Police Bust Russian Hacker Gang who made $30M in one Month

Russia Times

Russian police have detained ten people who managed to get one billion roubles, approximately $30 million, through a clever scheme involving a computer virus, blackmail and SMS billing.

Website Lifenews.ru reported on Tuesday that ten members of the criminal group had been detained in Moscow. Operatives of the city police directorate for fighting economic crimes have told journalists that the suspects created a computer virus that blocked all programs on the users’ computers and put a pornographic picture on the screen together with a demand to send an SMS to a certain number to receive a code that would supposedly unblock the computer. For the SMS the victims were billed about 300 roubles or $10. However, sending the SMS never led to any results and some users have sent it repeatedly.

According to the police, the suspects made about one billion roubles from the scam, or $33 million in just one month.

Although the virus extortion scheme is widespread in the world (it even has the special title of “ransomware”), Russians were probably first to invent the virus that blocks the Windows operating system completely.

Paul Allen Launches Patent War

The Wall Street Journal

They're the everyday fixtures of the Internet experience: pop-up stock quotes on a website, suggestions for related reading near a news article, videos along the side of your screen.

Now, Microsoft Corp. co-founder Paul Allen says he owns the technology behind all these ideas, and he's demanding that some of the world's top Web companies pay up to use them.

The 57-year-old software guru on Friday sued much of Silicon Valley, claiming Internet giants such as Google Inc., Facebook Inc. and eBay Inc. have built their businesses around what he says is his technology.

Mr. Allen's suit, filed in federal court in Seattle, asserts those three companies and eight others are using technology developed a decade ago at the billionaire's now-defunct Silicon Valley laboratory. Mr. Allen, a pioneer of computer software, didn't develop any of the technology himself but owns the patents.

His targets vowed to fight. "This lawsuit against some of America's most innovative companies reflects an unfortunate trend of people trying to compete in the courtroom instead of the marketplace," a Google spokesman said. Other companies named in the suit said they planned to defend themselves or weren't available to comment.

Patent litigation in general is on the rise, in what is becoming a lucrative endeavor. Ocean Tomo, a Chicago-based merchant bank that tracks the intellectual-property market, values the licensing market at as much as $500 billion.

Mr. Allen's lawsuit comes amid high-profile successes of firms such as NTP Inc., which enforce patents without making products and have been called "patent trolls" by critics. Courts have tried to rein in patent litigation, with mixed results, and Congress has yet to act on legislation that would do the same.

For Mr. Allen, the lawsuit marks new terrain. The four patents named in the suit were developed at Interval Research Corp., a Palo Alto, Calif., lab and technology incubator Mr. Allen financed with about $100 million during the Internet bubble, but which closed down about a decade ago.

Mr. Allen wasn't available for comment, according to a spokesman, who said Mr. Allen's lab created the technology that he wants to mark as his own. "We recognize that innovation has a value, and patents are the way to protect that," said the spokesman, David Postman.

Mr. Postman said the timing of the suit wasn't related to Mr. Allen's health or personal finances. Mr. Allen recently pledged to give away the majority of his fortune. He was diagnosed last year with non-Hodgkin's lymphoma, but has completed treatments and has no outstanding issues.

"It sounds like the classic patent-troll case," said Mark Lemley, a Stanford Law School professor who specializes in intellectual property and has represented Google and Netflix Inc. in other cases. He said suits filed by holders of years-old patents over technology that's in widespread use can be difficult for a plaintiff to win.

Mr. Allen's lawyers said a team has been reviewing his patent portfolio for years, seeing what's relevant to the current marketplace and parsing the technicalities necessary to complete the lengthy patent process. During that time, some patents were sold or licensed.

Ron Laurie, a former intellectual property lawyer who now advises companies on patent licensing strategy, said Mr. Allen and his companies have generally avoided aggressive litigation. "He's not been thought of as being in the troll community at all," said Mr. Laurie, who in past years advised another concern tied to Mr. Allen.

Legal experts said increasingly large settlements for patent holders in recent years have created an incentive for patent owners to file infringement suits, rather than sell intellectual property, even when patents are years old.

NTP in July sued Apple Inc., Microsoft and four other companies over patents related to the wireless delivery of email to cellphones. BlackBerry maker Research In Motion Ltd. paid NTP $612.5 million in 2006 to settle similar patent charges.

Another Microsoft veteran, former chief technology officer Nathan Myhrvold, has amassed thousands of patents and secured hundreds of millions of dollars in patent-licensing deals from telecommunications companies and others. Mr. Myhrvold's Seattle-based firm Intellectual Ventures patents some of its inventions but also acquires patents to license.

Named in Mr. Allen's suit are Google, Facebook, eBay, Apple, Yahoo Inc., AOL Inc., Netflix, Office Depot Inc., OfficeMax Inc., Staples Inc. and Google's YouTube subsidiary.

Notably missing from the defendants' list are Microsoft, in which Mr. Allen remains a major investor, and Amazon.com Inc., which is based in Mr. Allen's hometown of Seattle. Mr. Postman declined to comment on the selection of defendants.

EBay said it was reviewing the complaint and planning a vigorous defense. A Facebook spokesman said, "We believe this suit is completely without merit and we will fight it vigorously."

Representatives from Apple, AOL, Netflix, Yahoo, OfficeMax and Office Depot declined to comment. Staples didn't return requests for comment.

The suit, filed by Mr. Allen's Interval Licensing LLC, lists violations of four patents for technology that appear to be key components of the operations of the companies—and that of e-commerce and Internet search companies in general. The suit seeks damages but doesn't specify an amount.

The technology behind one patent allows a site to offer suggestions to consumers for items related to what they're currently viewing, or related to online activities of others in the case of social-networking sites.

A second, among other things, allows readers of a news story to quickly locate stories related to a particular subject. Two others enable ads, stock quotes, news updates or video images to flash on a computer screen, peripherally to a user's main activity.

Mr. Allen bankrolled Interval Research. During its heyday, the lab employed more than 110 scientists, physicists, engineers, "and was at the forefront in designing next-generation science and technology," the suit says. The lab's co-founder David Liddle, a former Xerox Corp. researcher, couldn't be reached for comment.

The lab worked on numerous projects, with goals to create technology to use in Mr. Allen's ventures in cable-TV and telecommunications. In later days it also focused on developing technology to license to others. Over a decade, Interval was issued about 300 patents.

According to Friday's suit, Interval Research was listed in Google's "credits" site in 1998 as an outside collaborator and one of a handful of sources of research funding for Sergey Brin and Lawrence Page's research that resulted in Google seo. Google declined to comment on any ties to Interval.

Interval Research's developments included cellular voice-processing technology and motion-detection technology used in games that allows a computer to "see" commands. It also created a "smart" toy called "Red Beard's Pirate Quest" and later sold the technology behind it to Lego Group.

Work at Interval Research was phased out after plans for commercializing its technology didn't pan out as expected.

Verizon’s Pact With Google Would Keep Internet Open, Tauke Says

Bloomberg / Business Week

 

Verizon Communications Inc.’s proposal with Google Inc. for Internet-traffic rules will meet demand for an open Internet, said Thomas Tauke, Verizon executive vice president for public affairs.

“We need to get this right” to promote investment, Tauke said in a speech at an Aspen, Colorado, conference.

U.S. regulators and lawmakers are considering what rules are needed to keep companies from throttling rivals’ Web traffic. Verizon and Google announced a proposal on Aug. 9 that would bar providers from selectively slowing content traveling over their wires while exempting Web use on mobile devices from government regulation.

The Google-Verizon accord may lead to discrimination against some wireless Internet traffic, and a provision allowing special services might “create a tiered ‘private Internet’ reserved for a few big corporations,” the Washington-based advocacy group Free Press said in a statement.

Tauke, at the Aspen Forum organized by the Washington-based Technology Policy Institute that studies innovation, said consumers would benefit from added services.

“We want to protect the Internet but we also want to offer consumers more services,” such as remote monitoring of blood pressure, Tauke said. “The broadband platform, in addition to the open Internet, is the platform for innovation and growth in the years ahead.”

A U.S. court rules in April that the Federal Communications Commission didn’t have authority to regulate Comcast Corp.’s Web practices. FCC Chairman Julius Genachowski has proposed to reclaim power by applying rules written for telephone service.

Verizon, AT&T Inc. and the National Cable & Telecommunications Association representing Comcast and Time Warner Cable Inc. oppose the idea, which is backed by Free Press and Consumer Federation of America.

Where are you? A Rundown of Facebook's 'Places'

Associated Press

Services based on your location, such as Foursquare, are popular in the tech-centric bubbles of Silicon Valley and New York City. But for many people, these services remain odd — and potentially creepy — tools on your smart phone to let friends or even strangers know you just showed up to a restaurant, gym or the corner deli.

According to a Pew Internet & American Life Project survey this spring, only 5 percent of adult Internet users in the U.S. have used such a service. With the entry of Facebook Places to the mix, though, this number is likely to grow. For now, here is a rundown for the other 95 percent on what Facebook Places means and how to protect your privacy.

1. Checking in.

Most location services won't broadcast your whereabouts without your consent. If you want to tell people where you are, you need a smart phone with GPS or other geolocating capabilities. You begin by installing a free application for one of these services. You then "check in" to a place by choosing it from a list of nearby venues on your screen. You can also add venues on your own. If you don't check in, Facebook won't magically "know" you're there.

2. What's the point?

Many people already tell Facebook friends where they are. Granted, "at the gym" isn't the most insightful status update, but people do it nonetheless. The Places feature builds on this so you can, temporarily, link yourself to a specific place, be it a gym or a burger joint.

If you want, you can let other people who have also checked in — friends or even strangers — see that you are there. It's a way to connect your online social network with your offline world. On Foursquare, there's a gaming element, too. Whoever has checked in to a place the most often becomes its virtual "mayor." Users also can earn Scouts-inspired "badges" for checking into specific places — such as "Gym Rat" for going to the gym 10 times in 30 days. Pointless, scary or genius? You decide.

3. The concerns

The more information you broadcast about yourself online, the more that marketers, strangers, future or current employers and anyone else will know about you. Are you OK with leaving an ever-expanding digital trail behind? Do you want ads to target you based on demographic information you've scattered about? You can walk into a store and then walk out without the owner knowing who you are, but do you know what happens when you also check in, digitally? And should other people be able to share your location with the world?

4. Friends or "friends"?

Under Facebook's default settings, everyone you list as a "friend" will be able to see where you've checked in. But are they really your friends?

Facebook's settings allow you to exclude specific people from seeing your check-ins, or you could authorize only a select few. To do this, go to "Account" on the top right corner of the page. Then choose "Privacy Settings" and click "Customize settings." Look for a pull-down menu next to "Places I check in to." Click on it, and select "Custom."

To authorize people, look for "These people," select "Specific People..." and type their names into the box underneath. To exclude just a few friends — your boss, maybe, or that nosy co-worker you reluctantly "friended" — type their names into the "Hide this from" box.

Take this time to go over your full list of friends, with pruning shears if need be. Does Uncle Ned or the spouse of a friend of a friend you met at a wedding last year really need to be there?

5. Checking in friends.

Say you're at a bar with a group of co-workers who are also your Facebook friends. When you check in, you can choose the names of those with you and check them in as well.

That could be useful for Facebook users without smart phones who want to participate, but you may not want your friends checking you in to places, for whatever reason.

Facebook will send you an e-mail notification if a friend tries to check you in someplace.

If you say "Yes," friends will now always be able to check you in. If you choose "Not now," you'll get another notification the next time someone tries to check you in. You can't pick which friends can check you in, nor can you authorize a check-in for one-time only.

To prevent your friends from checking you in once and for all, you have to return to your privacy settings on your computer. Once you're in "Customize settings," choose "Disabled" next to "Friends can check me in to Places."

6. Here now

The "here now" feature lets others — including strangers — see that you've checked in to a place. But they can only see this if they have also checked in to the same place in the past few hours.

If this feature is turned off, only your Facebook friends can see your check-ins and your name won't pop up in the "Here now" section of a place.

"Here now" should already be off if your overall privacy settings are at "Friends of Friends" or stricter, something you do through the "Customize settings" section.

If you want to turn it on, click "Enable" next "Include me in 'People Here Now' after I check in" on your privacy customization page. Likewise, if it's already on but you want it off, uncheck the box next to "Enable."

7. Some outside applications could access your check-ins.

To prevent that, go to your privacy settings page. Then click "Edit your settings" under "Applications and Websites" in the lower left corner. Look for an "Edit Settings" box next to "Info accessible through your friends." Click it, and uncheck the box next to "Places I check in to."

8. One more thing on friends

Your friends are hopefully considerate, upstanding, sharp-as-a-tack Facebook citizens. They wouldn't tag embarrassing photos of you without your permission — so that someone clicking through your profile could pull up images of that wild night with the lampshade on your head and your tie ... well, never mind.

So it follows that they, hopefully, won't check you in to a strip club when you both should be at church, just to be funny. And if they do, maybe it's time to take out those pruning shears.

9. And while you're at it ...

It's a good idea to check your privacy settings on Facebook every so often, so take this time to look at what you are sharing with friends and the broader Internet, and what your friends may be sharing about you. Also look at the photos you've been tagged in over the years and remove any tags that you are not comfortable with. Potential employers often look at applicants' social media pages to get an idea of who they are before hiring.

Germany: Would-Be Employers Can't Do Social Network Checks

CBS News

Ever feel that those shots of you doing a keg stand in a bikini might be hindering your career? German politicians say they have a solution: ban potential employers from looking at applicants' Facebook accounts.

A law that passed through the German cabinet Wednesday makes looking at any closed social network illegal, but looking at professional networking Web sites, like LinkedIn, or running a Google search on an applicant, would be OK.

The measure still needs to go through parliament.

Interior Minister Thomas de Maizière told reporters Wednesday that future employers shouldn't be looking at information they would only want to show to friends like "wild photos from their college time." It would also be illegal to try and "friend" a potential employee to find out personal details.

Social media expert Klemens Skibicki, a professor for marketing at Cologne Business School, thinks the measure would be incredibly difficult to enforce. Much of the information can be found by third party search engines such as 123people (http://www.123people.com/) and it would be difficult to determine if the employer was using a fake account or an IP address changer to access data.

"How does one prove that they were discriminated against like that?" Skibcki asked. "This law can't effectively stop anybody from searching social network information about applicants."

Christian Solmecke, a lawyer with the German Institute for Communication and Law on the Internet, thinks that individuals should control who has access to their social networks and that the government should not interfere, but that it can be difficult for people - especially teenagers - to understand how information they post on the internet could affect them in the future, as well as how to make that data private.

The measure also prohibits companies from videotaping employees in "personal" locations such as bathrooms, changing rooms and break rooms, reports Der Spiegel. Seems like that would be a given, but in 2008, a scandal emerged when discount retailer Lidl spied on workers in the bathroom and collected personal information about them.

Also off limits? Most monitoring of employees telephone calls and e-mail use, even during company time. If monitoring occurs, businesses must inform their employees.

The country, with a history of government monitoring that includes the Gestapo and Stasi, has some of the strongest privacy laws in the world.

The Facebook legislation comes as there is increasing controversy over Google Street View in Germany. The consumer ministry is expecting the number of citizens requesting to opt out - have their property blurred on Google Street view and expunged from Google servers - to rise above 200,000 as many people worry that having such data on the internet is a violation of their privacy.

Google Buys Online Currency Management Company Jambool

PC World

 

Google has bought Jambool, a company that makes a platform for managing online payments for virtual goods sold on gaming and social networking sites.

Jambool made the announcement on Friday on its Web site. Terms of the deal were not disclosed. The company develops Social Gold, which can be used for managing virtual currency or processing payments within applications for websites such as Facebook.

In a statement, Google said "we are committed to offering consumers and merchants innovative digital payment solutions, and Jambool will help Google evolve our payments offering and expand into digital goods and content."

The Social Gold platform was launched in 2008, and Jambool wrote that they processed more than double the payment value in the first half of 2010 than they did in all of 2009.

"We've welcomed hundreds of developers to our platform," according to the post. "The fact that our highest revenue day was in the last week attests to the continued growth of online gaming."

The company says it has the only platform with an API (application programming interface) that can manage purchases done in a Flash-based game during game play and even for first-time users who do not have their details yet on record. Jambool charges 10 percent per transaction, but that fee goes down to 7 percent if a client is processing at least US$25,000 per month.

Jambool said Social Gold is PCI (Payment Card Industry) Security Standards Council Level 1 compliant, the highest rating. The company said it uses a "combination of algorithmic detection, analytics and human verification to control and manage fraud."

Jambool published a set of questions and answers for its customers about how they may be affected by the acquisition.

"We are thrilled to be part of Google, and we look forward to the exciting road ahead," the company said.

Hacker’s Arrest Offers Glimpse Into Crime in Russia

NY Times

 

On the Internet, he was known as BadB, a disembodied criminal flitting from one server to another selling stolen credit card numbers despite being pursued by the United States Secret Service.

And in real life, he was nearly as untouchable — because he lived in Russia.

BadB’s real name is Vladislav A. Horohorin, according to a statement released last week by the United States Justice Department, and he was a resident of Moscow before his arrest by the police in France during a trip to that country earlier this month.

He is expected to appear soon before a French court that will decide on his potential extradition to the United States, where Mr. Horohorin could face up to 12 years in prison and a fine of $500,000 if he is convicted on charges of fraud and identity theft.

For at least nine months, however, he lived openly in Moscow as one of the world’s most wanted computer criminals.

The seizing of BadB provides a lens onto the shadowy world of Russian hackers, the often well-educated and sometimes darkly ingenious programmers who pose a recognized security threat to online commerce — besides being global spam nuisances — who often seem to operate with relative impunity.

Law enforcement groups in Russia have been reluctant to pursue these talented authors of Internet fraud, for reasons, security experts say, of incompetence, corruption or national pride.

In this environment, BadB’s network arose as “one of the most sophisticated organizations of online financial criminals in the world,” according to a statement issued by Michael P. Merritt, the assistant director of investigations for the Secret Service, which pursues counterfeiting and some electronic financial fraud.

As long ago as November 2009, the United States attorney’s office in Washington, in a sealed indictment, identified BadB as Mr. Horohorin, a 27-year-old residing in Moscow with dual Ukrainian and Israeli citizenship.

But it was not until Aug. 7 this year that Mr. Horohorin, who was traveling from Russia to France, was detained on a warrant from the United States as he boarded a plane to return to Russia at an airport in Nice, in southern France.

The Secret Service released a statement on Aug. 11, when the indictment was unsealed. Max Milien, a Secret Service spokesman in Washington, said the agency could not comment about the decision to arrest Mr. Horohorin in France.

Olga K. Shklyarova, spokeswoman for the Russian bureau of Interpol, said no American law enforcement agency had requested Mr. Horohorin’s arrest in her country. “We never received such a request,” she said by telephone.

According to the Secret Service statement, Mr. Horohorin managed Web sites for hackers who were able to steal large numbers of credit card numbers that were sold online anonymously around the globe.

Those buyers would do the more dangerous work of running up fraudulent bills.

The numbers were exchanged on Web sites called CarderPlanet — carder.su and badb.biz — according to the Secret Service, and payment was made indirectly through accounts at a Russian online settlement system known as Webmoney, an analogue to PayPal.

Underscoring the nationalistic tone of much of Russian computer crime, one site featured a cartoon of the Russian prime minister, Vladimir V. Putin, awarding medals to Russian hackers.

“We awaiting you to fight the imperialism of the U.S.A.” the site said, in approximate English.

Mr. Horohorin lived openly in Moscow. As a foreign citizen, he registered with the police, according to Dmitri Zakharov, a spokesman for the Russian Association of Electronic Communication, an industry lobby for legitimate Russian Internet businesses, who cited a database of such registries.

A phone number for Mr. Horohorin was out of service Thursday.

Arrests in Russia for computer crimes are rare, even when hackers living in Russia have been publicly identified by outside groups, like Spamhaus, a nonprofit group in Geneva and in London that tracks sources of spam.

The F.B.I. in 2002 resorted to luring a Russian suspect, Vasily Gorshkov, to the United States with a fake offer of a job interview (with a fictitious Internet company called Invita), rather than ask the Russian police for help.

To obtain evidence in the case, F.B.I. computer experts had hacked into Mr. Gorshkov’s computer in Russia. When this was revealed, Russian authorities expressed anger that the F.B.I. had resorted to a cross-border tactic.

Online fraud is not a high priority for the Russian police, Mr. Zakharov said, because most of it is aimed at computer users in Europe or the United States. “This is a main reason why spammers are not arrested,” he said.

Politics may also play a role.

Vladimir Sokolov, deputy director of the Institute of Information Security, a Russian research organization, said the United States and Russia were still at odds on basic issues of computer security, although the differences were narrowing.

The United States tends to view computer security as a law enforcement matter. Russia has pushed for an international treaty that would regulate the use of online weapons by military or espionage agencies.

Last year the United States opened talks on a treaty, but it has continued to press for closer law enforcement cooperation, Mr. Sokolov said.

Computer security researchers have raised a more sinister prospect: that criminal spamming gangs have been co-opted by the intelligence agencies in Russia, which provide cover for their activities in exchange for the criminals’ expertise or for allowing their networks of virus-infected computers to be used for political purposes — to crash dissident Web sites, perhaps.

Sometimes, the collateral damage for online business is immediate.

A year ago, for example, hackers used a network of infected computers to direct huge amounts of junk traffic at the social networking accounts of a 34-year-old political blogger in Georgia, a country that fought a war with Russia in 2008.

The attack, though, spun out of control and briefly crashed the global service of Twitter and slowed Facebook and LiveJournal, affecting tens of millions of computer users worldwide. The Russian authorities have repeatedly denied that the state has any connection to such attacks.

Spamhaus says 7 of the top 10 spammers in the world are based in the former Soviet Union, in Ukraine, Russia and Estonia.

More ominously, Western law enforcement agencies have traced a code intended for breaking into banking sites to Russian programming.

In 2007, Swedish experts identified a Russian hacker known only by his colorful sobriquet — the Corpse — as the author of a virus that logged keystrokes on personal computers to capture passwords for Nordea, a Swedish bank, and the accounts were drained of about $1 million.

For a time, these rogue programs were openly for sale on a Russian Web site. The home page displayed an illustration of Lenin making a rude gesture.

Since Mr. Horohorin’s arrest, the badb.biz Web site has gone dark.

But through Monday, at least, its CarderPlanet counterpart, the Russian site carder.su, was still open for business.

Google Tests 'Streaming' SERP

cNet

Google is testing a search results page that changes with each letter you type into its search query bar.

Rob Ousbey, a Google SEO consultant in the U.K., discovered the test and captured the results on video. Essentially, it's a "streaming" search results page that appears to use Google Suggest technology to change the entire search results page based on the changing nature of your query.

Watch the video below for the full effect, but entering a few characters into the search box starts the spin cycle, as a query for "straw" changes the search results pages--and ads--from links to the Seattle Times as the "s" is typed, then the alternative Seattle newspaper The Stranger as the "stra" is typed, and finally to recipes for strawberry pie as "straw" comes into the field.

Google is known for prolific testing of its cash cow, so it's by far a given that this particular implementation is bound to show up. A Google representative told Techcrunch that "at any given time we are running between 50-200 search experiments."

Facebook Unveils Location Service

The Wall Street Journal

 

Facebook Inc. unveiled a new way for users to share their physical locations online, extending the social-networking giant's reach into the real world even as it opens itself to new potential concerns about privacy.

While Facebook stopped short of announcing how it would make money off its location services, the move paves the way for the company to become a major player in the growing business to supply local information and advertising, rivaling efforts by Google Inc. and others.

The new service, called Places, allows Facebook users to tap the location-sensing capabilities of their mobile phones to "check in" to a business or address and then instantly share it with their Facebook connections. The optional service will also allow users to find other people who have also recently logged their presence physically nearby.

Places will "help people stay connected everywhere they go, not just at their computer," said Facebook Chief Executive Mark Zuckerberg at an event at the company's Palo Alto, Calif., headquarters.

While location-based mobile-app companies such as Foursquare Labs Inc. have drawn attention from early adopters and investors, Facebook's entry into the market could help make the idea of sharing one's location with friends and businesses become mainstream. The company already has 150 million users of its service on mobile phones, although the Places service will initially only be available on an app for Apple Inc.'s iPhone and through an enhanced mobile website.

Still, adding location information to the data that Facebook collects and mines about its 500 million users could open the company to new criticism from privacy advocates and regulators. Facebook executives said they built in privacy controls to protect sensitive location information, such as limiting the default visibility of check-ins to friends only.

But Nicole Ozer, the technology and civil-liberties policy director at the American Civil Liberties Union of Northern California, said it left out some other important privacy safeguards. "Facebook is rolling out 'here now,' privacy later," she said, noting that the company makes it easy to let strangers know your current location but gives limited ability to control exactly who knows that you are at a place. If a user's "here now" feature is turned on, he or she is visible to any user in that place.

"It's nearly impossible to launch any new social feature without some level of privacy concern, and it remains to be seen whether users will like or dislike the fact that they can be checked in by their friends," said Augie Ray, a social-networking analyst with Forrester Research. Facebook said it intended that service as an advantage, since not all of its users have one of the smartphones that are required to use the service. Users can also turn off the ability for their friends to check them in—but it is permitted by default.

In May, Facebook changed its privacy controls following a torrent of criticism. The Federal Trade Commission has said it is continuing to look into social networks and plans to issue new guidelines later this year for how they handle privacy. In late July, the Senate Commerce Committee held a hearing about online privacy that included testimony from Facebook, Google and other technology companies.

Mr. Zuckerberg played down the immediate implications of the new service for Facebook's core revenue stream of selling advertising. "You can imagine all of these things in the future," he said, but added that the company wanted to focus first on creating a service that would be useful for the social lives of users.

Still, analysts said the location service could eventually open considerable new business opportunities for Facebook, including location-targeted advertising. Facebook could also tap business opportunities by setting up sponsorships and special deals with local businesses. Even with the initial launch, local businesses will be able to claim the Facebook page for their own location as a business page.

"There are such tremendous opportunities for marketers with Places, I think, sooner rather than later we are going to see advertisers incorporated into it," said Debra Aho Williamson, a senior analyst at eMarketer

Those sorts of business uses could eventually compete with Google, which has been building out its maps and local information and advertising business. In the mobile market, Google hopes to become a platform for mobile check-in services by offering its database of information about millions of local businesses and other places around the world.

For the existing generation of location-based Internet services, Facebook extended an olive branch by opening the location data that it collects to third parties. Appearing at Facebook's announcement, some initial partners, including Foursquare and Gowalla, said they thought Facebook would be an enabler—not a competitor—by introducing a lot of new users to the world of sharing their locations.

Cameron Diaz Tops List of Riskiest Celeb Searches

Associated Press

If you're looking for Cameron Diaz, Julia Roberts or Jessica Biel online, look out!

The movie stars top the latest list of the most dangerous celebrities to search for online, according to new research by computer-security software maker McAfee Inc.

It's far from an Oscar, but landing atop McAfee's annual list carries a distinction all its own: It means that criminals believe those celebs are the perfect lures to sucker people into visiting malicious websites.

Clicking onto strange sites is sketchy to begin with. But many people do, and their computers get infected. Once a computer is infected, criminals can steal victims' online banking passwords, e-mail passwords, and do other kinds of nasty deeds.

Facebook Claim May Be Bolstered by $3,000 Check

Bloomberg

The western New York man suing over claims he owns 84 percent of Facebook Inc. has a copy of a $3,000 cashier’s check that may support his contract claim against the company and Chief Executive Officer Mark Zuckerberg.

The purported canceled check is made out to Zuckerberg and dated three days before Paul Ceglia claims the two men signed a contract in 2003. That agreement, Ceglia said in court papers, entitles him to control of the world’s biggest social networking website.

A copy of the check was turned over last week to Ceglia’s side by a Wellsville, New York, branch of Community Bank N.A., according to Terrence Connors, a lawyer for Ceglia. The Wellsville Daily Reporter published a copy on its website.

The check is the first independently produced evidence to be made public of Ceglia’s claimed contractual relationship with Zuckerberg. Connors said the copy of the check is among bank records his side has obtained as evidence in the case, now pending in federal court in Buffalo, New York.

Ceglia, 37, said in his June 30 lawsuit that he and Zuckerberg signed a “work for hire” contract in 2003, when the Facebook CEO was an 18-year-old Harvard University freshman. The agreement called for Zuckerberg to do computer coding work and provided for a $1,000 investment by Ceglia in a project called “The Face Book,” in exchange for a 50 percent stake, Ceglia claimed.

34 Percent

A clause in the contract gave Ceglia an additional 34 percent for delays in the launching of the site, he claimed in court papers.

Lawyers for Zuckerberg said the Facebook CEO once worked for Ceglia, though they denied he signed away any right to control his Palo Alto, California-based company.

“We have never disputed that Mark did some work for Ceglia,” Facebook spokesman Andrew Noyes said yesterday in an e-mail in response to questions about the check. “Everything else asserted by the plaintiff is false and his lawsuit is frivolous, if not outright fraudulent.”

The check, made out to “Mark Zuckerburg,” is dated April 25, 2003. Three days later, Ceglia claims, he and Zuckerberg signed the contract in a hotel in Boston. The check appears to be signed by Mark Zuckerberg for deposit into a Fleet Bank account. The time stamp appears to show it was deposited the day Ceglia said the contract was signed.

Ceglia attached to his complaint a copy of the contract he claims he and Zuckerberg signed. His lawyers said they have the original, which hasn’t been seen by Facebook or by the public. Zuckerberg hasn’t provided details of the work he did for Ceglia.

The parties are scheduled to be back in federal court in Buffalo on Oct. 13 to argue Ceglia’s motion to have the case returned to state court.

The case is Ceglia v. Zuckerberg, 10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

Korean Firm Tweaks Twitter for Workers

The Wall Street Journal

Korea's LG CNS uses Web service to build internal system for workers to communicate

SEOUL—When a senior executive at a South Korean company recently wanted to find some partners for lunch, he sent a Twitter message—but only to employees within his technology-services firm.

The company, LG CNS Co., has been experimenting with a version of Twitter—the short-burst messaging service used on computers and cellphones—that it created for the internal use of its 7,000 employees.

Called BizTweet, the system at LG CNS is an example of a less-heralded offshoot of the Twitter phenomenon: Companies are using it for internal communication and other purposes beyond the external marketing for which it has become well known.

Twitter Inc., the San Francisco-based creator of the system, initially marketed its service as a way for individuals to broadcast quick messages to friends. Companies like Starbucks Corp. and Virgin Atlantic Airways Ltd. have embraced it as a way to reach consumers. But now, just as they did with other Web technologies, people are finding new ways to make use of the Twitter concept.

Twitter's creators laid the foundation for such development by using open-source software to make the system and releasing features they've developed in a public form called an application programming interface, or API.

A Twitter spokesman said BizTweet is "just another cool use" of Twitter's technology and "showcases the power of open platforms and reinforces Twitter's value for businesses." He said more than 230,000 third-party applications have been built using Twitter's technology.

In South Korea, Twitter is a relatively new phenomenon due to the delayed entry of smartphones, which were kept out of the country by government rules until last year. But the uptake has been swift this year. Estimates vary widely, but there are believed to be between 400,000 and one million Twitter accounts in the country. Several prominent executives, politicians and entertainers have built followings for their Twitter messages, or tweets.

At LG CNS, a group of developers who maintain the company's array of internal message boards, employee blogs and databases decided the Twitter-style service could provide a means for mass communication that was less formal than email and less technical than postings on topic-oriented bulletin boards.

The group of employees took several of the key Twitter APIs and built BizTweet on LG CNS's internal network. Last month, they invited 1,000 employees to test BizTweet. What has emerged, they say, is a real-time public conversation in the company. On Monday, the company made BizTweet available to all of its employees, and they posted more than 300 messages.

"This system doesn't replace any of the other tools on the intranet," says Lim You-kyoung, one of the developers. "It is more informal and creative."

Employees discuss simple things like the weather and sports, but most of the traffic ends up being about work. They notify each other about seminars, post reports from meetings, seek volunteers to test products and solicit ideas for problems they're facing with customers.

LG CNS's executives worried that BizTweet users might become too focused on nonwork items, becoming a kind of electronic water cooler that couldn't be controlled, says Choi So-young, a company spokeswoman who participated in the test.

"This is not a playground," Ms. Choi says. But few rumors and time-wasting information emerged on the corporate system.

Developers say that's because the system uses an employee's real name and photograph, unlike the pseudonyms on the public Twitter. "Before you write something down, you are likely to think that everyone can see it," says Yi Jae, another LG CNS employee. "We say it's fun but less fun" than the public Twitter, he says.

LG CNS is studying whether to provide the system as a product to its clients, which hire the company to design, build and sometimes run their data systems. The company is part of the LG business group that is best known for LG Electronics Inc., maker of televisions, cellphones and appliances, and LG Chem Ltd., the maker of batteries for hybrid and electric cars.

But the company's marketers face a challenge because the corporate culture inside most South Korean companies is still rigidly hierarchical, with information chiefly flowing from the top down and lower-level employees rarely allowed to directly talk to senior executives. Many firms may be reluctant to embrace a system like BizTweet that permits such an open flow of communication.

"Corporate culture is changing and autonomy and creativity is more and more important," says Kang Yu-kyoung, one of the developers at LG CNS. "This is just part of that change."

Holman W. Jenkins, Jr.: Google and the Search for the Future

The Wall Street Journal

The Web icon's CEO on the mobile computing revolution, the future of newspapers, and privacy in the digital age.

 

To some, Google has been looking a bit sallow lately. The stock is down. Where once everything seemed to go the company's way, along came Apple's iPhone, launching a new wave of Web growth on a platform that largely bypassed the browser and Google's search box. The "app" revolution was going to spell an end to Google's dominance of Web advertising.

But that's all so six-months-ago. When a group of Journal editors sat down with Eric Schmidt on a recent Friday, Google's CEO sounded nothing like a man whose company was facing a midlife crisis, let alone intimations of mortality.

For one thing, just a couple days earlier, Google had publicly estimated that 200,000 Android smartphones were being activated daily by cell carriers on behalf of customers. That's a doubling in just three months. Since the beginning of the year, Android phones have been outselling iPhones by an increasing clip and seem destined soon to outstrip Apple in global market share.

True, Apple sells its phones for luscious margins, while Google gives away Android to handset makers for free. But not to worry, says Mr. Schmidt: "You get a billion people doing something, there's lots of ways to make money. Absolutely, trust me. We'll get lots of money for it."

"In general in technology," he says, "if you own a platform that's valuable, you can monetize it." Example: Google is obliged to share with Apple search revenue generated by iPhone users. On Android, Google gets to keep 100%. That difference alone, says Mr. Schmidt, is more than enough to foot the bill for Android's continued development.

And coming soon is Chrome OS, which Google hopes will do in tablets and netbooks what Android is doing in smartphones, i.e., give Google a commanding share of the future and leave, in this case, Microsoft in the dust.

Can it all be so easy? Google's stock price has fallen nearly $150 since the beginning of the year. Financial pundits have started to ask skeptical questions, wondering why it doesn't give more of its ample cash back to shareholders in the form of buybacks and dividends. Some suspect that all that temptation merely encourages Mr. Schmidt, along with founders Sergey Brin and Larry Page—the triumvirate running the company—to splurge on gimmicky ideas that never pay off. Fortune magazine recently called Google a "cash cow" and suggested more attention be paid to milking it rather than running off in search of the next big thing.

But to hear Mr. Schmidt tell it, the real challenge is one not yet on most investors' minds: how to preserve Google's franchise in Web advertising, the source of almost all its profits, when "search" is outmoded.

The day is coming when the Google search box—and the activity known as Googling—no longer will be at the center of our online lives. Then what? "We're trying to figure out what the future of search is," Mr. Schmidt acknowledges. "I mean that in a positive way. We're still happy to be in search, believe me. But one idea is that more and more searches are done on your behalf without you needing to type."

"I actually think most people don't want Google to answer their questions," he elaborates. "They want Google to tell them what they should be doing next."

Let's say you're walking down the street. Because of the info Google has collected about you, "we know roughly who you are, roughly what you care about, roughly who your friends are." Google also knows, to within a foot, where you are. Mr. Schmidt leaves it to a listener to imagine the possibilities: If you need milk and there's a place nearby to get milk, Google will remind you to get milk. It will tell you a store ahead has a collection of horse-racing posters, that a 19th-century murder you've been reading about took place on the next block.

Says Mr. Schmidt, a generation of powerful handheld devices is just around the corner that will be adept at surprising you with information that you didn't know you wanted to know. "The thing that makes newspapers so fundamentally fascinating—that serendipity—can be calculated now. We can actually produce it electronically," Mr. Schmidt says.

Mr. Schmidt obviously has an eye to his audience, which this day consists of folks with an abiding devotion to the newspaper business. He speaks in sorrowful tones about the "economic disaster that is the American newspaper." He assures us that in the coming deluge trusted "brands" will be more important than ever. Just as quickly, though, he adds that whether the winners will be new brands or existing brands remains to be seen. On one thing, however, Google is willing to bet: "The only way the problem [of insufficient revenue for news gathering] is going to be solved is by increasing monetization, and the only way I know of to increase monetization is through targeted ads. That's our business."

Mr. Schmidt is a believer in targeted advertising because, simply, he's a believer in targeted everything: "The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them."

That's a bit scary when you think about it. But for investors and executives the big question, of course, is which companies will control these opportunities. Google may see itself as friend and helper to the media business, but it also clearly sees itself in control of the targeting information. Says Mr. Schmidt: "As you go from the search box [to the next phase of Google], you really want to go from syntax to semantics, from what you typed to what you meant. And that's basically the role of [Artificial Intelligence]. I think we will be the world leader in that for a long time."

Between here and there, though, the company faces ever-growing legal, political and regulatory obstacles. The net neutrality debate, which Google has led, has taken a sudden turn that has many of its former allies in the "public interest" sector shouting "treason."

What was most striking about the set of net neut "principles" Google produced this week with former antagonist Verizon was that they didn't apply to wireless. "The issues of wireless versus wireline gets very messy," Mr. Schmidt told one news site. "And that's really an FCC issue, not a Google issue."

Wait. Isn't the future of the Internet wireless these days? Isn't wireless the very basis of the new partnership between Google and Verizon, built on promoting Google's Android software? But Google has now broken ranks with its allies and dared to speak about the sheer impracticality of net neutrality on mobile networks where demand is likely to outstrip capacity for the foreseeable future.

If that weren't about to become a sticky political wicket for the company, it also faces growing antitrust, privacy and patent scrutiny, fanned by a growing phalanx of Beltway opponents, the latest being Larry Ellison and Oracle. "There's a set of people who are intrinsic oppositionists to everything Google does," Mr. Schmidt acknowledges resignedly. "The first opponent will be Microsoft."

Mr. Schmidt is familiar with the game—as chief technology officer of Sun Microsystems in the 1990s, he was a chief fomenter of the antitrust assault on Bill Gates & Co. Now that the tables are turned, he says, Google will persevere and prevail by doing what he says Microsoft failed to do—make sure its every move is "good for consumers" and "fair" to competitors.

Uh huh. Google takes a similarly generous view of its own motives on the politically vexed issue of privacy. Mr. Schmidt says regulation is unnecessary because Google faces such strong incentives to treat its users right, since they will walk away the minute Google does anything with their personal information they find "creepy."

Really? Some might be skeptical that a user with, say, a thousand photos on Picasa would find it so easy to walk away. Or a guy with 10 years of emails on Gmail. Or a small business owner who has come to rely on Google Docs as an alternative to Microsoft Office. Isn't stickiness—even slightly extortionate stickiness—what these Google services aim for?

Mr. Schmidt is surely right, though, that the questions go far beyond Google. "I don't believe society understands what happens when everything is available, knowable and recorded by everyone all the time," he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends' social media sites.

"I mean we really have to think about these things as a society," he adds. "I'm not even talking about the really terrible stuff, terrorism and access to evil things," he says.

Not that Google is a doubter of the value of social media. Mr. Schmidt awards Facebook his highest accolade, calling it a "company of consequence." And though "there is a lot of hot air, a lot of venture money" in the sector right now, he predicts that one or two more "companies of consequence" will be born among the horde of new players just coming to life now.

A skeptic might wonder whether, despite present glory, Google itself might yet prove a flash in the pan. The company has enormous technological confidence. Mr. Schmidt describes how YouTube, its video-serving site, almost "took down" the company in its early days, thanks to the swelling outflow of video dispatched from its servers to users around the globe. Salvation was the "proxy cache"—lots of local servers around the world holding the most popular videos. "The technology that Google invented allows us to put those things very close to you," says Mr. Schmidt. "It was a tremendous technological achievement."

But with YouTube, as with lots of Google projects, there remains the question of how to make money. Google captured the search wave and shows every sign of positioning itself successfully for the mobile wave. As for the waves after that, your guess may be as good as Mr. Schmidt's.

Google Plan Disillusions Former Allies‏

NDTV

San Francisco:   On Friday at lunchtime, as Google employees dined al fresco, a hundred protesters descended on the company's Silicon Valley campus. A group called the Raging Grannies sang a song called "The Battle Hymn for the Internet," and others carried signs reading, "Google is evil if the price is right."

They were there to complain about what they saw as Google's about-face on how Internet access should be regulated and to deliver a petition with about 300,000 signatures.

Several of the groups at the protest, like MoveOn.org and Free Press, once saw Google as their top corporate ally in the fight for net neutrality -- the principle that the Internet should be a level playing field, with all applications and services treated equally.

But a week ago, Google stunned many of its allies by crossing the aisle and teaming up with Verizon Communications to propose that net neutrality rules should not apply to wireless access and to outline rules for the wired Internet that critics say are riddled with loopholes.

Google's compromise with Verizon is the latest collision between idealism and pragmatism at the company, which has long promoted the idea that its mission, organizing the world's information, is for the public good, as underscored by its unofficial motto: "Don't be evil."

Some say that as Google has grown up and become a large multinational company, it has been forced to start weighing its business interests against the more idealistic leanings of its founders and many of its employees.

"I don't know that Google pondered the moral decision this time," said Jordan Rohan, an Internet and digital media analyst at Stifel Nicolaus. "I think the business decision to cooperate with Verizon superseded the other complications and side effects that it may cause."

Google strongly defends its proposal with Verizon, saying it does not violate net neutrality principles and, if adopted by regulators, would protect wired Internet access more than it is protected now.

"We don't view this as a retreat at all," Alan Davidson, Google's director of public policy, said in an interview. "Google believes very strongly in net neutrality."

But the proposal left Google's former allies, as well as many other technology and media companies, feeling disappointed and even betrayed. The risk, they say, is that without adequate regulation, Internet access companies could exercise too much control over what their customers can do online, or how quickly they can gain access to certain content. They could charge companies for faster access to consumers, hurting smaller players and innovation.

"Google has been the most reliable corporate ally to the public interest community," said Josh Silver, president of Free Press, an advocacy group. "That is why their sellout on net neutrality is so stunning."

The proposal from Google and Verizon was all the more surprising to some advocates because it was released just as broader talks brokered by the Federal Communications Commission were close to producing a draft compromise agreement, according to three people briefed on the talks, who agreed to speak on the condition of anonymity because the talks were supposed to be confidential.

Unlike the Google-Verizon proposal, the agreement would have imposed some rules on wireless Internet, these people said.

"We were very close," said one person briefed on the talks. Both the F.C.C. and Google declined to comment on those discussions. After reports of a Google-Verizon deal emerged, the F.C.C. called off the talks, which in addition to those two companies included AT&T, a cable industry group, Skype and the Open Internet Coalition.

Though Google has long said that it thinks openness rules should be applied broadly to Internet access, the company was persuaded that wireless is different because it is evolving rapidly and there is more competition, Mr. Davidson said. Wireless carriers say they need more leeway to manage their networks because it is difficult and expensive for them to add more capacity.

The shift was also a pragmatic compromise to get "broader support, in this case from Verizon and hopefully others," he said.

Still, Google's new position on net neutrality represents a scaling back of the company's ambitious goals. When Google began building a presence in Washington in 2005, net neutrality was one of the first issues it embraced. And over the years, Google's drive to open up the wireless industry became a corporate mission, backed by the company's financial might.

In 2007, Google made a $4.7 billion bid in a government auction of wireless airwaves. The company's goal was not to win the auction, but to raise the price above a threshold that would set off rules forcing openness on the airwaves. Verizon won the auction and soon plans to deploy a high-speed network that will be bound by those rules.

In January, Google introduced its own phone, the Nexus One, and opened an online store to distribute it. By selling directly to consumers, Google was challenging the control that wireless carriers have over the distribution of phones, especially in the United States. But Google quietly killed the Nexus One and the phone store this year.

nalysts say Google's new, more conciliatory approach to the wireless industry was born of necessity.

Verizon offers a number of smartphones that run the Android software from Google, and Verizon is handling growing amounts of data flowing through its network to and from those phones. The volume will only increase as new mobile devices are developed and people use them to watch movies and do other bandwidth-intensive activities. Meanwhile, Google is looking to the mobile Web to feed much of its future growth.

"This is about Google becoming friendlier with the wireless industry so that more Google searches are conducted on wireless devices," Mr. Rohan said. If wireless was exempted from net neutrality rules, Verizon could limit the use of some applications and spend less money improving its network, or get paid by Web companies for delivering content.

Some people see echoes of Google's decision to go into China in 2006. In that case, after a lengthy internal debate, Google put aside its aversion to censorship and decided to enter what quickly became the world's largest Internet market. Google has since pulled its search engine out of mainland China after online attacks that originated there, but the decision to do business there tarnished the company's reputation among human rights advocates and disappointed many employees.

"I don't fault Google and Verizon for striking a deal," said Susan Crawford, a professor at the Benjamin N. Cardozo Law School and a longtime supporter of net neutrality. "A large private company is always going to operate in its own interest, and for anyone to believe otherwise would be naïve."

Professor Crawford, who is critical of the proposal, said the F.C.C.'s lack of action on access rules pushed Google to seek a compromise. "Google had no choice but to cooperate with the friendliest carrier it can find, which is Verizon," she said.

But disappointed consumers and advocates seem to be holding Google to a different standard, in large part because of the image it created.

"If the world of business is an ugly world full of rats, they've managed to create a bushy tail for themselves and come across as a very, very cute rat with terms like 'Do no evil,' " said Scott Galloway, professor of brand strategy at the Stern School of Business at New York University. "The downside of that is that people have expectations that they're going to fight these quixotic battles, and the bottom line is their obligation to their shareholders."

Not all believe that Google has betrayed its principles. Some longtime Silicon Valley chroniclers say they still think Google is trying to do the right thing, not only for itself, but also for the Internet as a whole.

"I would rather have a company like Google that means to do no evil and is struggling with compromises on these hard issues than a company that doesn't see a struggle," said Tim O'Reilly, founder and chief executive of the technology publisher O'Reilly Media. "Most companies don't even see things in those terms."

US FDA warns Pharma firm about Facebook Promotion

Bloomberg / Business Week

The U.S. Food and Drug Administration has warned a pharmaceutical company that its use of the Facebook Share button to promote a cancer-fighting medication violates FDA requirements for disclosing information about drugs.

The FDA, in a letter sent to drug-maker Novartis Pharmaceuticals July 29, tells the company that its use of Facebook Share to promote Tasigna is incomplete and misleading.

This is likely the first time the FDA has issued a warning to a pharmaceutical firm for using Facebook to promote its products, said Jeffrey Chester , a privacy advocate and executive director of the Center for Digital Democracy.

The FDA, which posted the warning letter on its website this week, asks Novartis to stop using Facebook Share to promote the leukemia drug.

"The shared content is misleading because it makes representations about the efficacy of Tasigna but fails to communicate any risk information associated with the use of this drug," said the FDA letter, signed by Karen Rulli, acting group letter of the agency's Division of Drug Marketing, Advertising, and Communications. "In addition, the shared content inadequately communicates Tasigna's FDA-approved indication and implies superiority over other products."

FDA rules require that most medication promotional pieces contain information about risks associated with taking the drug, the letter said. In addition, promotional materials are misleading if they suggest a "drug is safer or more effective than another drug when this superiority has not been demonstrated by substantial evidence or substantial clinical experience," the letter said.

Novartis also failed to notify the FDA of the Tasigna promotion, as required by the agency, the letter said.

Novartis, in a statement, said it takes the FDA letter "very seriously."

"We have addressed its concerns by taking the direct and immediate action of taking down the widget referenced by the FDA," the company said. "Novartis will continue to have active discussions with the FDA to understand fully all of the concerns. We also will assess all of our Web assets and materials based on these concerns."

The warning letter highlights a problem with Facebook and other websites targeting advertising dollars from pharmaceutical and companies, said Chester, who asked the FDA in March to investigate the online marketing of drugs. Facebook should be responsible for creating safeguards for the marketing of medications and other health products on its site, he said.

Websites "see digital dollars in their bottom lines and are ignoring the health risks confronting consumers who are targeted using social-media marketing," Chester said. "This letter is a wake-up call -- for the pharma industry, Facebook, and social media application companies."

The FDA's letter is appropriate, Chester added. "Risk warnings must be prominently disclosed -- and not purposefully ... hidden by making a consumer click for more information," he said.

A representative of Facebook didn't have an immediate comment on the letter or Chester's perspective.

Oracle Sues Google, Claiming Patent Infringement

Associated Press

 

Oracle Corp. said Thursday it has filed a patent and copyright-infringement lawsuit against Google Inc.

Oracle said in a statement that Google's Android system for mobile phones infringes on its patented Java technology.

Google spokesman Andrew Pederson said the company can't comment because it has not yet reviewed the lawsuit.

Oracle, which makes database software and other technology, acquired the Java computer programming language and related technology when it bought Sun Microsystems. That deal that closed in January.

Java can be used as a platform for building applications for computers, websites and smart phones and other mobile devices.

In its complaint, filed with the U.S. District Court for the Northern District of California, Oracle said Google's Android operating system software consists of Java applications and other technology. As such, it infringes on one or more parts of seven different patents - something Google should know, Oracle argues, because it has hired former Sun Java engineers in recent years.

Oracle also said Google's Android also infringes on Oracle's copyrights in Java.

Oracle is seeking an injunction to stop Google from further building and distributing Android, plus higher monetary damages for willful and deliberate infringement.

Google says about 200,000 Android-powered phones are being sold each day.

Twitter Hoping People will Press its Tweet Button

Associated Press

 

Tweeting your favorite stories may be getting a little easier.

Twitter introduced Thursday a "tweet" button that websites can place alongside their content. The button serves as an invitation to Twitter's legion of users to share what they're reading without having to copy and paste the Web link.

Pressing the button automatically creates a shortened link that appears in a pop-up box tied to the Twitter user's account. A comment can be added next to the link, staying within the 140-character limit of Twitter's messaging service. After the message is dispatched, Twitter will suggest people the sender might want to follow, based on the story's topic and its writer.

The new tweet button will likely make Twitter an even more powerful tool for attracting online traffic. As it is, Twitter says nearly one-fourth of its tweets contain Web links.

The list of websites already using the tweet button include Gannett Co.'s USA Today, one of the world's largest newspapers; IAC/InterActiveCorp's search engine Ask.com and Google Inc.'s video site YouTube.

Twitter's new sharing tool is similar to a "retweet" button that another service called TweetMeme has offered publishers since early 2009. TweetMeme is teaming up Twitter on the new button.

Google Buys Social App Designer, Slide

PC Mag

Google has acquired Slide, a San Francisco-based manufacturer of social apps for sites like Facebook, MySpace, Bebo, Friendster, and Google's own Orkut. While both companies have yet to acknowledge the acquisition, The New York Times has reportedly confirmed the story, which was first broken by the TechCrunch blog.

According to two sources at The Times, Google will pay somewhere in the neighborhood of $228 million for Slide, the company behind such family-friend apps as SuperPoke, FunSpace, Top Friends, and Rock Riot.

The acquisition seems to reinforce a recent series of rumors surrounding the creation of a Google-owned casual gaming site that blogs are currently referring to as "Google Games." While also has yet to confirm the creation of such a site, CEO Eric Schmidt came fairly close in a recent interview, stating, "We have understood for a long time that social stuff is very important. The question that's in everyone's minds is why are we trying to create a competitor to Facebook, and the answer is we're not going to create a competitor to Facebook. It's something different."

Google has also reportedly invested $150 million in Zynga, the company behind such uber successful social gaming titles as Mafia War and Farmville.

Whether the investment in such gaming companies would play a major role in the creation of the rumored Google social network, Google Me, also has yet to be seen.

Google, Verizon Propose new Web Rules

The Wall Street Journal

The Two Say Proposal Eases 'Net Neutrality' Debate; Critics Say It Could Create Private Networks

Cellular Internet access is becoming an increasingly important profit center for telecommunications companies as more consumers adopt mobile Web tools such as smart phones like the iPhone and phones based on Google's Android software.

Some consumer advocates slammed the proposal, saying it could result in the creation of private, closed broadband networks akin to cable TV systems, as opposed to today's open Internet in which anyone can create a website or online service.

Google and Verizon called their statement of principles a legislative proposal. More precisely, it is a high-profile effort to influence a debate in Washington over the future rules of the road for the Internet—a debate that Congress has yet to begin in earnest.

The Google-Verizon statement is also aimed at the FCC, which has proposed applying to broadband services the rules originally designed to ensure the free flow of calls over telephone lines.

Last week, the FCC abruptly called off closed-door talks with industry lobbyists that were aimed at reaching a compromise on net neutrality. News of the impending Verizon-Google agreement was cited as a reason for abandoning the talks, said people familiar with the negotiations.

In 2002, the FCC deregulated Internet lines to encourage more investment. Earlier this year, the agency proposed reversing that decision after a federal appeals court said the FCC overstepped in 2008 when it sanctioned Comcast Corp. for deliberately slowing some customers' traffic.

FCC officials are trying to find a way for the agency to act as an Internet traffic cop without the need to take the controversial step of re-regulating Internet lines. The agency proposed doing that earlier this year; however, phone and cable-TV companies have protested the idea.

A spokeswoman for FCC Chairman Julius Genachowski declined to comment Monday on the Google-Verizon proposal.

Democratic FCC Commissioner Michael Copps said its past time for the FCC to act on net neutrality. "Some will claim this announcement moves the discussion forward. That's one of its many problems," he said in a statement.

AT&T Inc., a big broadband and cellular rival to Verizon, said in a statement that it would examine the proposal and that it is "committed to achieving a consensus solution to the net neutrality issue, either with the FCC or with the Congress."

The Verizon-Google agreement would provide a loose framework for protecting Internet traffic that the companies said would "provide certainty that allows both Web startups to bring their novel ideas to users, and broadband providers to invest in their network."

The proposal would allow broadband companies to charge companies or consumers more for "additional, differentiated online services," such as 3D movie streaming or gaming. That traffic would run in priority lanes alongside the traditional Internet.

Google Chief Executive Eric Schmidt said Google wouldn't pay Verizon or other Internet service providers to offer such premium services for Google's products, including its YouTube video service. "We like the public Internet and we intend to use it," Mr. Schmidt said.

The proposal wouldn't change what consumers get from either company. But consumer advocates blasted the plan. They worry that over time broadband providers would allocate a bigger chunk of their capacity to the priority lanes at the expense of the traditional Internet.

Along with Internet companies, including Amazon.com Inc. and Facebook Inc., public advocates have argued rules are needed to prevent broadband providers from favoring their own services or extracting money from companies for speedy delivery of Web traffic.

"It is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the [regular] Internet," said Gigi Sohn, president of Public Knowledge, a digital advocacy group.

Joel Kelsey, an adviser to media watchdog Free Press, said that "Google and Verizon can try all they want to disguise this deal as a reasonable path forward, but the simple fact is this framework…would transform the free and open Internet into a closed platform like cable."

Phone and cable companies say they need leeway in managing their Internet networks so bandwidth hogs such as video services don't take up too much capacity. They also say they need some pricing flexibility to offer new Internet services to help them recoup the billions of dollars they spend to build out broadband networks.

Richard Bennett, a senior research fellow at the think tank Information Technology and Innovation Foundation, whose funding comes mainly from phone and cable companies, called the Google/Verizon proposal a "good starting point for Congress."

To believe that some Internet applications shouldn't receive priority treatment is "naïve," Mr. Bennett said. "It's like they are saying all cars have to cost the same—that you should be able to buy a Ferrari for the price of a Geo Metro."

Facebook Advertisers Boost Spending 10-Fold, Sandberg Says

Bloomberg

 

Facebook Inc.’s biggest advertisers have boosted spending by at least 10-fold in the past year as the social network crossed the half- billion user mark, becoming more alluring to marketers that want to reach a broad online audience.

Some advertisers have increased spending by as much as 20-fold or more, Facebook Chief Operating Officer Sheryl Sandberg said in an interview. The site’s ad prices have held steady even as user growth fueled a surge in inventory, or pages that can carry ads, she said.

“Two years ago the big brands were experimenting with us,” said Sandberg, 40, declining to identify which customers were spending more. “They started buying with us a year ago. Now, they’re going big.” As a closely held company, Facebook doesn’t disclose revenue figures.

Facebook is courting advertisers and ramping up the pace of acquisitions to wring profit from its more than 500 million users, who don’t pay to use the site. The owner of the world’s largest social network may put off an initial public offering until 2012 to give Chief Executive Officer Mark Zuckerberg more time to add sales and lure users, people familiar with the matter said last week.

The company plans to make more purchases to help it build features to keep users glued to its pages -- and the ads that run on them -- longer. While Facebook has mainly focused on startups with smaller staffs, it may start pursuing bigger transactions, said Vaughan Smith, director of corporate development.

Bigger Deals

“As we get bigger and our platform gets more stable, I fully expect that we will be doing more significant acquisitions,” Smith, 43, said in an interview. “This is working for us, and it’s working for the people that we’re acquiring.”

Founded in 2004 by Zuckerberg in a Harvard University dormitory room, Facebook lets users share photos, video, short messages and other information with groups of friends. After surpassing News Corp.’s MySpace as the world’s biggest social network in 2008, Facebook nudged aside AOL Inc. to become the fourth-most visited site in the U.S. last year, according to ComScore Inc. Only Google Inc., Yahoo! Inc. and Microsoft Corp. are bigger.

Facebook’s sales may rise to at least $1.4 billion in 2010 from $700 million to $800 million last year, two people familiar with the matter said last week.

‘The Reach’

Facebook, based in Palo Alto, California, gets much if not most of its revenue from advertising. Its customers include Coca-Cola Co., JPMorgan Chase & Co. and Adidas AG.

“You can’t ignore the reach that’s there, but it’s also the true engagement that we have,” said Michael Donnelly, Coca-Cola’s director of global interactive marketing.

Facebook’s future growth will hinge partly on whether it can overcome privacy concerns and stave off a threat by rivals including Twitter Inc. Consumer groups and lawmakers have alleged that Facebook doesn’t do enough to protect the personal information people add to their profiles.

“Facebook’s value is being able to preserve that user base,” said Michael Gartenberg, a partner at researcher Altimeter Group in San Mateo, California. “Those 500 million users -- advertisers not only want to make sure that those people aren’t churning and that they’re actually using their accounts, but that there’s growth here as well.”

Advertisers ‘Dig In’

To make marketing messages more appealing to marketers and less intrusive to users, Facebook has incorporated social elements. Below an ad, users can see which of their friends may be fans of the advertiser, for example.

“Some clients have actually been pretty active on Facebook for a while, but we’re finding a number of clients that are starting to dig in a little bit more,” said Joe Mele, a managing director at Publicis Groupe SA’s Razorfish agency. “We’re seeing increased interest.”

With each new user, Facebook gets more pages on which to place ads, resulting in an inventory surge. Yet prices for ads based on the number of times they are viewed have held steady in the past year, Sandberg said. The prices of the social ads may rise as Facebook brings more “value” to companies, she said.

“A movie studio last year that did three movies with us -- this year, if they’re releasing 12 movies, they’ll do 10 of them with us,” Sandberg said. “A company that did one product launch with us -- this year they’re going to do half of their product launches.”

Display Leader

Also buoying ad prices, about half of Facebook users return to the site daily, the company says. That makes the users valuable to advertisers that want messages viewed multiple times.

Much of Facebook’s ad growth comes from so-called display ads, graphic messages that usually appear as boxes on Web pages, rather than the search-related ads that are Google’s mainstay. Facebook displaced Yahoo as the top U.S. site for display ads, with 16 percent share in the first quarter, up from 11 percent in the fourth quarter, according to ComScore in Reston, Virginia.

Spending on display advertising is expected to rise 13 percent to $8.56 billion in the U.S. this year, after a 4.5 percent gain in 2009, according to EMarketer Inc.

To chase that growth, Facebook is relying on dealmaking. It has made five acquisitions so far this year after one apiece in 2009 and 2007, Smith said.

Another Dealmaker

The company buys small startups -- typically with a dozen or fewer employees -- to gain entrepreneurs who can become future leaders, Smith said. Chief Technology Officer Bret Taylor came from FriendFeed, acquired last year.

Facebook will keep up the acquisition pace and may pursue larger, more complex transactions, Smith said. He plans to hire another corporate development executive, adding to the one person helping him clinch deals now.

The company doubled the number of salespeople last year from 2008. It now has more than 1,400 employees.

Among potential targets are companies that focus on virtual currencies and mobile social networking, Smith said. The company also is looking for acquisitions that may bolster its advertising effort, he said.

“We’re doing advertising, especially brand advertising, in a different way than has been done before,” he said.