” new product next week that has been built by Facebook’s Seattle team. The press invitations to that event went out today, saying nothing more than “Please join us for an event at Facebook” on July 6.

So what is the new product? MG Siegler speculates here that it might have a desktop component given all the desktop software hiring going on in Seattle.

And he’s right. This isn’t the main project that team is working on, but next week, says a source with knowledge of the partnership, Facebook will launch a new video chat product, powered by Skype, that works in browser. Suddenly those chat icons in the invitation have a lot more meaning.

The product has been built on Skype and will include a desktop component. It’s not clear to me whether that means it will just work if a user has Skype already installed on the computer, or if additional software will need to be downloaded even if the user already uses Skype. But it’s clear that there’s very deep integration between the products, and from the user’s perspective, the product will be an in browser experience.

Facebook and Skype have already been working together, including integration of various Facebook features into the Skype service.

But this is something else entirely. The partnership could substantially increase Skype usage. Facebook has more than 750 million active users. Currently Skype has just 170 million. And it will certainly help Facebook become even stickier for users as they start to have voice and video chat as an option to communicate.

And this also brings Facebook even closer to Microsoft, which is a Facebook shareholder and has a pending acquisition of Skype. The guys in Redmond must be smiling today, something that happens far too infrequently at Microsoft HQ.

Zynga finally filed for its IPO today, and we now we get to take a look at its financials. At a high level, the company made nearly $600 million in revenues last year, and $90 million in profits. It grew at an incredible pace, with revenues growing 392 percent in 2010, up from $121.5 million in 2009 (and up from $19 million in 2008).

In just the first quarter of 2011 alone, the company’s revenues reached $235 million (or a $940 million revenue run-rate), and that was up 134 percent from the first quarter of 2010. What is particularly amazing about all of these revenue growth numbers is that Zynga started paying Facebook 30 percent of all Facebook Credits-related revenues starting in July, 2010, and only barely skipped a beat. Sequential revenue growth slowed from 32 percent in Q3 2010 to 15 percent in Q4 2010, but then accelerated again to 20 percent growth in Q1 2011.

The good news for investors is that Zynga actually makes a profit. After a $53 million loss in 2009, it swing to a $90 million net profit in 2010. And profits grew 84 percent in the first quarter of 2011 to $11.8 million.

Zynga makes almost all of its money from the sale of virtual goods (95 percent of Q1 2011 revenues), and the rest is advertising. Advertising revenue grew 321 percent in the first quarter to $13 million, while online gaming revenue grew 127 percent to $222 million.

Zynga also reports a non-GAAP (Generally Accepted Accounting Principles) measure, which it calls Bookings. In this sense, it is joiningother recent Net IPO filers like Groupon, which also put forth their own non-GAAP measure of revenues. In Zynga’s case, Bookings make it look even bigger. For instance, total Bookings in 2010 were $838.9 million, or 40 percent higher than its $597.5 million in revenues.

Zynga defers the recognition of all of its revenues, which is actually a more conservative accounting approach and is a godo thing. But it still wants to get credit for what it could have recognized, so it reports Bookings as well. It’s kind of like a way for Zynga to pat itself on the back in its financials.

Here is how Zynga explains Bookings in the S-1:

Bookings is a non-GAAP financial measure that we define as the total amount of revenue from the sale of virtual goods in our online games and advertising that would have been recognized in a period if we recognized all revenue immediately at the time of the sale. We record the sale of virtual goods as deferred revenue and then recognize revenue over the estimated average life of the purchased virtual goods or as the virtual goods are consumed.

Advertising revenue is treated the same way.

Some other key metrics investors will want to keep an eye on (all numbers are as of March 31, 2011):

• Total Q1 Revenues: $235.4 million
• Online Game Revenue: $222.4 million
• Online Advertising Revenue: $13 million
• Cash and Cash Equivalents: $996 million
• Operating cash flow: $103 million
• Cash flow from financing activities: $225 million
• Daily Active Users: 62 million
• Monthly Active Users: 236 million
• Monthly Unique Users: 146 million
• Employees: 2,268

The difference between active users and unique users is that active users are counted per game, whereas a unique user might play more than one game. In other words, there is an overlap in active users. In March, 2011, 146 million people played one or more Zynga games. So Zynga makes about $1.60 per user per quarter.

Zynga’s cash flows from “financing activities” was twice as big in Q1 than from operating activities, which is interesting. In the filing, Zynga discloses that it sold $287.2 million worth of marketable securities in the first quarter, primarily related to a $485 million financing which it raised during the quarter (but it also repurchased $261 million worth of stock in the same period).

Earlier this week while visiting Seattle, Facebook CEO Mark Zuckerberg tipped off Seattle press that the company would be launching an “awesome” new product next week that has been built by Facebook’s Seattle team. The press invitations to that event went out today, saying nothing more than “Please join us for an event at Facebook” on July 6.

So what is the new product? MG Siegler speculates here that it might have a desktop component given all the desktop software hiring going on in Seattle.

And he’s right. This isn’t the main project that team is working on, but next week, says a source with knowledge of the partnership, Facebook will launch a new video chat product, powered by Skype, that works in browser. Suddenly those chat icons in the invitation have a lot more meaning.

The product has been built on Skype and will include a desktop component. It’s not clear to me whether that means it will just work if a user has Skype already installed on the computer, or if additional software will need to be downloaded even if the user already uses Skype. But it’s clear that there’s very deep integration between the products, and from the user’s perspective, the product will be an in browser experience.

Facebook and Skype have already been working together, including integration of various Facebook features into the Skype service.

But this is something else entirely. The partnership could substantially increase Skype usage. Facebook has more than 750 million active users. Currently Skype has just 170 million. And it will certainly help Facebook become even stickier for users as they start to have voice and video chat as an option to communicate.

And this also brings Facebook even closer to Microsoft, which is a Facebook shareholder and has a pending acquisition of Skype. The guys in Redmond must be smiling today, something that happens far too infrequently at Microsoft HQ.

Zynga just filed for its much-awaited $1 billion IPO and now we know how much founder Mark Pincus and the company’s investors own in the company. Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.

Pincus is the largest shareholder of Zynga, with 16 percent of the company (all in terms of Class B shares). Kleiner Perkins owns 11 percent of the company; IVP owns 6.1 percent; Union Square Ventures owns 5.5 percent; Foundry owns 6.1 percent, Avalon Ventures owns 6.1 percent and DST owns 5.8 percent.

Pincus makes a salary of $300,000, and Van Natta earns a salary of $200,000.

Pincus actually sold 7,840,836 shares for a total of $109,458,070 in March. Union Square Ventures, Foundry, Kleiner Perkins, Avalon and IVP all sold shares back to Zynga earlier this year (see chart below).

Minutes ago, social gaming giant Zynga filed its much-anticipated S1, beginning the path to an IPO in which it’s looking to raise $1 billion. We’re currently combing through the document, which lays out some of the company’s key statistics and financials for the first time. And there’s a clear trend: the word ‘Facebook’ appears in the document some 204 times (Google clocks in at 10).

The reasons for that should be obvious to anyone that’s tracked Zynga’s rise to success: the company is tied at the hip to Facebook Platform. It relies on Facebook’s viral channels, like News Feed and Notifications, to help its games grow. It’s reliant on Facebook’s Credits for monetization (Facebook now forces all games to use Credits). And it’s subject to whatever changes Facebook makes to its terms of service, or tweaks it makes to the way applications can interact with users. In other words, Zynga is warning investors that if Facebook changes the terms of their relationship, they’ll suffer.

But there’s one possible catch: an addendum that is repeatedly referred to throughout the S-1 that guarantees a 70/30 split between Zynga and Facebook on items purchased using Facebook Credits. The fact that an agreement exists isn’t news — Zynga and Facebook announced that they’d forged one last year after Zynga threatened to leave the platform. But the terms of their deal have been a mystery. And it seems like they still are.

Here’s the section that goes into most detail about the financial terms of the agreement:

Facebook Credits is Facebook’s proprietary virtual currency that Facebook sells for use on the Facebook platform. Under the terms of our agreement, Facebook sets the price our players pay for Facebook Credits and collects the cash from the sale of Facebook Credits. Facebook’s current stated face value of a Facebook Credit is $0.10. For each Facebook Credit purchased by our players and redeemed in our games, Facebook remits to us $0.07, which is the amount we recognize as revenue. We recognize revenue net of the amounts retained by Facebook because we do not set the pricing of Facebook Credits sold to our players.

That’s pretty straightforward (all developers are currently offered the 70/30 cut), but the S-1 alludes to some other aspects of the deal that are not described in the S-1 — namely, that it operates under modified Terms and Conditions compared to other developers (emphasis mine).

In 2010, we entered into an addendum with Facebook that modified Facebook’s standard terms and conditions for game developers as they apply to us and that govern the promotion, distribution and operation of our games on Facebook. In July 2010, we began migrating to Facebook Credits, and by April 2011, we had migrated all of our games on Facebook to Facebook Credits.

Whatever those adjusted terms are, they clearly don’t negate Zynga’s current reliance on Facebook.

All of the S-1′s financials are reported after first subtracting Facebook’s 30% cut whenever relevant, but it doesn’t look like Zynga breaks out just how much of their revenue is generated through Facebook, which is almost certainly a vast majority. I’m sure investors will be curious about that — and I’d also be eager to know just what kind of advantages the addendum gives Zynga over its competitors. Because on Facebook, even features that sound minor, like access to certain notification channels, can make all the difference in helping a game rise to massive popularity.

Of course, Zynga isn’t exactly without leverage. The company’s games continue to be a huge draw for users, and Facebook would suffer greatly if Zynga left the platform (especially if its games were available on a rival service, like the newly-launched Google+). Zynga’s deal with Facebook runs through 2015 so that doesn’t seem likely, but, again, it’s not clear exactly what that deal guarantees for both parties.

Here’s one relevant passage outlining how Zynga views its relationship with Facebook:

We have benefited from Facebook’s strong brand recognition and large user base. If Facebook loses its market position or otherwise falls out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our games, which would consume substantial resources and may not be effective. In addition, Facebook has broad discretion to change its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us. For example, in 2010 Facebook adopted a policy requiring applications on Facebook accept only its virtual currency, Facebook Credits, as payment from users. As a result of this change, which we completed in April 2011, Facebook receives a greater share of payments made by our players than it did when other payment options were allowed. Facebook may also change its fee structure, add fees associated with access to and use of the Facebook platform, change how the personal information of its users is made available to application developers on the Facebook platform or restrict how Facebook users can share information with friends on their platform. Beginning in early 2010, Facebook changed its policies for application developers regarding use of its communication channels. These changes limited the level of communication among users about applications on the Facebook platform. As a result, the number of our players on Facebook declined. Any such changes in the future could significantly alter how players experience our games or interact within our games, which may harm our business.

Zynga has just filed its S-1 with the SEC, indicating that the company plans to go public. According to the filing, Zynga aims to raise as much as $1 billion, but this could be a place holder amount. Updating

According to the filing Zynga has 60 million daily active users in 138 countries. 38,000 virtual items are created every second and game players spend 2 billion minutes a day on Zynga games. The company had $597 million in revenue in 2010, and posted revenue of $235 million in the first quarter of 2011.

Zynga is profitable, posting $90.6 million in net income in 2010, which is a a 28% net margin. In Q1 of 2011, the social gaming giant reported $11.8 million in profit. Zynga has $995 million in cash on hand.

Founder Mark Pincus writes in the filing of the company’s operational philosophies: Games should be accessible to everyone, anywhere, any time; Games should be social; Games should be free; Games should be data driven and ; Games should do good.

Underwriters include Morgan Stanley, Goldman Sachs, Bank of America, Barclays Capital, JP Morgan and Allen and Company.

Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.