Today: Facebook launches video advertisements as CEO Mark Zuckerberg publicly berates the U.S. government. Also: Wall Street plunges as NetApp, eBay exercise layoffs.
The Lead: Facebook video ads ready to roll out, Zuckerberg lashes out
Facebook began selling video advertisements Thursday, a move investors have been awaiting and some users have been dreading for more than a year, but CEO Mark Zuckerberg was focused on an entirely different topic.
Advertisers are being offered the chance to run 15-second video ads on the Facebook platform, with the actual advertisements set to begin in a month or two. The lucrative move has been reported since late 2012 and officially announced late last year, but Facebook has delayed the rollout more than once to ensure the ads function correctly and aren't bothersome to the social network's 1.2 billion users.
"In the past we've done more stuff to just ship things quickly and see what happens in the market," Facebook executive Brian Boland told Bloomberg News. "Now, instead of just throwing something out there, we're making sure that we're getting it right first."
Bloomberg reported that Facebook will command $1 million or more for the spots, which users will see no more than three times a day. While the commercials will play automatically when they appear on a user's screen, they will be muted unless a user clicks or taps on them.
The market for digital video commercials is large and growing: eMarketer predicts that U.S. advertisers will spend $4 billion on such ads in 2014, with the possibility of drawing some business from the $66.4 billion television advertising market.
It is yet another Facebook initiative that will generate more revenue and please investors, analysts said.
"While they may not be moving fast, I think they are being thoughtful about monetization of their network in innovative ways," IDC analyst Crawford Del Prete told MarketWatch.
Despite the lucrative opportunity ahead of Facebook, Zuckerberg instead focused on NSA surveillance in a Facebook post Thursday, describing himself as "confused and frustrated by the repeated reports of the behavior of the U.S. government."
The Menlo Park company's founder said in the post that he had called President Barack Obama to register his complaint, presumably after a Wednesday report that claimed the National Security Agency posed as Facebook servers to obtain data from unwitting Web surfers.
"The U.S. government should be the champion for the Internet, not a threat. They need to be much more transparent about what they're doing, or otherwise people will believe the worst," Zuckerberg wrote.
Facebook stock dropped 2.9 percent to $68.83, reversing a positive roll that pushed the company into the top five valuations in the technology sector, passing Oracle to settle in behind only Apple, Google, Microsoft and IBM.
SV150 market report: Stocks sink, layoffs hit Silicon Valley
Wall Street suffered across-the-board declines Thursday as world leaders toughened their language about Russia's involvement in Ukraine, and Silicon Valley technology stocks were equally affected, as only 10 of the area's top 150 public companies clocked an increase amid layoff news.
NetApp announced its second round of layoffs in less than a year, saying in a filing with the Securities and Exchange Commission that it will reduce head count worldwide by about 600 employees 10 months after laying off 900 workers. The Sunnyvale company recorded net income of $192.1 million on revenues of $1.61 billion in its most recent quarter and claimed a global workforce of just more than 13,000 employees in its most recent annual report, released in June 2013. eBay confirmed to ReCode on Thursday that it laid off employees of Magento, a company the San Jose e-commerce powerhouse acquired in 2011. The blog reported that eBay laid off about 50 workers, including some at Magento's San Jose office. In addition, Disney laid off 143 workers in its Palo Alto division, created when the entertainment giant acquired Mountain View video game maker Playdom in 2010. NetApp stock declined 1.8 percent to $37.16 Thursday, and eBay shares fell 2.2 percent to $56.70 as CEO John Donahue continued to battle activist investor Carl Icahn.
Google dropped 1.5 percent to $1,189.06 while dropping its cloud-storage prices and reportedly plotting retail stores similar to Apple's. Apple fell 1.1 percent to $530.65 after being one of four companies -- along with Google, Cisco and Microsoft -- reported to have huge stashes of U.S. government bonds bought with money stashed overseas to avoid U.S. taxes. Netflix declined 1.5 percent to $430.06 after locking up three more original animated series; Amazon's rival streaming service got more expensive, as the company hiked its annual subscription for Prime from $79 to $99. VMware fell 2.7 percent to $103.97 despite a price target hike from FBR Capital Markets analyst Daniel Ives, who wrote that the Palo Alto company "is benefiting from a robust (enterprise license agreement) renewal cycle."
The SV150 index of Silicon Valley's largest tech companies: Down 27.1, or 1.73 percent, to 1,540.76
The tech-heavy Nasdaq composite index: Down 62.91, or 1.46 percent, to 4,260.42
The blue chip Dow Jones industrial average: Down 231.19, or 1.41 percent, to 16,108.89
And the widely watched Standard & Poor's 500 index: Down 21.86, or 1.17 percent, to 1,846.34
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.