Malware Hits Computerized Industrial Equipment

NY Times

The technology industry is being rattled by a quiet and sophisticated malicious software program that has infiltrated factory computers.

The malware, known as Stuxnet, was discovered by VirusBlokAda, a Belarussian computer security company in July, at least several months after its creation.

Security experts say Stuxnet attacked the software in specialized industrial control equipment made by Siemens by exploiting a previously unknown hole in the Windows operating system.

The malware is the first such attack on critical industrial infrastructure that sits at the foundation of modern economies.

It also displays an array of novel tactics — like an ability to steal design documents or even sabotage equipment in a factory — that suggest its creators are much more sophisticated than hackers whose work has been seen before. The malware casts a spotlight on several security weaknesses.

Eric Chien, the technical director of Symantec Security Response, a security software maker that has studied Stuxnet, said it appeared that the malware was created to attack an Iranian industrial facility. Security experts say that it was most likely staged by a government or government-backed group, in light of the significant expertise and resources required to create it. The specific facility that was in Stuxnet’s crosshairs is not known, though speculation has centered on gas and nuclear installations.

Since it was unleashed, Stuxnet has spread to plants around the world., affecting operations and warehouse material handling. Siemens said it had received 15 reports from affected customers, 5 of which were located in Germany. All of these sites successfully removed the malicious program, which can be detected and removed by commercial antivirus programs.

“Up to now there have been no instances where production operations have been influenced,” the company said in an e-mailed statement.

Security researchers initially believed Stuxnet’s primary purpose was espionage because of its ability to steal design documents for industrial control systems. But more in-depth study of the program, which is extremely large and highly complex by malware standards, has revealed that it can also make changes to those systems.

Exactly what Stuxnet might command industrial equipment to do still is not known. But malware experts say it could have been designed to trigger such Hollywood-style bedlam as overloaded turbines, exploding pipelines and nuclear centrifuges spinning so fast that they break.

“The true end goal of Stuxnet is cyber sabotage. It’s a cyber weapon basically,” said Roel Schouwenberg, a senior antivirus researcher at Kaspersky, a security software maker. “But how it exactly manifests in real life, I can’t say.”

Stuxnet’s remarkable sophistication has surprised many security professionals. Its authors had detailed knowledge of Siemens’ software and its security weaknesses. They discovered and used four unknown security flaws in Microsoft’s Windows operating system. And they masked their attack with the aid of sensitive intellectual property stolen from two hardware companies, Realtek and JMicron, which are located in the same office park in Taiwan.

“It’s impossible this was created by some teenager in his basement,” Mr. Chien said. “The amount of resources and man hours to put this together,” he said, show “it has to be something that was state originated.”

Microsoft to Close Its Blogging Platform-Migrates Users to WordPress.com

NY Times

 

Microsoft and WordPress just announced that WordPress.com will become the default blogging platform for Windows Live. Live Spaces' 30 million users will have six months to migrate their blogs over to WordPress.com and the two companies will offer a number of tools that should make this migration very easy. This announcement, which was made at TechCrunch Disrupt, comes as a bit of a surprise and will surely upset some of Windows Live Spaces' most active users. It does, however, fit into Microsoft's vision for its Live.com brand.

Six Months to "Upgrade"

Starting today, Windows Live users will be able to "upgrade" their blogs to WordPress.com, and new Windows Live users will be able to create their new blogs on WordPress.com. As a Microsoft spokesperson just told us, existing users will have six months to either migrate to WordPress.com or export their data. If they don't do anything, they will likely lose their content, though Microsoft may offer them the ability to export their data at a later point as well.

For Windows Live, It's All About the Partnerships

It's interesting that Microsoft has basically given up on hosting its own blogging platform, but this move fits into the bigger picture of the company's plans for the Live.com platform. We hinted at this last week when Microsoft announced its partnership with LinkedIn. As Microsoft's director of product management for Windows Live Dharmesh Mehta told us last week, the company aims to integrate the best products instead of reinventing them. As Mehta notes in a blog post today, rather than invest in a competing blogging platform, Microsoft decided "the best thing we could do for our customers was to give them a great blogging solution through WordPress.com."

Microsoft Brings LinkedIn to Windows Live Messenger, Hotmail

Read Write Web

 

Depending on where you are in the world and what profession you are in, Windows Live Messenger is either a professional tool you use every day to keep up with your colleagues or something only teenagers would use. Starting today, Messenger - which Microsoft is already positioning as a social networking client - will become more appealing to professionals, as Microsoft is introducing a deep integration with LinkedIn in the U.S. Thanks to this integration, Messenger users will not just be able to send status updates to LinkedIn and view your colleagues updates, but your Messenger and Hotmail contacts will also be kept in sync across the Windows Live and LinkedIn platforms.

In addition to the Windows Live desktop and web apps, Microsoft's Messenger app for the iPhone will also now offer support for LinkedIn.

Microsoft's Mission: Integrate the Best Products - Don't Reinvent the Wheel

As Dharmesh Mehta, Microsoft's director of product management for Windows Live, told us earlier this week, the company has no interest in building its own social network when tools like Facebook (which is already integrated in Microsoft Messenger and Windows Live) and LinkedIn perfectly good alternatives. Instead, Microsoft is not focused on integrating these services into its own applications. For the most part, these integrations are built on top of open APIs and standards, though the LinkedIn integration also includes some "custom coding," as Mehta described it.

Besides the ability to see LinkedIn updates in your Messenger and post them directly from the application, the most important new feature that this partnership introduces is the unified contacts list that allows you to easily send an email to one of your LinkedIn contacts from Hotmail, for example.

Thanks to this, your LinkedIn contacts are now also available in other Windows Live apps like the Photo Gallery. Due to the nature of LinkedIn, you probably don't want to send a lot of photos to your LinkedIn stream, but, as Microsoft notes, this allows you to easily tag a photo with a contacts name so that you can "put a face to a name."

Of course, you can also use the Windows Live web service to push updates to LinkedIn, though it is probably best to remain vigilant about which updates are appropriate for LinkedIn and which should go to Facebook instead. In addition, you can also syndicate your LinkedIn to your Windows Live feed, so that your friends who are not on LinkedIn can see your updates there.

Bonus: More Hotmail Updates

Earlier today, Microsoft also announced a number of new features for Hotmail. Among these, is the ability to send very large attachments (up to 10GB) by uploading the content to SkyDrive, in-line video support for Dailymotion and Justin.tv, as well as the ability to see the status of your US Postal Service, UPS and DHL packages right in your mailbox (assuming the tracking number is in the email).

Google Watching Bing, Not Facebook As Close Competitor

Tech Review

 

Google’s CEO, Eric Schmidt had an interview with Charlie Rose this week and it will be aired on PBS Network this Friday.  In the interview, Schmidt says that Facebook isn’t really any concern of Google’s right now.  The search engine that Microsoft has, called Bing, is actually the competitor they are concerned about most right now.

Microsoft has more cash and engineers than Google, Schmidt says and they are more well known for their “storied reputation of technology innovation”.  Google’s search numbers are still well at the top of the charts with about 65 percent, but Microsoft has been on the increase over the past year, and they are sitting at about 11 percent, according to comScore.

Even though you might think that with all the stories about Google’s social network, Facebook would be the largest competition, but Schmidt says that with the studies Google has done, it appears that Facebook users use Google more.  The two companies fit very well together, or at least the demographics are very much the same for both web sites at this time.

Google’s CEO also mentioned one other thing in the interview and that is that Google has expanded it’s agreement to provide Apple with search services.  That is very curious since Android is starting to gain on the iPhone in the mobile smartphone market.

Facebook, Twitter see more Spam Attacks

USA Today

 

Facebook and Twitter users take heed: Expect those surges of spam you've been experiencing to recur. Hackers and spammers have staked out new turf for attacking the popular social networks, and it'll take the good guys some time to shore up defenses, cybersecurity experts say.

Here's what's happening: Hackers are aggressively probing Twitter and Facebook for security holes, especially ones they can use to tap into mechanisms for rapidly disseminating content to millions of users. On discovering a fresh vulnerability, an attacker will usually disperse a test posting that spreads in wormlike fashion, proving his skill.

Next, alert spamming gangs move into action. They stand ready to blast high volumes of spam through the new hole for as long as it stays unpatched. Often, such spam comes from "clickjackers" who make money by getting users to click to a webpage full of ads, or to an advertising-related survey. They get paid up to $1 a click from advertisers, and can make hundreds of thousands of dollars a day.

Facebook and Twitter "are the new toy everybody wants to attack to get visibility and also to make a little money," says Catalin Cosoi, research director at anti-virus firm BitDefender.

Spammers pounced all over a flaw recently uncovered in Twitter's mouse-over feature. Anyone who simply moused over a corrupted microposting, or tweet, caused an identical tainted tweet to be sent to all of his or her followers. Each subsequent click spread the attack exponentially.

Twitter devotes 23 of its 250 employees to security, trust and safety issues, says Twitter security director Bob Lord. The team reacted quickly to users tweeting about the spam surge in progress and patched the hole over the course of six hours. "We work very hard to protect our users, which is at the core of what we do," says Lord.

Attackers also recently discovered fresh holes in Facebook's photo-upload and status-messaging features. Spammers used those holes to blast out tainted Web links. Anyone who clicked on the link spread spam to all of his or her friends. Reacting to users' messages about the attack, Facebook cut off each spam surge within hours, says spokesman Simon Axten. "We continue to work tirelessly to reduce the impact of attacks," he says.

The companies expect to contain the impact of spam surges in no small part due to a built-in early warning system: users who aren't shy about bringing new attacks to their attention. They also warn users to be careful what they click on.

Yet, soaring popularity is proving to be a blessing and a curse. The companies have their hands full keeping basic services running reliably, in addition to battling cyberattackers.

"Twitter and Facebook can be turned into vehicles for mass distribution of malware if they don't deploy countermeasures," says Neil Daswani, chief technical officer of security firm Dasient. "The numbers of users that can be affected in a short time is incredible."

‘The Social Network’ Premiere: Justin Timberlake Talks at the Afterparty

The Wall Street Journal

 

The 48th New York Film Festival kicked off last night with the screening of “The Social Network,” the movie that chronicles the birth of Facebook and the machinations of its co-founder Mark Zuckerberg. Set to ominous music that infuses each scene with a sense of both gravitas and doom, the film has already gotten critics talking about Oscar nominations.

Before the screening, we caught up with Andrew Garfield, who plays Facebook co-founder Eduardo Saverin, the businessman who initially bankrolled the operation and whose shares were later diluted. Garfield, who recently starred in “Never Let Me Go,” will take over the Spider-Man franchise from predecessor Tobey Maguire. He doesn’t expect to drink sixteen egg shakes a day to bulk up though. “I don’t think the idea is for me to be Arnold Schwarzenegger,” he said. “I’m skinny. Spider-Man’s skinny.” He wouldn’t tell us his first choice to play Mary Jane Watson, though Emma Stone’s name has been floated recently.

We also ran into Armie Hammer, who plays both Cameron and Tyler Winkelvoss, the identical twins who originally commissioned Zuckerberg to work on their website. After asking whether Lindsay Lohan inspired him in arguably the best film of her career, “The Parent Trap,” Hammer said that the movie was the source of all his research. “I watched ‘The Parent Trap’ 247 ½ times. I can say all the lines backward.”

After the screening, guests headed to the Harvard Club, fittingly, to celebrate, which made us wonder whether Harvard fundraisers besiege Zuckerberg for donations even though he dropped out. Justin Timberlake, who plays Napster founder and Facebook president Sean Parker in the film, rocked dark frames and gamely posed for pictures with fans. When we asked him about his foray into film, fashion, and restaurants he told us, “I’m jumping around so people don’t find out how moderate I am. I didn’t want people to find out I wasn’t the best singer, so I became an actor.”

For Facebook, Movie Damage Control

The Wall Street Journal

Executives Sought to Influence 'The Social Network,' Which Harshly Portrays CEO Zuckerberg, Offered Another Version

Facebook Inc. executives have sought to discredit a new film's unflattering portrayal of Chief Executive Mark Zuckerberg, even as they worked behind the scenes to influence the movie.

Those efforts range from attempting to massage the script, according to one of the film's producers, to promoting an alternative corporate history.

The movie, "The Social Network," depicts Mr. Zuckerberg as a socially awkward egomaniac who may have stolen the idea for his company from fellow students while he was an undergraduate at Harvard University.

The film—which premieres Friday night and will be widely released Oct. 1 by Sony Corp.'s Sony Pictures—takes as its narrative framework two lawsuits over the company's origins. Facebook later settled the cases.

On Friday, Mr. Zuckerberg will announce on "The Oprah Winfrey Show" that he is donating $100 million to the public schools in Newark, N.J.— his first major act of philanthropy.

According to a person familiar with the matter, Facebook didn't time Mr. Zuckerberg's gift for the film's premiere.

Mr. Zuckerberg, through a company spokesman, declined to be interviewed for this article.

Facebook's efforts to combat the film stretch back to the 2009 publication of Ben Mezrich's book, "The Accidental Billionaires," upon which the film is based. "Ben Mezrich clearly aspires to be the Jackie Collins or Danielle Steele of Silicon Valley," Facebook's top communication and strategy executive, Elliot Schrage, told several news outlets in a statement last summer.

Mr. Mezrich defended his book Thursday, saying, "They haven't pointed out anything that isn't true."

The movie's producers made the film without attempting to secure rights to Mr. Zuckerberg's life story, because they felt they had enough research to back up the film without his cooperation.

The company didn't formally cooperate, either, but at least one executive engaged in detailed negotiations with the filmmakers over the script, an attempt to mitigate the damage the film could do.

Scott Rudin, one of the film's producers, said Facebook's Mr. Schrage read the film's script and gave guidance, some of which was incorporated into the final product. The company provided biographical background on Mr. Zuckerberg, helped the filmmakers portray the computer-programming and hacking processes and referred the filmmakers to speeches Mr. Zuckerberg gave that were online.

A Facebook spokeswoman said Thursday, "We found working with Scott Rudin and his colleagues to be a terrific learning experience. They do a wonderful job of telling a good story."

Mr. Rudin said a Facebook executive expressed worry the movie could hurt an initial public offering the company is considering. Even though any stock offering is likely at least a year away, the executive worried that skepticism over the company's origins could lower its valuation, currently north of $20 billion.

"They were trying to figure out a way not to tie Mark's personal identity to the identity of the company," Mr. Rudin recalled. "Because they were and are talking about an inevitable IPO and clearly want the company to be bigger than Mark Zuckerberg."

Over the summer, Mr. Schrage and Facebook Chief Operating Officer Sheryl Sandberg saw the movie and told Mr. Rudin they weren't happy about the way it portrayed their boss. Ms. Sandberg thought the depiction of Mr. Zuckerberg was not "sympathetic," said Mr. Rudin.

Other companies, including General Motors Corp. and McDonald's Corp., have had to address bad publicity generated by films such as "Roger & Me" and "Super Size Me." But popular movies don't always have impact on the operations of the companies they portray.

In recent months, Facebook has been supporting a book that offers a more flattering view of the company's origins. The company gave veteran technology journalist David Kirkpatrick extensive access to Mr. Zuckerberg and other Facebook executives for "The Facebook Effect." The author gave a talk about the book on Facebook's campus on June 24. The company has referred journalists to Mr. Kirkpatrick as an expert on Facebook's founding.

"Don't treat the movie as the history of Facebook," said Mr. Kirkpatrick, who has read the film's script but has yet to watch the film.

Mr. Zuckerberg himself has recently given interviews in which he said little about the film, but highlighted Facebook's social impact as it reached 500 million users world-wide. In a July interview with ABC News, Mr. Zuckerberg described the movie about his company as "fiction," adding: "the real story is actually probably pretty boring."

Mr. Zuckerberg has said in interviews that he had no plan to see the film.

The film ends with a disclaimer that says some events were created. The filmmakers say that's a boilerplate message, and aren't ceding any ground.

"Facebook keeps saying the movie is fiction, but they never say what is fiction," said Mr. Rudin.

It's been a week of headaches for Facebook. On Wednesday, some people couldn't connect to the site because of a problem with a third-party network provider. Facebook fixed the problem, but on Thursday it had another temporary outage.

Twitter Hack opens Pop-ups, Wreaks Havoc

Associated Press

Twitter Security Flaws - Web Clutter Portal becoming favorite target of hackers

A new way to cause mischief quickly spread through short-messaging service Twitter on Tuesday morning before the site could fix the problem, as mysterious "tweets" of blocked-out text propagated themselves and caused popup windows to open.

Shortly before 10 a.m. Eastern time, (1400 GMT), Twitter said on its "safety" feed on the site that the attack had been shut down. It also said it does not believe that any user information was compromised, rather, the "vast majority" of the breaches were pranks or promotions.

The hack had been extra nefarious because the tweets activated without being clicked on - it was enough for Web surfers to move their mouse cursors over them. But it only affected visitors to Twitter.com. Various third-party programs used to send and read tweets, such as Tweetdeck, were unaffected.

The popups could, though didn't necessarily, contain malicious code that could take over poorly protected computers. The White House's official Twitter feed - followed by 1.8 million users - was among those affected, though the offending message was quickly taken down.

Fittingly for Twitter, which limits messages to just 140 characters, the virus may have been among the shortest on record. According to security software maker F-Secure Corp., the shortest virus so far was just 22 characters long.

Twitter said in a blog post it was notified of the security breach at 5:54 a.m. Eastern time. The problem was caused by something called "cross-site scripting." This allowed users to run JavaScript programs on others' computers, turning tweets different colors or causing the pop-up boxes to appear. Some users, Twitter added, took things a step further and included code that got people's accounts to re-tweet the messages without their knowledge.

"It was like a massive snowball fight that got out of control," said Ray Dickenson, chief technology officer at computer security firm SafeCentral.

But while the effects of Tuesday's mischief were very visible - such as the pop-ups - and playful, Dickenson said that he was worried because JavaScript can quietly do more malicious things, like sending people to sites that can infect computers.

Security breaches had been common in Twitter's early days, but the company has since worked to beef up its vigilance and the problems have become less common. Tuesday's hack coincided with Twitter's ongoing rollout of a redesign of its website, which tries to streamline users' Twitter feeds and make it easier to see photos and videos directly on the site, without having to click on a link to YouTube or Flickr.

Twitter said it discovered and fixed this problem last month, and that a recent site update unrelated to the redesign was responsible for its return.

Web Start-Up Values Soar

The Wall Street Journal

Investors Bid Up Internet Firms to Levels Reminiscent of the Last Dot-Com Boom 

The technology-heavy Nasdaq Composite Index is relatively flat this year. Yet tech company valuations are rapidly rising in one area: closely held consumer Web firms.

Venture-capital investors and others have been bidding up the valuations of consumer Web start-ups this year, particularly of the firms that show the most user traction. In an echo of the 1990s dot-com boom, some investors also are giving lofty valuations to Web firms that have no revenue and that barely have a product out.

Among them: question-and-answer website Quora Inc. in March raised around $14 million in a financing round that inputs a value for the whole company of about $87.5 million, people familiar with the matter have said. The Palo Alto, Calif., firm didn't publicly launch its service until June and hasn't said how it will make money.

Another company, Blippy Inc., which allows people to share and discuss their purchases online with friends, raised $11 million in a deal valuing the whole company at $46 million earlier this year. In June, mobile-technology firm Foursquare raised $20 million in funding at a company valuation of $95 million, up from a $6 million valuation less than a year earlier, a person familiar with the matter said.

Valuations for closely held companies are typically guesswork. But the strong numbers for consumer Web companies indicate how parts of Silicon Valley's start-up market are bouncing back following the recession. The recovery already started showing up last year, when Twitter Inc. was valued at $1 billion during a round of funding, up from $95 million in mid-2008 when it raised a previous round of funding, according to research firm VentureSource, a unit of Wall Street Journal owner News Corp.

Some investors worry the lofty numbers signal that froth has returned to the Web sector. That can create false hopes for a company's performance, pressuring entrepreneurs and investors to gamble to live up to such expectations. Many investors won't recoup their investments, especially with the stock market having been relatively unreceptive to initial public offerings in recent years.

"Anytime you take an increase in valuation, then you're making an implicit promise that you have to meet and that's what's challenging," said Matt MacInnis, chief executive of Inkling, a San Francisco interactive textbook start-up. Last month, Inkling announced a funding round led by venture firm Sequoia Capital that included a bump-up in valuation to the tens of millions of dollars, said Mr. MacInnis. "Now the onus is on the entrepreneur to knock it out of the park or fail," he said.

The escalating valuations for consumer Web start-ups are reflected in the secondary market, where investors buy and sell the shares of closely held companies such as social-networking company Facebook Inc. On SecondMarket, which operates an exchange where investors can trade the stocks of closely held start-ups, the share prices of six actively traded private companies—including four consumer Web start-ups—rose an average of 39% between January and August, according to the company.

In contrast, the Nasdaq—which includes publicly traded tech behemoths such as Apple Inc. and Intel Corp.—is up just 3% so far this year through Tuesday. "There's a big disconnect between the public market and the private market," said Saar Gur, a venture capitalist at Charles River Ventures and an investor in Blippy.

While hot Web companies garnering high valuations aren't new, the speed with which valuations are jumping has quickened, said Silicon Valley start-up investors. Driven by the Internet's growing scale, Web companies can take off more quickly than before if they gain a toehold with consumers. That leads to valuations soaring more rapidly than in the past as venture capitalists and other investors fight for a piece of the momentum.

Deal-of-the-day site Groupon Inc., for instance, was founded in 2008 and quickly brought in consumers eager to tap its discounts. By April when it received a $135 million investment from Russian investment firm Digital Sky Technologies Ltd. and venture firm Battery Ventures, Groupon was valued at about $1.35 billion.

"Before, people didn't expect growth trajectories to be as fast," said venture capitalist Patricia Nakache of Trinity Ventures. "A lot of consumer Web companies are going from a seed investment and leapfrogging" in valuations.

Some Web entrepreneurs said they now have more power to drive high valuations than in the past. Since Internet firms are relatively cheap to build—all that's needed is several staffers and some computers—many entrepreneurs don't need lots of cash when investors call, said Philip Kaplan, a Blippy founder.

As a result, entrepreneurs may turn down funding until "investors say 'What do we need to do to make this happen,' " he said. "The ball is in our court."

Director Says He Put Justin Timberlake 'Through Hell' for Role in Facebook Movie

Yahoo News

Justin Timberlake has been a professional performer for 17 years, and he's not yet 30 years old. He started at age 12 when he joined "The New Mickey Mouse Club." He was in the one of the biggest boy bands of the '90s, and became a multiplatinum solo artist in the 2000s. So it's probably been a while since someone made JT jump through hoops just to land a job.

But that's exactly what director David Fincher did before he cast Timberlake for a major role in "The Social Network." The movie is about the early days of Facebook and how the site went from a project in Mark Zuckerberg's dorm room to a global sensation. Timberlake plays Sean Parker, the co-founder of Napster and first president of Facebook. But despite his fame -- or maybe because of it -- Fincher made the pop star work to land the part.

In an interview with HitFix.com, Fincher (who also directed "Seven," "Fight Club" and "The Curious Case of Benjamin Button") admitted he was initially skeptical about casting Timberlake. He said, "Justin Timberlake was one of those 'do we dare?' kind of conversations -- he could easily have upset the apple cart in any number of ways." So rather than simply handing Timberlake the role -- standard practice for a star of his magnitude -- Fincher made him work for it. The director said, "[We] put him through Hell shooting screentest after screentest to make sure we could walk the razor's edge of 'extremely famous person as spoke of an ensemble.'"

Timberlake's track record in movies has been spotty at best. His first feature, 2005's "Edison," went straight to video. But he did receive critical praise for his dramatic turns in 2006's "Alpha Dog" and "Black Snake Moan." His biggest role in a major studio film -- besides providing a voice in "Shrek the Third" -- was in the disastrous Mike Myers comedy "The Love Guru." "The Social Network" will be his highest profile dramatic role to date, with Oscar buzz starting for the film long before anyone had actually seen it.

It is also understandable that there would be some hesitation to put such a familiar face in a movie where the cast is made up of mostly unknowns. For the lead role of Mark Zuckerberg, Fincher chose Jesse Eisenberg, who had a surprise hit last year with "Zombieland." Most of the rest of the young cast have been in relatively few films before this, but some are already on their way to becoming household names. Andrew Garfield, who plays Zuckerberg's former partner Eduardo Saverin, has since been named as the new Spider-Man in the 2012 reboot of that series. And costar Rooney Mara will soon reunite with Fincher to play the title character in the English-language adaptation of the bestselling novel "The Girl With the Dragon Tattoo."

In the HitFix interview, Fincher also explained why Mara was the right choice for the highly sought-after role of Lisbeth Salander. He said that Mara is "smart and capable and works really hard." He also said that she has the right look to play the unconventional character. "She is ridiculously photogenic in a very interesting way -- she can be plain, or she can be exquisite in a matter of moments."

You'll get to see if Fincher's gamble with casting Timberlake paid off when "The Social Network" opens on October 1. His version of "The Girl With the Dragon Tattoo" starts filming soon and is scheduled to be released on December 21, 2011.

Murdoch Banks on Rooney Hooker, Coke Binge to Push Paywall Plans‏

Bloomberg

James Murdoch’s plan to charge for online access to U.K. tabloid News of the World shows he’s extending his paywall model even as advertisers flee websites of two of his other newspapers where Internet readers have to pay.

News of the World, which this month featured a video of boxer Ricky Hatton purportedly snorting cocaine and published an interview with a prostitute who said she had sex with Manchester United footballer Wayne Rooney while his wife was pregnant, will seek payment from Web readers from next month. The move follows Murdoch-controlled News Corp.’s July push to get London papers The Times and The Sunday Times into the online-pay arena.

With more people getting their news from the Internet, newspapers are increasingly charging for online access to make up for lost revenue from print advertising. Murdoch’s strategy to put all stories of his U.K. newspapers behind an online paywall differs from the approach of some other newspapers such as the Financial Times which first gives access to some stories online before it starts charging.

So far, The Times and The Sunday Times have seen readers leave to access free news elsewhere, with advertisers following suit. “I can go to the Guardian or CNN and get an audience,” said Chris Bailes, digital trading manager at Starcom MediaVest Group, a media buyer owned by Publicis Groupe SA. “No one is indispensable.”

Starcom MediaVest, which has placed ads for the Emirates airline and Continental Airlines Inc., has cut its advertising on the Times and Sunday Times by more than 50 percent, Bailes said. News Corp.’s international unit hasn’t communicated with media buyers about its online figures, he said.

“We wouldn’t put our money where we don’t know the numbers, just as you wouldn’t invest in a stock,” Bailes said.

Fewer Visitors

James, Rupert Murdoch’s son, is the chairman and chief executive officer of News Corp.’s European and Asian operations that oversee the U.K. news titles. A News Corp. spokeswoman declined to comment on Times readership or advertising since the paywall was installed.

Visits to the website of The Times fell to a third as of July 20, several weeks after the paywall was put up, data compiled by Experian Hitwise showed. Murdoch has not publicly commented on the traffic.

The News of the World might be able to turn the paywall model into more of a success, some analysts said.

News of the World will re-launch its site in October and make it available for 1 pound ($1.6) a day or 1.99 pounds for four weeks, News Corp.’s international unit, News International said in a statement yesterday. An Apple Inc. iPad application will follow for 1.19 pounds a week. Access to the site of “Fabulous” magazine will be included in the pricing, it said.

Tabloid Model

The News of the World website “will be the third of our titles to launch a paid-for digital proposition in under four months,” News International Chief Executive Officer Rebekah Brooks said in the statement.

“News of the World has a lot of content and videos and it could be easier to attract paying readers,” said Benedict Evans, a media analyst at Enders Analysis in London. “People buy the paper to read about a footballer having sex, so why not do the same online?”

The Financial Times and Murdoch’s Wall Street Journal already charge for online access, and have enjoyed a degree of success because they offer premium content for a niche group of readers, analysts said.

Paper Paywalls

“I couldn’t imagine the same would happen for the New York Post or even Bild in Germany because they are general,” said Karsten Weide, a research vice president for digital media and entertainment at Interactive Data Corp. Bild is Germany’s biggest tabloid and the New York Post is an U.S. tabloid owned by News Corp.

Paid-for online versions of The New York Times and Washington Post could also do well because their readers are typically wealthy and better educated, Weide said. The paid-for online model could also work at local newspapers, where the content isn’t widely available, he said.

The New York Times plans to erect an Internet paywall next year. The newspaper will see “some effect” on readership after it implements a paywall next year, New York Times Co. Chief Executive Officer Janet Robinson said in June. “We feel that we will protect as much of the audience as possible” with a “metering” approach, that allows free access to a limited number of stories, she said at the time.

Different Approaches

The difficulty for general titles such as The Times is that similar news is available free from many more websites, including those of competing U.K. newspapers the Guardian, the Independent and the Daily Telegraph.

Stories from The Times online aren’t even available on the Google search engine so readers have no idea what the Times’ journalists are writing about, according to Enders’s Evans.

“The Financial Times paywall approach is better because it allows you several free articles a month and you can at least see what the stories are and share the content with your friends even if you cannot open all the stories,” he said.

Rupert and James Murdoch have both lobbied in the past for governments to do more to protect copyright online and prevent people from taking online content without paying for it.

The money an online reader generates is about a third or quarter that of a print reader. That’s because online ad rates are lower and the average online reader skims through about five pages, while an offline print reader averages 70 to 80 pages, Enders’s Evans said, citing figures by researcher ComScore.

IPad Effect

With contact details on a small base of loyal, paying online readers, marketers target users. Also, News Corp. could bundle newspaper subscriptions with TV offerings from pay-TV operator British Sky Broadcasting Group Plc, which it controls.

Paywalls are about developing a closer relationship with readers, said Alan Brydon, head of trading at the MPG media buying agency, owned by France’s Havas SA. The paywall allows marketers to target more effectively and send tailored messages to users to start a dialog, he said.

“I thought a year ago that paywalls were rubbish, but then you see the iPad and that’s how people will read a paper,” said Brydon. “In three to five years when iPads are as ubiquitous as iPods you will see people subscribing.”

MPG has probably cut its ads on the Times and Sunday Times by 90 percent, from advertisers including Air France-KLM and Sporting Index, Brydon said.

“There’s no shortage of places to go online to advertise, but if you have a database of 10,000 people with their details then that becomes very interesting,” he said.

Children Face Intensive Tracking on the Web

The Wall Street Journal

 

A Wall Street Journal investigation into online privacy has found that popular children's websites install more tracking technologies on personal computers than do the top websites aimed at adults.

The Journal examined 50 sites popular with U.S. teens and children to see what tracking tools they installed on a test computer. As a group, the sites placed 4,123 "cookies," "beacons" and other pieces of tracking technology. That is 30% more than were found in an analysis of the 50 most popular U.S. sites overall, which are generally aimed at adults.

The most prolific site: Snazzyspace.com, which helps teens customize their social-networking pages, installed 248 tracking tools. Its operator described the site as a "hobby" and said the tracking tools come from advertisers.

Starfall.com, an education site for young children, installed the fewest, five.

The research is part of a Journal investigation into the expanding business of tracking people's activities online and selling details about their behavior and personal interests.

The tiny tracking tools are used by data-collection companies to follow people as they surf the Internet and to build profiles detailing their online activities, which advertisers and others buy. The profiles don't include names, but can include age, tastes, hobbies, shopping habits, race, likelihood to post comments and general location, such as city.

Selling the data is legal, but controversial, especially when it involves young people. Two companies identified by the Journal as selling teen data initially denied doing so. Only when shown evidence that they were offering data for sale—in one case, it was labeled "teeny boppers"—did they confirm it.

The Journal found that many popular children's sites are run by small companies or mom-and-pops, and privacy practices vary widely. Among the sites studied, the Journal identified one, y8.com—featuring kids' games with names like "Crush the Castle 2" and "Dreamy Nails Makeover"—that has had ties to a pornography site, xnxx.com, according to Internet registration records. Y8 installed 69 tracking files on the Journal's test computer. It also asks users to provide an email address to register.

"Children are safe on y8," a site employee named Olivier G. said in response to emailed questions. "We are *strongly against* the exposure of children to any adult content." Asked twice about y8.com's apparent ties to a pornography site, he didn't respond.

The Journal's study focused on sites popular with young people according to comScore Media Metrix.

Companies placing the tracking tools say the information they collect is anonymous and mainly used to deliver targeted ads or to gauge ads' effectiveness. They also say they don't collect "personally identifiable information" like names or email addresses and generally don't specifically target children.

Collecting data on minors is regulated, albeit lightly. The only federal restrictions require parental consent to collect names and other personal information of children under 13 in most circumstances. Currently, the Federal Trade Commission is considering whether changes to the law are warranted. No changes are expected before next year.

Many kids' sites are heavily dependent on advertising, which likely explains the presence of so many tracking tools. Research has shown children influence hundreds of billions of dollars in annual family purchases.

Google Inc. placed the most tracking files overall on the 50 sites examined. A Google spokesman said "a small proportion" of the files may be used to determine computer users' interests. He also said Google doesn't include "topics solely of interest to children" in its profiles.

Still, Google's "Ads Preferences" page (google.com/ads/preferences) displays what Google has determined about web users' interests. There, Google accurately identified a dozen pastimes of 10-year-old Jenna Maas—including pets, photography, "virtual worlds" and "online goodies" such as little animated graphics to decorate a website.

"It is a real eye opener," said Jenna's mother, Kate Maas, a schoolteacher in Charleston, S.C., viewing that data.

Jenna, now in fifth grade, said: "I don't like everyone knowing what I'm doing and stuff."

A Google spokesman said its preference lists are "based on anonymous browser activity. We don't know if it's one user or four using a particular browser, or who those users are." He said users can adjust the privacy settings on their browser or use the Ads Preferences page to limit data collection.

As part of the project, the Journal calculated an "exposure index" for each site, taking into account the number of trackers on the site and data-handling practices of those trackers. Snazzyspace.com ranked highest in exposing users to potentially aggressive tracking. A site owned by Viacom Inc., neopets.com, where kids can create make-believe "pets," had the highest exposure index of sites popular with children under 12.

Viacom's Nickelodeon TV network accounted for eight of the 50 sites in the survey. On average, the eight installed 81 tracking tools, close to the 82 average for all 50 sites. One, a games site called Shockwave.com, installed 146; another game-and-video site, nick.com, installed 92.

The vast majority of tracking files on Nickelodeon sites were installed by other firms, such as ad networks. A Nickelodeon official said those services "are collecting data on what users like to see and do based on their web behaviors and activities."

Many tools raise no privacy concerns. They might merely remember, say, where users pause in a game, so they aren't forced to start every time they visit.

But other tools are used to develop profiles of web-surfing behavior. Those can be used to deliver targeted ads that home in on children's concerns—say, dieting ads aimed at youngsters worried about their weight.

The number of tracking files installed by any specific site can vary from visit to visit. In the Journal's examination, the math-games site coolmath4kids.com installed 60 on a test computer.

However, when Angela La Fon, a teacher in Big Island, Va., checked her own computer with a tracker-detection tool called Abine, she found the site had installed 89 "cookies" on her machine. (Cookies are little text files that can give a computer a unique identity, which data-collection companies can use to track people's activities).

"That's creepy," says Ms. La Fon, who encouraged her six-year-old son, Lee, to use the site. "I wouldn't have thought I would have had 89 cookies, period. Much less than from one site."

Karen Davis, chief executive of coolmath4kids.com, declined to be interviewed, citing concern for her own privacy. In an email she wrote, "We are assured by our service providers that all data gathered is anonymous and compliant with all laws and privacy policies."

Several sites, including coolmath4kids.com, modified their privacy policies after being contacted by the Journal with its findings. For example, the math-games site no longer states that using cookies to collect anonymous data is "no big deal." Ms. Davis said she made the changes "to provide as much transparency as possible for our users."

A spokeswoman for weeworld.com, where kids can create a WeeMee avatar and chat with friends, said that as a result of a Journal analysis, it changed its privacy policy to provide a clearer explanation of how to disable cookies. Weeworld.com installed 144 tracking tools in the Journal's test.

Of the 50 sites examined by the Journal, only one had no posted privacy policy, the gaming site y8.com. Records at archive.org, a library of previous versions of websites, indicate that y8.com launched in the late 1990s as a sex site for adults at least 21 years old.

Y8.com became a game site aimed at a younger audience in 2006. ComScore reports that 12.2% of its users are 2 to 11 years old, and 22.8% are 12 to 17.

Internet registration records from December 2006 show that y8.com and a hard-core sex site, xnxx.com, shared the same mailing address in France, plus the same email address. Later, the sites changed their contact information and no longer share the same addresses. On the website games.xnxx.com, which bills itself as offering "fun sex games," there is a prominent link at the top and bottom of the page to "non-adult" games on y8.com.

The y8.com employee, Olivier G., didn't respond to questions about who owns the site or its apparent relationship with xnxx.com. He wrote in an email that y8.com is "strongly against the collection and use of personal information." He also said "we don't do anything" with email addresses provided by users.

Parents hoping to let their kids use the Internet, while protecting them from snooping, are in a bind. That's because many sites put the onus on visitors to figure out how data companies use the information they collect.

Gaiaonline.com—where teens hang out together in a virtual world—says in its privacy policy that it "cannot control the activities" of other companies that install tracking files on its users' computers. It suggests that users consult the privacy policies of 11 different companies.

In a statement, gaiaonline.com said, "It is standard industry practice that advertisers and ad networks are bound by their own privacy policy, which is why we recommend that our users review those." The Journal's examination found that gaiaonline.com installed 131 tracking files from third parties, such as ad networks.

An executive at a company that installed several of those 131 files, eXelate Media Ltd., said in an email that his firm wasn't collecting or selling teen-related data. "We currently are not specifically capturing or promoting any 'teen' oriented segments for marketing purposes," wrote Mark S. Zagorski, eXelate's chief revenue officer.

But the Journal found that eXelate was offering data for sale on 5.9 million people it described as "Age: 13-17." In a later interview, Mr. Zagorski confirmed eXelate was selling teen data. He said it was a small part of its business and didn't include personal details such as names.

BlueKai Inc., which auctions data on Internet users, also said it wasn't offering for sale data on minors. "We are not selling data on kids," chief executive Omar Tawakol wrote in an email. "Let there be no doubt on what we do."

However, another data-collecting company, Lotame Solutions Inc., told the Journal that it was selling what it labeled "teeny bopper" data on kids age 13 to 19 via BlueKai's auctions. "If you log into BlueKai, you'll see 'teeny boppers' available for sale," said Eric L. Porres, Lotame's chief marketing officer.

Mr. Tawakol of BlueKai later confirmed the "teeny bopper" data had been for sale on BlueKai's exchange but no one had ever bought it. He said as a result of the Journal's inquiries, BlueKai had removed it.

The FTC is reviewing the only federal law that limits data collection about kids, the Children's Online Privacy Protection Act, or Coppa. That law requires sites aimed at children under 13 to obtain parental permission before collecting, using or disclosing a child's "personal information" such as name, home or email address, and phone and Social Security number. The law also applies to general-audience sites that knowingly collect personal information from kids.

The FTC is considering, among other things, whether to broaden "personal information" to include data "collected in connection with online behavioral advertising."

To try to avoid having to comply with Coppa, some sites state they prohibit kids under 13 from visiting. But that's easy for children to circumvent. Jenna Maas, the Charleston 10-year-old, opened an account on weeworld.com (which prohibits kids under 13 from registering) simply by fibbing about her age.

In Jenna's case, she got her mother's permission first. Ms. Maas says she lets Jenna visit sites for older kids "as long as I can monitor it."

Claire Quinn, weeworld.com's chief of safety, says the site has "tools in place" to prevent underage kids from joining, but "there is obviously no great age verification system out there."

FTC officials said website operators can't be held responsible if children lie about their age unless they glean from other information that a child is under 13.

Some experts believe the federal law also should apply to collecting data on teens, though not necessarily by requiring parental consent.

"We need clearer explanations of what's happening to their data online, that they can understand—not the kind of legalese in a privacy policy that basically obscures what's really going on," says Kathryn C. Montgomery, a professor of communication at American University.

Yahoo to Upgrade E-Mail, Search Results this Fall

Associated Press

 

Yahoo Inc. wants to prove it has regained its technological stride after years of meandering that have caused the Internet company to lose ground to its rivals.

The proof of Yahoo's renewed vigor will come this fall when the company plans to unveil facelifts to its free e-mail service and search results, a top executive told reporters Thursday.

Those upgrades will be major steps toward "bringing cool back to Yahoo," said Blake Irving, who was hired as the company's chief products officer in April.

Over the next three years, Yahoo will be quickly rolling out more innovations that will give people more reasons to stay on Yahoo's website for longer periods and reel in more revenue from advertisers clamoring to reach a more engaged audience.

Although Irving is relatively new to the company, his goals echo those of other Yahoo executives, including some from prior regimes that crumbled after failing to fulfill their promises. Former Yahoo CEO, Terry Semel, even played a Frank Sinatra song, "The Best Is Yet To Come," at a 2004 investment conference to underscore his resolve to recapture the buzz that helped make Yahoo the most successful Internet company during the 1990s.

Instead, Yahoo fell even further behind Google Inc. and now it's trying to reverse a recent shift that is driving more people and advertisers to Facebook's popular online hangout.

The troubles have battered Yahoo's stock, which has lost more than half its value since another CEO, co-founder Jerry Yang, turned down an opportunity to sell the entire company to Microsoft Corp. for $47.5 billion, or $33 per share, in May 2008.

Yahoo shares dipped 8 cents Thursday to close at $14.19.

Irving, a former Microsoft Corp. executive, believes Yahoo's strengths have been overlooked both by investors and the media. Among other things, Yahoo still has about 600 million worldwide users and a pool of engineers that Irving believes is among the brightest in the world.

"I expected to find some good, some bad and a lot of ugly here," Irving said. "There is a lot more good than I expected."

That's a theme Irving's boss, Carol Bartz, has been emphasizing since she was brought in as CEO 20 months ago to orchestrate a turnaround. Although analysts have praised Bartz for sharpening Yahoo's focus and shedding unprofitable services, Yahoo's stock price and financial performance have remained lackluster since her arrival. Bartz has repeatedly said it could take several years before Yahoo begins hitting on all cylinders again.

Rather than fight Facebook, Yahoo has been trying to piggyback on the social network by enabling its e-mail users to interact with their Facebook circle of friends from their inboxes. The company will build upon that effort this fall when e-mail users will be able to start sending the short messages known as tweets to their Twitter accounts. Yahoo's e-mail also is supposed to run twice as fast with the upcoming upgrade.

The company, based in Sunnyvale, Calif., declined to provide a precise timetable for its latest e-mail overhaul. It has been working on the e-mail revisions for more than a year already.

To lower its expenses, Yahoo is relying on Microsoft for most of the search results on its website.

But Yahoo is still trying to distinguish its search results by packaging some of its recommendations differently than Microsoft's Bing does.

The latest changes to Yahoo's search results will debut sometime this fall when the company will start bundling more key information in a capsule that will be highlighted above links from other sites. For instance, a search for Lady Gaga will contain different strips within the capsule that show pictures of her, popular songs and video clips.

U.S. Tech Probe Nears End

The Wall Street Journal

Several of the U.S.'s largest technology companies are in advanced talks with the Justice Department to avoid a court battle over whether they colluded to hold down wages by agreeing not to poach each other's employees.

The companies, which include Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Intuit Inc. and Walt Disney Co. unit Pixar Animation, are in the final stages of negotiations with the government, according to people familiar with the matter.

The talks are still fluid, these people said, with some companies more willing to settle to avoid an antitrust case than others. If negotiations falter, both sides could be headed for a defining court battle that could help decide the legality of such arrangements throughout the U.S. economy.

Still, there are powerful incentives for both sides to settle the potential civil case before it reaches that stage.

The Justice Department would have to convince a court not just that such accords existed, but that workers had suffered significant harm as a result.

The companies may not want to take a chance in court. If the government wins, it could open the floodgates for private claimants, even a class action by employees. A settlement would allow the Justice Department to halt the practice, without the companies having to admit to any legal violations.

Spokespeople for Google, Apple, Intel, Adobe and Intuit all declined to comment. Pixar had no immediate comment. A Justice Department spokeswoman also declined to comment.

The Justice Department's probe of hiring practices could reach beyond Silicon Valley.

During the course of its more than year-long investigation, the agency has uncovered evidence of such agreements in other sectors, according to the people familiar with the matter.

A settlement with tech companies—or a court fight—could therefore help determine what kinds of agreements are acceptable in other industries as well.

At stake are dueling visions of how far companies should be able to go in agreeing to limit the kind of headhunting that can help valuable employees increase their compensation.

The companies have argued to the government that there's nothing anticompetitive about the no-poaching agreements. They say they must be able to offer each other assurances that they won't lure away each others' star employees if they are to collaborate on key innovations that ultimately benefit the consumer such as improved Google SEO.

Some economists believe that banning such agreements could harm Silicon Valley's open, collaborative model.

"The effect of the lawsuit would be to reduce innovation because companies would worry about exposing their employees to each other," said Paul Rubin, an economics professor at Emory University, who isn't involved in the case.

For the Justice Department, such agreements amount to an effort by companies to limit competition for talent, harming employees' ability to get the best jobs and wages and reducing the incentives for people to enter professions in high demand, according to people familiar with the matter.

The government could argue that the agreements constitute an effort by companies to fix the price of labor, and are therefore just as harmful as price-fixing or bid-rigging—automatic violations of antitrust law.

"In a free market economy, you want the best people getting the best positions, and presumably all the rewards that come with that," said Spencer Waller, a law professor at Loyola University Chicago, who has no connection to the case. "This agreement, if the government has the facts, suggests that market for talent is being depressed by collusion."

The agreements under investigation varied in their scope and details, according to the people familiar with the matter. In conversations with the Justice Department, some companies have maintained they didn't have agreements not to hire each others' employees, only agreements not to "cold-call" partners' employees.

However, people familiar with the matter say the Justice Department believes that cold-calling is an important way in which people are hired in the sector. Even if the employees don't end up moving, their employer often has to sweeten their pay and conditions to make sure they stay.

After more than a year of investigation, the Justice Department antitrust division has concluded that many of these agreements have harmed people's ability to get better jobs or improve their conditions.

But proving that in court may be tricky, some antitrust lawyers said.

During the course of the investigation, more than a dozen tech companies have been questioned by the Justice Department, people familiar with the matter said. Those include Yahoo Inc., Genentech Inc. and IAC/InterActiveCorp.

However, some companies said they are no longer in the government's cross-hairs. "After a thorough investigation, the [Justice Department] antitrust division has advised IBM that it will not pursue a case against IBM," an International Business Machines Corp. spokesman said.

Microsoft Corp. also said it is no longer a target of the investigation. A Genentech spokeswoman said the Justice Deparment had relieved the biotech firm of the obligation to hold on to relevant information.

A Yahoo spokeswoman said the company fully cooperated in the investigation and believed its responses were sufficient. IAC didn't respond to requests for comment.

The agency has decided not to pursue charges against companies that had what it believes were legitimate reasons for agreeing not to poach each other's employees, said people familiar with the matter. Instead, it's focusing on cases in which it believes the non-solicit agreement extended well beyond the scope of any collaboration.

Craigslist will not Resume Adult Services Advertising

LA Times

A company official tells a congressional hearing on minors caught up in sex trafficking that the shutdown of its controversial classified ad website is permanent.

Craigslist has no plans to bring back the controversial adult services category that was on its classified advertising website, a company official told Congress on Wednesday.

Craigslist placed a block on the section earlier this month after law enforcement officials and human rights groups accused it of not properly monitoring the category and removing ads for prostitution and child trafficking.

William Clinton Powell, director of customer service and law enforcement relations for Craigslist, made the statement during a House Judiciary Committee hearing on minors caught up in sex trafficking.

Adult advertisements posted on Craigslist received three times more responses than those on any other online service, Deborah Richardson, chief program officer for the Women's Funding Network, said before the committee.

In the last six months, there has been a steep increase in the number of U.S. adolescent girls advertised for commercial sex on the Internet, Richardson said. Linda Smith, a former congresswoman who now heads the nonprofit Shared Hope group that provides rehabilitation for women and children involved in sex trafficking, said, "I have not had a girl that wasn't marketed online, and most of them were on Craigslist."

At least 100,000 children in the United States are involved in commercial sex every year and the average age at which girls enter prostitution is 13, Smith said.

Connecticut Atty. Gen. Richard Blumenthal, who led an effort to persuade Craigslist to drop the section, said Wednesday he was pleased by the announcement it would not be resumed, but asked the company for "more effective and aggressive screening to fight prostitution ads, including swift removal of suspect ads flagged by the public."

Ernie Allen, chief executive of the National Center for Missing and Exploited Children, said removing the category was a "positive and productive" step. But he said more must be done.

"The goal is to destroy the business model for those who sell children for sex on the Internet," Allen said.

EBay to Focus on Exports, Cross-Border China Trades, CEO Says‏

Bloomberg

 

EBay Inc., the owner of e-commerce sites and the PayPal payment service, plans to focus on exports and cross-border trades involving China instead of competing in the domestic market, Chief Executive Officer John Donahoe said.

“Over time, we will look for opportunities to partner or joint venture or work together with Chinese companies,” Donahoe, 50, said in an interview today in Hangzhou, China. “We’ve, in essence, exited the domestic market.”

Cross-border trades will probably rise more than 80 percent to $4 billion this year, Donahoe said. EBay is counting on PayPal and partnerships with local companies to help it expand revenue from China after failing to gain a local foothold to compete against entrepreneur Jack Ma’s Alibaba Group Holding Ltd.

“We don’t think the battle with Alibaba over the next five years is a game breaker,” said Bill Smead, an EBay investor who manages $160 million at Smead Capital Management Inc. in Seattle. “The story is way bigger than that little bit of duking it out.”

Although competition from Alibaba is stiff, EBay’s efforts in China, which has more Internet users than the total U.S. population, could pay big rewards, Smead said.

Donahoe said Alibaba Group and its Alipay system shouldn’t be seen as rivals to EBay and PayPal. PayPal now has 1 million users in China, he said. Alibaba Group said its rival Alipay system has 300 million registered users in the world’s largest market by Internet users.

Alibaba Domination

“Alibaba dominates the Chinese domestic market,” Donahoe said in the interview. “We are the leading cross-border global e-commerce and payments network. I don’t view Alibaba as a competitor. I view them as a colleague and a potential partner.”

Donahoe is in Hangzhou, headquarters of Alibaba, to speak at Alibaba’s annual Netrepreneur Summit. Donahoe said he met with Ma last night and the two appeared on stage at the summit, seated in armchairs, joking with each other. Ma turns 46 today and Donahoe wished him a happy birthday.

“EBay can support us globally so we can build a website on which small and medium-sized enterprises from China can sell to the world,” Ma said.

EBay first entered China in 2002 under the leadership of former CEO and current California gubernatorial candidate Meg Whitman. Competition from Taobao.com, Alibaba’s auction business, saw EBay’s market share decline by half and it shut down its site in 2006.

Donahoe joined EBay in 2005 as president of its Marketplaces unit from Bain & Co., where he was worldwide managing director. He became CEO in March 2008.

China Venture

Today, EBay operates in China through a joint venture with Tom Online Inc., controlled by billionaire Li Ka-shing, in addition to PayPal.

“U.S. Internet companies have had difficulty entering the China market due to both political reasons and cultural differences,” Galant Ng, a Hong Kong-based Internet analyst at Tai Fook Securities, said in an interview. “They may have to use something other than a direct approach. Maybe strategic partnership is the way. Alibaba is a good strategic partner.”

Twitter Gets a Makeover

NY Times

 

Twitter unveiled a new Web site on Tuesday that it hopes will be user friendly.

The redesigned site, which will be available to all users in the next few weeks, makes it simpler to see information about the authors of Twitter posts, conversations among Twitter users, and the photos and videos that posts link to.

“It’s going to increase the value that people are getting out of Twitter, so in less time you can get more information and value,” Evan Williams, Twitter’s co-founder and chief executive, said in an interview. He had the idea for the redesign and has spent much of his time in the last few months working with Twitter engineers on the site. He has said he was surprised that so many people use the service — 160 million — given how difficult its Web site is to navigate.

That large audience is appealing to advertisers, but the unappealing Web site has not been a welcoming place for them. Twitter, which has raised $160 million in venture capital, has slowly started to run ads called Promoted Tweets that people see when they search the site. Mr. Williams said the new site would improve ads “because there’s going to be more real estate and more engagement.”

Twitter’s new Web site could threaten the many start-ups that build apps, like TweetDeck, Brizzly and Seesmic, to make Twitter easier to use and to provide users with more sophisticated tools.

Even though 78 percent of Twitter’s unique users gain access to the service through its Web site, the site has had some major flaws. Twitter has not been able to funnel resources into redesigning the site until now, Mr. Williams said, because the company has had trouble keeping up with its growth, even struggling to keep its Web site from crashing.

If people want to learn more about the author of a post, for instance, they must go to a new page. It has been almost impossible to follow a conversation between two Twitter users. And while a quarter of the posts contain links, if people post a link to a photo, readers have not been able to see the picture without going to a new site.

On the new Twitter Web site, people see two panes instead of a single timeline of posts. The timeline stays in the left pane. In the right pane, they can see more information about posts — like biographies of authors, photos and videos to which posts link — and conversations that spring from a particular post. This eliminates the need to click back and forth.

Mr. Williams said the new site was not designed for the sake of advertisers, but the experience of viewing ads would improve. For example, when a movie studio puts out a “sponsored tweet” for a film with a link to the trailer, users will be able to see the trailer without leaving the Twitter site.

Borrowing an idea from image searching on Google and Bing, Twitter now shows a continuous stream of posts so people do not need to click “more” to view additional posts.

Twitter, which was founded in 2006, has grown so quickly in part because it opened its technology to thousands of software developers outside the company who have built Twitter tools.

But as Twitter has matured, it has angered many of those developers by building similar tools itself or acquiring the start-ups that built the tools, limiting opportunities for competing app developers. Last spring, for example, it bought Atebits, which made a Twitter iPhone app called Tweetie, and turned it into the official Twitter for iPhone app.

Other start-ups worry that if Twitter builds its own tools, they will go out of business. Indeed, mobile Twitter users now reach Twitter through the company’s own iPhone and BlackBerry apps more than through any others, according to the company.

“We’ve made it pretty clear that we are going to create the best experiences we can with all our clients,” Mr. Williams said. “We made it clear to developers that it’s great for everyone if we make it as good as possible, because that will create more successful Twitter users.”

GoDaddy.com Goes on the Auction Block

The Wall Street Journal

GoDaddy.com, the closely held website that registers Internet domain names, has put itself up for sale in an auction that could fetch more than $1 billion, people familiar with the matter said.

Qatalyst Partners, the boutique firm run by veteran technology banker Frank Quattrone, has been hired to shop the Go Daddy Group Inc., which runs the world's largest domain name registrar, these people said. Private-equity firms are expected to bid for the company, which currently has more than 43 million domains under management.

GoDaddy.com and Qatalyst representatives did not immediately respond to requests for comment.

Based in Scottsdale, Ariz., GoDaddy.com is owned by Bob Parsons, who founded the company in 1997 and is its chief executive—a man the company website describes as "not shy to speak his mind." The company is well known for its edgy advertising, including Super Bowl commercials and ads featuring different "Go Daddy Girls," including racing car driver Danica Patrick.

In addition to registering domain names, GoDaddy.com sells e-commerce, security and other services to people and businesses looking to manage their online presence. The company posted revenue between $750 million and $800 million in 2009, according to people familiar with the matter.

Two smaller competitors, Register.com and Network Solutions, have both been in private-equity's hands. Earlier this year, technology-focused buyout firm Vector Capital sold Register.com to another web registration and design provider , Web.com Inc., for $135 million. Network Solutions is owned by General Atlantic Partners.

Private-equity firms are attracted to the business because of the steady cash flow from monthly fee-based subscriptions and the potential for "up-selling" customers additional features to enhance their websites.

Microsoft Obtains Legal Might to Fight Spamming Botnets

USA Today

 

SEATTLE — With a judicial assist, Microsoft has perfected a new superweapon to shoot down botnets, the engines cybergangs use to deliver malicious Internet attacks.

The U.S. District Court of Eastern Virginia last week granted a motion that, in effect, gives Microsoft permanent ownership of 276 Web domains once used by the Waledac cybergang to send instructions to hundreds of thousands of spam-spreading PCs.

Cybersleuths and attorneys at Microsoft's digital crimes unit actually decapitated the Waledac botnet in February by persuading District Court Judge Leonie Brinkema to issue a temporary restraining order to take the 276 domains offline.

Brinkema's order was unusual because the owner of the domains could not be reached and thus did not have a day in court to protest, says Microsoft senior attorney Richard Boscovich Sr.

With permanent ownership of the domains, Microsoft now has a proven legal means to take aim at U.S.-registered domains — including .com, .net, .biz and .org domains — shown to be conducting criminal activity. "It's open season on botnets," says Boscovich. "The hunting licenses have been handed out, and we're coming back for more."

The Waledac botnet was a major source of spam and PC infections, at its peak in 2009 delivering 1.5 billion spam messages daily. Microsoft added detection and filtering for Waledac infections to its free malicious software removal tool. But cleaning infected PCs one by one did not stop the command PCs.

By December, Microsoft Hotmail accounts were getting swamped with more than 650 million e-mail spam messages sent out by Waledac. That helped motivate the company to pursue a court order to shut down the command domains.

Even after the botnet's command center got knocked out, tens of thousands of infected PCs continued trying to phone home for instructions. Internet service provider Cox Communications has contacted several hundred of its subscribers by phone to guide them to Microsoft's free cleanup tool.

Lingering Waledac infections pose a risk, says Jason Zabek, safety manager at Cox. "You never know if something else will pop up to try to use it," he says.

Indeed, Microsoft in one recent seven-day period counted 58,000 PCs attempting 14.6 million connections to the 276 Waledac domains it now owns. The company advises using its free Security Essentials program, which will clean up Waledac and many other infections. Meanwhile, it is back at the hunt. "There are dozens of major botnets and hundreds of smaller ones," says T.J. Campana, Microsoft senior program manager. "Botnets remain the backbone of criminal activity."

Google's Searches Under Scutiny

Elevated scrutiny over Google has lead the Texas attorney general's office to conduct an antitrust review of Google Inc.'s core search-engine operations.

The lead prosecutor of Texas has pursued allegations made by several small businesses that the search giant unfairly devalued their ranking results or ad placements in the search engines, Google said Friday.

Google disputed the allegations, tracing them back to three companies that have ties to industry rival Microsoft Corp.

Texas Attorney General spokesman, Greg Abbott, announced that an investigation of Google was taking place but declined any further comment. A spokesman for Microsoft had declined comment.

The company is sometimes asked about the fairness of the search engine and why some websites are ranked higher than others, said Don Harrison, a deputy general counsel at Google, in a blogpost.

"Given that not every website can be at the top of the results, or even appear on the first page of our results, it's unsurprising that some less relevant, lower quality websites will be unhappy with their ranking," Mr. Harrison wrote.

Google claimed the investigators requested information about the cases of Foundem.co.uk, TradeComet.com LLC and myTriggers.com Inc., which have each claimed that Google unfairly demoted their search result rankings.

TradeComet, a business-focused search engine portal, has sued Google in federal court, however the case was dismissed. MyTriggers, a price comparison web resource, also sued Google in Franklin County, Ohio - neighboring others known for home remodeling Cuyahoga County. Google objects to any wrongdoing.

The European Commission is following suit by conducting a preliminary inquiry into a dispute set by British price comparison website, Foundem. Google has denied any violations to the laws in Europe.

Google claimed Foundem is supported by ICOMP, an organization funded greatly by Microsoft. The search company added that TradeComet and myTriggers are represented by the same antitrust lawyers Microsoft uses, it said in a blogpost.

Other legal professionals, such as one Savannah business litigation lawyer, are analyzing the antitrust issues of the case. Two other specialists who have found unique interest in the case are John Schmidt, Roanoke business lawyer, and Elliot Mardson, Oklahoma City commercial litigation lawyer.

Microsoft, which is a main competitor with Google in a number of businesses, has acknowledged aiding the complaints of small businesses about Google. However, Microsoft has objected to supporting their antitrust suits. The owners of Foundem, SourceTool and myTriggers have all denied any affiliation of representing Microsoft in any way.

Chief executive of TradeComet, Dan Savage, said: "Obviously, Google is just trying to distract from its own problems by pointing to others and their lawyers."

A myTriggers spokesperson added: "Though there are probably a lot of other victims too, MyTriggers' concern is just the harm to MyTriggers done by Google's anticompetitive conduct and bullying tactics. We have a strong antitrust claim and look forward to our day in court."

Mr. Abbott, who is opting for a fall re-elect, has past experience in antitrust cases for the state of Texas. Abbott and his team of Harrisburg business litigation lawyers have been analyzing the market for electronic-books, which witnessed price hikes for some titles being distributed and sold by Apple Inc. for its iPad, individuals familiar with the issue have claimed. Mr. Abbott reached a $28 million settlement against the top Indianapolis drug lawyer with Abbott Laboratories over alleged false reporting of drug prices back in 2008.

In pinpointing Google's core business operations, Texas has taken an authority step ahead of the federal agencies charged with enforcing antitrust laws in the U.S., the Justice Department and Federal Trade Commission. Both agencies have performed antitrust evaluations of the search giant's transactions.

A recent example occurred when The Justice Department motioned to block Google's advertising deal with rival Yahoo Inc., forcing the company to cut the deal. This year, the FTC allowed Google to purchase mobile advertising company AdMob for $750 million.

Currently, The Justice Department performing an overview of Google's $700 million buyout of ITA Software Inc. ITA is force behind the airfare search for a number websites including Microsoft's Bing search engine.

But neither The Justice Department or the FTC has the reputation to have performed a monopolization inquiry that targets Google's business in search engine placement and advertising. Google takes more than 65% of the pie for all U.S. search queries, and an even larger slice for total search advertising revenue. The company manages about 90% of search queries in some countries such as France. Many companies around the globe rely on Google SEO to help drive traffic to their websites.

On Friday, Google agreed to pay $8.5 million to cover attorneys' fees and establish an education fund to resolve a class-action suit that alleged its social-networking service violated the privacy of its users. From the start, the service created a network of social contacts based from Gmail, Google's free email service. Each user's contacts network was visible to others.

After overwhelming complaints, Google altered the settings so that user's contacts were kept private by default. The prompt action was taken in an effort to facilitate business risk assessment for future users.