Match Group

Is a company that's only 20 months old and has no revenue model really worth $5 billion? Spoiler alert: no.

IAC/InterActiveCorp recently bought back 10% of mobile dating service Tinder. Although it's easily the hottest mobile dating app on the market, it’s hard not to approach Tinder with a healthy dose of skepticism. $5 billion is, to put it bluntly, a completely insane number for such a young company.

According to the market research company IBISWorld, the entire online dating industry is worth just $2 billion. How on earth could a company that gives away its dating app for free be worth more than the entire dating industry? The answer is simple: it can't.

The number, first reported by Bloomberg and quickly picked up elsewhere, was based on the $500 million IAC had allegedly paid to buy a 10% stake in Tinder from venture capitalist Chamath Palihapitiya, but it's far from accurate. Sam Yagan, CEO of IAC’s Match Group (which includes IAC’s online dating companies) recently confirmed that a deal was made, but declined to comment further.

“I can confirm on the record that we did a transaction with Chamath, but this valuation is nowhere near the truth,” he told Forbes. Tinder CEO Sean Rad added that the Bloomberg report was “meaningfully incorrect.” Forbes found that an e-mail to Palihapitiya did not receive an immediate response, but noted that his statement on Twitter read “My Tinder sale for $500M is inaccurate. I sold my stake but value was much less. Thx @samyagan for official IAC pos’n. #wishfulthinking”

That being said, it's far too early to write Tinder off as worthless. Just because it has no revenue model to speak of to date, doesn't mean it has no value to investors. With 10 million active daily users, Tinder is fundamentally changing the way a massive number of people behave and engage with each other. That's bound to be worth something.

“Tinder’s really doing something that has been the Holy Grail for online dating: it becomes fun,” says Mark Brooks, a consultant to the Internet dating industry. Unlike traditional dating sites, surfing profiles on Tinder is fun, low risk, and not time-consuming. Users don't have to fill out tedious surveys and the swiping process practically eliminates the fear of rejection. Thanks to Tinder, mobile dating is exciting and mainstream, a major coup that the rest of the dating industry has never been able to figure out.

“IAC’s not valuing Tinder based on what it’s worth,” Brooks notes. “They’re valuing it based on what they’ll lose if they don’t own it. If Tinder can own mobile and own the younger demographic, then IAC is owning the future with Tinder. It’s an international phenomenon.”

This breakup is so big, it’s shaking up the entire online dating industry.

It's not the kind of breakup makes you want to curl up on the couch in your pajamas with a sappy movie and a pint of ice cream. This kind of breakup involves two of the biggest forces on the Internet: Mozilla Firefox and OkCupid.

It all started when OkCupid members using Mozilla’s Firefox web browser attempted to access the site and were greeted with this message:

“Hello there, Mozilla Firefox user. Pardon this interruption of your OkCupid experience. Mozilla’s new CEO, Brendan Eich, is an opponent of equal rights for gay couples. We would therefore prefer that our users not use Mozilla software to access OkCupid.”

It’s not every day you see a dating site take a dive into politics, but OkCupid has never been one to follow the herd. Here's the back story: at the end of March, Mozilla named its cofounder and former Chief Technology Officer, Brendan Eich, to the position of CEO following the resignation of Gary Kovacs last April. Eich’s opposition to same-sex marriage has been public knowledge since 2012, when it was revealed that he donated to California’s 2008 Proposition 8 campaign that sought to ban gay marriage.

When the news hit that Eich had been promoted, all hell broke loose. The backlash was swift on Twitter. Three Mozilla board members quit. And OkCupid decided to brave political waters and take a stand.

“We’ve devoted the last ten years to bringing people—all people—together,” OkCupid’s missive continued. “If individuals like Mr. Eich had their way, then roughly 8% of the relationships we’ve worked so hard to bring about would be illegal. Equality for gay relationships is personally important to many of us here at OkCupid. But it’s professionally important to the entire company.”

At least one other company, the app developer Rarebit, has followed suit. Boycotting Firefox is no small statement, as it is the world's second most popular web browser on personal computers and is responsible for about 12% of OkCupid’s 3 billion monthly page views.

The anti-Mozilla landing page is now gone from OkCupid, but the site told CNET that it plans to release another statement at some point in the near future.

As for Eich, he told CNET that "[w]ithout getting into my personal beliefs, which I separate from my Mozilla work -- when people learned of the donation, they felt pain. I saw that in friends' eyes, [friends] who are LGBT [lesbian, gay, bisexual, or transgender]. I saw that in 2012. I am sorry for causing that pain."

Whether or not you believe in the sincerity of his statement, the damage is done: Eich resigned in the wake of the controversy. 

We’ve been warned of scandals when it comes to online dating. Some people post fake profiles and create stories of financial hardship to extract money or financial information from other users, hoping to cash in on someone’s vulnerability or desire for love. This can compromise our security, but it’s within our control to not respond or to report the abuse. But what about the information we voluntarily offer without even knowing how it will be used?

Mobile dating and location-based apps operate and match you with others according to where you physically are, which means they need to collect data from you, usually through your phone’s GPS. But then what happens to the information? Is it used only for matching purposes to benefit the users of the site, or are companies using this valuable information in other ways?

New legislation aims to protect users from themselves and the online dating sites who collect location and other personal information. Senator Al Franken is leading the charge, advocating for more privacy for users.

"This stuff is advancing at a faster and faster rate, and we've got to try and catch up," Franken tells USA Today. "This is about Americans' right to privacy and one of the most private things is your location."

Considering how many people have used online dating sites – a recent Pew report indicated 38% of singles – it makes sense that companies offering services for daters operate with security and privacy in mind. Unfortunately, most people don’t realize how much information they are voluntarily sharing when they sign up and post photos on their phone.

Members also might not realize what information a dating website or app is collecting about them and their social media networks, say if a Facebook login is used to sign up. Though most companies will outline what information they can collect about you and your friends, the fine print is often overlooked by users just trying to download and check out a new app.

A few states require online dating sites to disclose whether they conduct criminal background checks on members, including Illinois, New York, New Jersey and Texas. eHarmony, Match, and Sparks Networks signed an agreement with the California District Attorney’s office in 2012 to check subscribers against national sex offender registries and provide a rapid abuse reporting system for members. Security precautions are being taken to protect users, but legislators like Al Franken and privacy advocates don’t think it’s enough.

Rainey Reitman of the San Francisco, Calif.-based Electronic Frontier Foundation, a nonprofit that advocates for user privacy amid technology development, told USA Today: "People don't realize how much information they're exposing even by doing something as slight as uploading a photograph. Many online apps are very cavalier about collecting that information and perhaps exposing it in a way that would make you uncomfortable."

Finding love on OkCupid: good. Getting scammed out of thousands of dollars on OkCupid: not so much.

Unfortunately for Michael Picciano, he falls into the latter category. Picciano is now suing OkCupid and its parent company, IAC, for failing to conduct “even minimal screening of its subscribers and therefore deceptively creating the impression that their dating service was safe . . . when in fact . . . [it] was a trap for the unwary,” he says in his Manhattan civil suit.

It all began back in February 2013, when he received a message from “genuineguy62.” (Is it just me or is that, like, the least trustworthy name ever?) After 10 days of chatting on the site, Picciano continued the conversation with the man, who called himself Bruce Thompson, via personal e-mails. A month following that, Thompson made his first telephone call to Picciano. And by the end of March, the two had canceled their OkCupid subscriptions because “they had found each other.”

Shortly afterwards, Thompson asked Picciano to wire him money to cover “unexpected fees ”incurred while setting up a new computer parts business. Picciano says he made four wire transfers in steadily increasing amounts to addresses in Texas, Ontario and England. In total, the payments added up to $70,460.

Four weeks following his first payment, Picciano involved the police. A friend of his had found Thompson's photo and information on a site called MaleScammers.com and warned Picciano. Picciano handed over a $100,000 forged check given to him by Thompson to the police, but they were unable to find the con man’s fingerprints.

Picciano is faulting OkCupid for failing to "exercise reasonable care" in communicating "the dangers associated with online matchmaking." There is, however, a page on the site called "Safety Tips" that explicitly warns members against wiring money to other users – or anyone they meet online – because the sender “has no protections against loss.”

In addition to going after OkCupid, Picciano is also suing Capital One for "failure to comply with proper procedures for the transmission of wire funds transfers." The lawsuit allages that none of the wire transfers contained the address of the recipient "as required by law."

According to the court papers, Picciano believes Thompson is back on OkCupid, trolling for new victims under the screen name "bigheartedbt.” While this hasn’t been confirmed, OkCupid users should take note – better safe than sorry.

Single baseball fans are about to hit a home run.

If you’ve checked out the homepage of pretty much any Major League Baseball team recently, you probably saw a few ads advertising other single sports fans. On Athletics.com, for instance, ads on each side of the page featured an attractive group of potential matches and text that read "Meet other single Athletics fans.” A banner ad across the top said “Take them out to the Athletics game.”

What’s going on?

With baseball's regular season here, Match and MLB.com are coming together to give singles another reason to cheer this season. Baseball fanatics on Match.com will have the opportunity to connect online through 29 different fan pages (one for every U.S. team) for the duration of the 2014 MLB season – meaning they have way more to look forward to this year than their team making it to the World Series.

To get started, Match members can announce their allegiance to their favorite team (or teams, if they’re the indecisive type) by adding its logo to their profile. Match members can also search for other fans using a new community search tool that allows them to easily connect with members who have also added their favorite team to their profiles.

On the other side of things, MLB.com will be promoting 29 different MLB Club portals where singles can search for and connect with other fans of their favorite teams. When you find a fellow fan who tickles your fancy, you can take them out to the ballgame for the perfect first date.

Noah Garden, Major League Baseball Advanced Media's executive vice president of revenue, said "the Match.com conversation is one we've had on and off over the years to see if there's something we could do together." MLB hopes the promotion will give ticket sales a boost. "The idea is put like people together with similar interest and passion," he said. "There's still always room for more butts in the seats."

It sounds a little blunt, but I guess you've gotta appreciate the guy's honesty. And I'm sure there are plenty of die-hard baseball fans who will be pleased about having an easy way to weed out rivals. In fact, Match.com President Amarnath Thombre said the first question self-identified Yankees fans often ask of singles on the site is: "Who hates the Red Sox?"

Better have your answer ready before you log on to Match.com, baseball fans, or you just might strike out. For more on this service you can read our Match.com review.

People who participate in online dating may be more open to interracial relationships than those who stick solely to traditional dating, says a study published in the Journal Proceedings of the National Academy of Sciences.

Researchers from the University of California, San Diego analyzed the first interactions of 126,134 American OkCupid users to study the complex relationship tween online dating and race. They found, unsurprisingly, that many users tended to send messages to other users of their own race – but they also found that they were much more likely to respond to messages from users of a different racial background. The study also found that once an individual responded to a member of another race, they were even more likely to initiate conversation with other users of different ethnicities in the future.

"It's not that people's levels of prejudice are changing; people are avoiding others from a different racial background because they think those other people won't be interested," study author Kevin Lewis, a sociologist for UC San Diego, told USA Today. "Receiving an interracial contact and replying to it makes you send over twice as many new interracial messages in the short-term future than you would have otherwise."

Online daters may be chipping away at racial barriers, but that doesn't mean they've fallen completely. "Race as a dividing factor is much more important than basically any other attribute," Lewis explained. The study found that white online daters, both male and female, overwhelmingly made contact with other white users (although that's also due to the fact that there are more white people on OkCupid to choose from). Caucasian users were also the most likely to seek out people of another race. Those who identified as black, Hispanic, Indian or Asian were much more likely to stay within their own racial lane while online dating.

The only group that consistently bucked the trend was Asian women. Asian women were more likely to contact white men and other Asian men. They were also more likely to respond to white men (though it's important to note that all races were most likely to respond to white men).

Lewis calls online daters’ reluctance to reach out to users of different ethnic backgrounds "pre-emptive discrimination." Based on the way race has shaped their lives so far, they expect to experience rejection – or at least to have little in common with someone who doesn't share their heritage. But, says Lewis, the study suggests that if someone is bold enough to make the first move and overcome their fear of rejection, they are rewarded with the realization that the pool of potential partners is wider and richer than they had ever imagined.