Legal

IAC is no doubt a leader in the dating market, with such prominent online dating brands as Match.com, Tinder, and OkCupid, which make up a company subsidiary called The Match Group.

The Match Group has announced its plans to launch its first IPO, making the company available for investment dollars from the general public. Match.com has long been a cash cow in the online dating industry with its paid subscription service, and Tinder with its new premium paid service has been reported to be worth about $1 billion by the end of the year. In fact, the combined revenues of all the companies in The Match Group accounted for nearly one third of IAC's overall revenue in the most recent quarter. They're also growing rapidly, surging 13% year-over-year in the most recent quarter to about $239 million.

Greg Blatt, Chairman of The Match Group said in a statement: "The Match Group is poised for substantial growth in the coming years. The dating industry has come a long way since its inception, but the category remains underpenetrated.  We believe the combination of our more established businesses such as Match, Meetic, and OurTime, and earlier stage businesses such as Tinder and OkCupid, creates an attractive combination of significant cash flow generation, strong margins and meaningful growth potential.” 

This comes at a good time, as Zoosk recently pulled its plans to launch an IPO, leaving the dating space wide open for potential investors. Ashley Madison, a dating site for infidelity, was quick to throw its hat in the ring, too. They are planning a second attempt at an IPO for later this year after a forfeited attempt in 2011.

The Match Group joins other prominent and publicly traded online dating services, notably Spark Networks, which owns several niche dating sites such as JDate, Christian Mingle, and BlackSingles.com, as well as Jiayuan.com, the largest online dating site in China.

After the IPO, investors will be able to buy stock in the company, although the ticker symbol is not yet known. Notably, IAC made the decision to split The Match Group from its parent company to do the IPO.

Barry Diller, IAC’s Chairman and Senior Executive said in a statement: "As many know from our actions over the last 20 years, I'm not a believer in simply agglomerating assets in perpetuity.  I've long felt that as entities grow into size and maturity it's healthy to give them separation and independence from a mother church.”

The hacking of large company databases for personal and compromising information is on the rise. First it was giant retailer Target, then entertainment studio Sony, followed by a few of the major insurance companies - and it has been reported that as many as 200 companies have been hacked in the last few years, its victims their own customers and employees.

But this week, in perhaps the most personal of the recent data hacks, dating website Adult Friend Finder (a service for those looking for casual friendships and sexual hook-ups), has announced that its customer data has also been breached.

Channel 4 News in the UK has reported that the personal information of 3.9 million of AdultFriendFinder.com’s members was discovered in an online forum for hackers, including users’ sexual preferences, e-mail addresses, dates of birth and, in some cases, whether they were looking to cheat on their spouses. The company has notified law enforcement agencies, but said that no financial or password information seems to have been stolen.

AdultFriendFinder is different from traditional dating sites in that the information people provide is much more personal. When a user signs up, the services asks him/ her to detail his interests and, based on those criteria, matches people for sexual encounters. The site, which boasts 64 million members, claims to have "helped millions of people find traditional partners, swinger groups, threesomes, and a variety of other alternative partners."

So customers who joined the website to anonymously post their sexual preferences for hook-ups might now face being exposed to family members, co-workers, bosses, and even spouses or partners, compromising their personal lives.

One controversial hacker took advantage of the now-exposed data to identify over Twitter and personally name four different men who were using the dating site – including one who was married. Because the data is now accessible to anyone, many more people could be publicly shamed as a result.

According to CNN Money: “The breach was carried out by a hacker who goes by the moniker ROR[RG]. In an online hacker forum, he said he blackmailed Adult FriendFinder, telling the site he would expose the data online unless the company paid him $100,000.”

"Until the investigation is completed, it will be difficult to determine with certainty the full scope of the incident, but we will continue to work vigilantly to address this potential issue and will provide updates as we learn more from our investigation," FriendFinder's statement said.

According to The Wall Street Journal, researchers noted that as awareness of the breach spread on Friday May 22nd, more copies of the files were appearing online, meaning more people potentially had access to the data.

Dating in China just got a whole lot harder. The country's internet regulator, the Cyberspace Administration of China, has closed down 128 online dating sites suspected of violating regulations and supplying false information.

The websites were shut down for a lengthy list of allegations, including organized prostitution, disseminating pornographic images, promoting vulgar content, allowing user information to be distributed illegally, and not having complete sets of registration records.

This crackdown comes after the CAC joined forces with several government agencies – including the Ministry of Public Security, the All-China Women's Federation, and the Ministry of Civil Affairs – to conduct a clean-up operation. The offensive began in February, driven primarily by tips from the public. Users are still encouraged to report illegal websites through hotlines, e-mail or mobile apps.

"The operation has achieved a good result. It acted as a deterrent to violators and also had positive impact on the industry's development," said the CAC in a statement. With the way paved, the plan is to create guidelines to ensure dating sites provide fair and honest service.

Other dating services have expressed support, saying the new policies will be good for the industry's long-term development. Wu Linguang, CEO of leading Chinese dating site Jiayuan.com, has come out in favor. The CEOs of Baihe.com and Youyuan.com have also both expressed support for the campaign.

Aside from targeting prostitution and fraudulent practices by service providers, the CAC's crusade tackled the issue of authenticity. Some services were accused of failing to enforce controversial 2012 regulations requiring users to give their real names and national identification numbers upon registration. These sites have been asked to enforce real-name registration to protect users against dishonesty and scammers.

Some believe these are advantageous moves that will help maintain a fair and competitive online market, and improve legal consciousness. Others are less convinced by the ostensible motives.

Chinese internet users have poked fun at the crackdown and questioned its intentions. Critics claim campaigns purporting to safeguard moral standards and related laws are merely a pretext for political censorship.

This is not the first time China has made such a bold move. Last year, in a similar effort to stamp out prostitution and pornography, the country closed nearly 1.8 million social networking and instant messaging accounts.

Not the first time, and likely not the last.

Dating website Plenty of Fish (POF) has been making headlines recently for its longevity and user milestones, as well as its recent disclosure of financial information about the company. But thanks to the new anti-spam law in Canada, POF now has an unwanted headline that they have to deal with - the popular dating website has been ordered to pay $48,000 in fines for its email practices.

Canadians complained of Plenty of Fish’s marketing tactics, which launched an investigation by the Canadian Radio-television and Telecommunications Commission (CRTC) and the Competition Bureau into the company’s practices. Specifically, the agencies examined how the company handles commercial emails to subscribers.

According to the disgruntled users, POF sent them commercial messages without a noticeable “opt out” or “unsubscribe” feature. One of the key requirements in the law is that each commercial email contain an unsubscribe mechanism to allow recipients to opt-out at any time. Also, according to the wording of the law, the unsubscribe feature has to be prominently displayed and “readily performed.”

Plenty of Fish agreed to paying a $48,000 penalty and developing a new compliance program to address its problematic email practices. The compliance program will include training and education for staff, as well as corporate policies and procedures regarding email marketing.

The new anti-spam law has been in effect since last year, but the Canadian agencies have had their challenges in enforcing it because of how vast and pervasive the problem of spamming seems to be. Millions of spam emails are sent every day by spammers from all over the world. Experts argued that the Canadian Radio-television and Telecommunications Commission (CRTC) and the Competition Bureau were not equipped to handle such a pervasive issue.

The agencies however, are proving the critics wrong. The Competition Bureau recently alleged that rental car companies Budget and Avis engaged in false and misleading advertising when they failed to disclose numerous additional fees as part of their car rental promotions, including their email promotions. The Bureau is seeking $30 million in fines and reimbursement to customers. And the CRTC discovered that Compu-Finder, a Quebec-based corporate training company, sent commercial emails without consent and like POF, without proper unsubscribe mechanisms. The company was hit with a $1.1 million penalty.

CRTC notes in a press release that POF did not argue with the fine or the accusation, and hopes that by example, other companies will be inspired to change their own email spamming tactics. As for POF, the company continues to grow its subscriber base despite its setbacks, recently announcing its user base has grown to 100 million worldwide.

IAC, the company who is the majority stakeholder in popular dating app Tinder, no longer wants Sean Rad in the driver’s seat. As of late March, the company has named the new CEO who will be taking his place: Christopher Payne.

Payne previously worked for eBay as a senior vice president in the company’s marketplaces division, where he was responsible for the North American market. He also founded Positronic, a search technology company, which eBay acquired in 2008. Before that, he worked for 13 years at Microsoft, including heading its search unit, which was then called Windows Search Live.

“Christopher brings invaluable experience running consumer technology businesses that operate at massive scale,” Mr. Rad said in a statement.

But the change might not be completely embraced by Rad, who was embroiled in a very public sexual harassment lawsuit brought about by former employee Whitney Wolfe. They settled out of court for an undisclosed amount, and she has now launched a new dating app of her own that directly competes with Tinder. Rad will remain President of Tinder and retains a seat on the company’s board. According to reports, he will still be in charge of product and marketing, but Payne will take over everything else.

The spotlight that has been on Rad the past few years has not been flattering, and the most recent scrutiny has come as a result of the new premium service Tinder Plus, which is costing as much as $19.99 US per month for two additional features. Users have asked to be able to use Tinder in multiple cities, as well as to “go back” and swipe right on matches they’d previously turned down. The new service offers these features for a price – but if you want to just keep the basic free service, the company has also put limits on the amount of swiping you can do in a 24-hour period. This caused controversy when it launched in the UK, and the app’s rating in the iTunes store went down to one and a half stars as a result.

Another controversial decision was pricing for the new service, which is based on age. For users under 30, Tinder Plus costs $9.99 per month, but for those 30 and older, it goes up to $19.99, and even more in European countries. Rad says a lot of research went into the pricing, and he stands by what he says customers are willing to pay.

Tinder also plans to launch an ad product, but has not disclosed how this will affect the service or user’s experience. Until now, advertising revenue has come from product placement, but the app has a lot of valuable user information for marketing departments to tap into.

IAC hopes that Payne can refocus Tinder’s business goals and help it grow into a more profitable as well as popular company.

Read our review of Tinder to find out more about this popular dating app.

While Tinder is looking for ways to increase its revenue stream with new premium service Tinder Plus, it is steering clear of any advertising that affects its service.

Although the company has strategically lent its brand to clever marketing campaigns - like Gillette’s facial hair survey and Domino’s Pizza Valentine’s Day campaign – they have avoided advertising that would compromise the app experience for users. Namely, in-app advertising.

The Gap however, decided that Tinder was the perfect fit for its new social media-inspired ad campaign: #SpringIsWeird, which included in-app advertising on Tinder. The campaign featured fake “profiles” of the Gap logo with messages including “you’re invited to the pants party” and “we’re taking 30% off all Gap denim,” which would appear when users were swiping through potential matches on the app. The Gap also created a “micro series” on Instagram as part of the campaign.

The Gap announced their campaign to a reporter for AdWeek in a story he promoted on Twitter after it was posted. But Tinder never approved the campaign, and apparently did not know it was happening.

In a tweeted response to the AdWeek reporter, Tinder’s VP of Communications & Branding, Rosette Pambakian, responded: “@GarettSloane we will be deleting those GAP profiles. It violates our TOS. We did not approve this campaign and it is not an ad.”

Trishna Nichols, The Gap’s leader of consumer engagement and brand strategies, described the campaign to AdWeek before the fallout: “We did a little something special on Tinder. It's a guerrilla [marketing] idea where you'll see a profile with clever messaging in the spirit of love and the perfect match. It's the perfect fit for Tinder.”

Unfortunately, the campaign wasn’t a fit for Tinder, and The Gap had never received authorization to post the ads. Tinder’s terms of service state that the service is "for personal use only" and that users may not use the service or any content contained in the service for "advertising or soliciting any user to buy or sell any products or services not offered by the company."

Other companies have done guerilla marketing on the app before, such as in 2013 when USA Network was promoting their show “Suits.” Advertisers for the show posted profiles of the show’s characters on Tinder, and they were not taken down. But now that Tinder is gearing up for creating new revenue streams, it could be that they will be cracking down harder on this type of “organic” advertising.

For now, The Gap will be moving forward with the campaign via social media, releasing an episode a week of its micro series on Instagram.