Broken Windows at Microsoft

Wall Street Journal
by ROBERT A. GUTH And NICK WINGFIELD
March 31, 2011

A new memoir by Microsoft Corp. co-founder Paul Allen is rewriting the history of one of the most storied partnerships in modern business, making clear that Bill Gates and Mr. Allen had a far more fractious and difficult relationship than is publicly known.

The book, written without Mr. Gates's support, also raises questions of who deserves credit for some early ideas key to Microsoft's successes. Its portrayal of events that happened decades ago, at the birth of Microsoft and the software industry, has created a major rift today between the two billionaires, whose relationship dates back to high school. Their friendship "is probably at very serious risk right now," said a person who knows both men.

A draft of the memoir, called "Idea Man: A Memoir by the Co-founder of Microsoft," was viewed by The Wall Street Journal and an excerpt appeared on Vanity Fair's website early Wednesday. It will be released on April 19.

The book recounts how the relationship between the two men came to a breaking point in 1982. In the Bellevue, Wash., offices of Microsoft that year, Mr. Allen overheard Mr. Gates and Microsoft executive Steve Ballmer complaining about Mr. Allen's productivity before and after his recent treatment for cancer, Mr. Allen writes. According to his account, Mr. Allen eavesdropped as his colleagues discussed ways to reduce Mr. Allen's stake in the company, then burst into the room, shouting, "This is unbelievable! It shows your true character, once and for all."

A person familiar with the matter said Mr. Gates, concerned about Mr. Allen's commitment to Microsoft, was considering exercising a provision in an employment contract with Mr. Allen that let Mr. Gates acquire his partner's Microsoft shares if Mr. Allen left the company before a certain date. A spokesman for Mr. Allen denies the Microsoft co-founder's employment contract from that period, signed in 1981, contained such a provision.

Messrs. Gates and Ballmer later apologized, and Mr. Allen left Microsoft a few months later with all his shares.

New information from the book combined with interviews with former Microsoft executives and friends of both men paint a picture of the creative tension between two very different people. Mr. Gates was confrontational and single-minded about Microsoft. Mr. Allen was a generalist intrigued by everything from Jimi Hendrix to science fiction and unwilling to sacrifice his life for the work.

Those differences became more stark as Microsoft grew. Mr. Gates became more frustrated by Mr. Allen's apparent lack of focus on the company's mission, compared to Mr. Gates. Mr. Allen in his book reveals a growing disenchantment with the behavior of Mr. Gates, whom he portrays as a confrontational taskmaster who clashed with Mr. Allen's low-key style.

Microsoft co-founder Paul Allen writes in his new memoir that Bill Gates schemed to undermine his role in the early days of the company. But people familiar with the matter say some of the statements in the book are false. Plus: how important are wingmen in tech twosomes?

Eventually they exploded. Mr. Gates's browbeating, Mr. Allen writes in the book, citing a letter he wrote to Mr. Gates in 1982, had led to "the gradual destruction of both our friendship and our ability to work together….The camaraderie of the early days is long since gone."

Past histories of Microsoft have said Mr. Allen's departure from the company was sparked by his first brush with cancer in 1982, when he was diagnosed with Hodgkin's disease.

Mr. Allen in the book also positions himself as the spark of many of Microsoft's most important ideas, playing down Mr. Gates's role in some cases. Parts of the book contain an undercurrent of bitterness Mr. Allen expresses for not receiving more credit for his work throughout his career and not getting more Microsoft shares.

Mr. Allen portrays Mr. Gates as steadily trying in the late 1970s and early 1980s to reduce Mr. Allen's stake in the company. Mr. Gates, from the earliest days was concerned with Mr. Allen's lack of focus and feared he'd leave, holding a large stake, said people familiar with the matter.

Mr. Allen became one of the world's richest people from the success of Microsoft under Mr. Gates's leadership, with the vast majority of his wealth created in the years after he left in 1983.

The relationship did recover: Mr. Allen writes that two years ago Mr. Gates was one of his "most regular visitors" when Mr. Allen was recovering from non-Hodgkin's lymphoma, describing him as "everything you'd want from a friend, caring and concerned."

The book is "a very balanced portrayal of their relationship," said David Postman, a spokesman for Mr. Allen. "Paul clearly values the input and the ideas and energy of Bill Gates."

"While my recollection of many of these events may differ from Paul's, I value his friendship and the important contributions he made to the world of technology and at Microsoft," Mr. Gates said in a written statement. A spokesman for Microsoft said Mr. Ballmer had no comment.

Messrs. Allen and Gates met in 1968 at a prestigious private school in Seattle, when Mr. Allen was a tenth grader and Mr. Gates was an eighth grader and both boys shared an interest in computer programming on the primitive machines of the time.

From their earliest encounters, Mr. Gates showed great ambition, speculating to Mr. Allen that the two of them would one day run their own company, Mr. Allen writes in his book.

One of the biggest sore points between Messrs. Allen and Gates was over their respective financial stakes in the company, a source of tension that began early and worsened over time.

When the two college dropouts were based in New Mexico in the mid-1970s, Mr. Allen says Mr. Gates asked for 60% of their partnership because of his greater contributions to the creation of software for running the BASIC programming language on an early personal computer.

Mr. Allen says he had assumed that their partnership was evenly split, but he agreed to Mr. Gates' request.

In 1977, Mr. Gates asked to again change their respective shares in the business when the two men established Microsoft as a formal partnership, this time to a 64-36 split, according to Mr. Allen.

Mr. Allen protested but again agreed to the demand, which he wrote hoping to put the issue to rest for good.

Mr. Gates' attempts to lower Mr. Allen's stake in the company reflected concerns that Mr. Allen wasn't working hard enough and wasn't committed to the company, said people familiar with the relationship.

That was one reason, these people said, that Mr. Gates also put a provision in their first partnership agreement that would allow him to buy out Mr. Allen if he thought there were "irreconcilable differences" between the two men.

The agreement, dated Feb. 3, 1977, also said that a letter from Mr. Gates to Mr. Allen citing "irreconcilable differences" between the partners would be treated as an intention by Mr. Allen to withdraw from the partnership, according to a person familiar with the contract. The agreement, didn't grant Mr. Allen the same right.

Mr. Allen mentions the agreement with Mr. Gates in the book, without saying why Mr. Gates asked for the clause.

A turning point for Mr. Allen occurred in 1981 when it was his turn to ask Mr. Gates for a bigger share of Microsoft. Mr. Allen writes that he felt he deserved the additional shares in recognition for his work on a successful Microsoft product called SoftCard. Mr. Gates balked.

"I don't ever want to talk about this again," Mr. Gates said, according to Mr. Allen. "Do not bring it up."

In an exclusive interview with the Wall Street Journal, Microsoft Chairman Bill Gates discusses the challenges of philanthropy in an economic recession and how his tenure at Microsoft prepared him for his new job running the Bill and Melinda Gates Foundation.

"In that moment, something died for me," Mr. Allen writes. "I'd thought that our partnership was based on fairness, but now I saw that Bill's self-interest overrode all other considerations. My partner was out to grab as much of the pie as possible and hold on to it, and that was something I could not accept."

Mr. Allen said he sucked it up and thought, "OK…but one day I'm out of here," the book says.

By then Microsoft was changing quickly. International Business Machines Corp. hired Microsoft in 1980 to build an operating system for a secret project to build the world's first personal computer. The deal would be Microsoft's biggest breakthrough and the still-small company was struggling to meet its client's deadlines.

Mr. Allen helped land IBM and was key to acquiring the software that Microsoft would use for the project. Yet he maintained his life balance. In April 1981, in the heat of the project, Mr. Allen and three other employees took a part of a weekend to fly to Florida to see the launch of the first space shuttle, Columbia, according to the book and people familiar with the trip.

To Mr. Allen, witnessing history was worth sacrificing work, he writes. Not so for Mr. Gates, who berated Mr. Allen for taking off at such a crucial time.

Those lashings and other confrontations, revealed in the book, took a toll on Mr. Allen. "My sinking morale sapped my enthusiasm for my work, which in turn could precipitate Bill's next attack," he wrote.

Increasingly, however, Mr. Allen became an outlier in a culture that attracted more people like Mr. Gates who were single-mindedly focused on building Microsoft. They were willing to work around the clock, sleep in the office and battle over strategy and technical decisions.

Mr. Allen, people familiar with the matter said, increasingly lagged the rest of group, taking more time for himself and gradually losing interest in remaining at the company.

When he left, said people who know Mr. Allen, it came as a relief to him and his colleagues. "Paul had a well-deserved retirement. He was respected," said a person who worked with him. "It seemed all for the best."

Mr. Gates, Mr. Allen says, tried to buy his Microsoft shares just before he left the company in February 1983. Mr. Gates offered $5 a share, Mr. Allen countered that he "wouldn't even discuss less than ten dollars a share," he writes in the book.

Microsoft went public in March 1986 at $21 a share. Each of those shares, adjusted for splits, is now worth $7,376.

Mr. Allen's stake in the company created one of the world's greatest fortunes—he ranks 57th on the Forbes magazine list of billionaires, with an estimated $13 billion fortune—and funded everything from his acquisition of multiple professional sports teams to a quest to build a reusable spacecraft.

"I am surprised that Paul would have felt that it helps his legacy to express dissatisfaction with the share of Microsoft he received," said Carl Stork, who joined Microsoft in 1981 and worked there for two decades. "While all of us considered Paul a friend and valued his contribution, there is no question that Bill had a far larger impact on the growth and success of Microsoft than did Paul."

Throughout the history of the technology industry, one co-founder often plays an outsize role in the success of their companies. Mr. Gates, Apple Inc.'s Steve Jobs and Facebook Inc.'s Mark Zuckerberg all saw their co-founders leave before their companies truly took off. Yet the importance of those early partnerships can't be overlooked, said David Yoffie, a professor at Harvard Business School.

"I'm not sure Bill would ever have dropped out of Harvard if it wasn't for Paul," Mr. Yoffie said, referring to Mr. Allen's role in encouraging Mr. Gates to leave college to start Microsoft. "I don't know whether Steve Jobs, without [Steve] Wozniak, would have ever gotten things together."

Mr. Allen has spent the decades since his departure from Microsoft using his wealth to carve a somewhat whimsical path for himself.

Many of his business investments, like the cable company Charter Communications, software company Asymetrix Corp. and set-top box maker Digeo Inc., have either flopped or fared poorly for him.

Mr. Allen devotes portions of his book to investments like the Portland Trail Blazers NBA franchise and the Seattle Seahawks NFL team.

He financed the creation of rock n' roll and science fiction museums in Seattle, while he invested $100 million in 2003 to form a nonprofit organization called the Allen Institute for Brain Science to study how brains work.

Over time the Microsoft co-founders started spending more time together. Mr. Gates invited Mr. Allen to join the Microsoft board. In the book, Mr. Allen recounts how as the company's antitrust battle with the U.S. government heated up, Mr. Gates called his old friend to his Seattle estate where he discussed the strain of the case.

More recently, Mr. Allen has hosted Mr. Gates's family on his mega-yacht Octopus and Mr. Gates has flown to Portland to join Mr. Allen for Trail Blazers games.

Writing about his feelings today, Mr. Allen said he missed the "good times" with Mr. Gates "when we'd spur each other on to bigger and better ideas." Still he never regretted his departure.

"It was like a failed romance," he writes of time at Microsoft. "Parts of the relationship had been wonderful, but I remembered the negatives, too. I could not go back."

New, Lean Firefox 4: Re-Built to Play Catch-Up

Wall Street Journal
by WALTER S. MOSSBERG
March 31, 2011

In the long browser wars, Microsoft's Internet Explorer has been the leader. But the sentimental favorite was Mozilla's Firefox, mostly because it was faster, hewed better to Internet standards and offered an unmatched array of third-party add-ons that enhanced its functionality.

In recent years, however, Firefox has slipped. It lost its speed dominance to Google's upstart Chrome browser and to Apple's Safari. And as its rivals stripped down their interfaces to make more room for Web content, Firefox remained saddled with lots of toolbars and menus.

This week, Mozilla is striking back. It released a sleeker, faster new edition, called Firefox 4, for both Windows and Mac.

After testing it, my verdict is that this new version is an improvement, but many of its new features are catch-ups to those present in other browsers.

Mozilla, a Silicon Valley nonprofit organization, this week also released a new mobile version of Firefox for phones running Google's Android operating system. I took a quick look at the Android version, which seems good, but this review is focused on the computer version.

Though Mozilla doesn't say so, I believe one reason for the revamp is to try to win back the hearts and minds of those techies and influential users who shun IE and once swore by Firefox.

My anecdotal observation is that these folks have been shifting gradually to Chrome. In addition, the big gun, Microsoft, last fall released a new version of IE that is faster and slicker than prior editions.

I tested Firefox 4 on three Windows PCs and two Macs, and compared it with its three main rivals (for IE, I was able to do this comparison only on Windows, as it lacks a Mac version).

Snappy Handling

I found the new Firefox to be snappy. It easily handled video-heavy sites and "Web apps," including Web-based email programs, simple games, productivity sites like Google Docs and the like. Some of these more complex sites use a new and evolving Web standard called HTML 5, which Mozilla has strongly supported. The new browser didn't noticeably slow down for me, even when many tabs were opened.

But, in my comparative speed tests, which involve opening groups of tabs simultaneously, or opening single, popular sites, like Facebook, Firefox was often beaten by Chrome and Safari, and even, in some cases, by the new version 9 of IE, which has ramped up its own speed.

I should stress that these tests, which I conducted on a Hewlett-Packard desktop PC running Windows 7, generally showed very slight differences among the browsers. Their speeds are converging. But Firefox 4 won only a couple of them.

Sleek Features

Still, speed isn't everything. The main new features in Firefox 4 do a lot to streamline the browser. As with its rivals, the tabs have been moved to the top.

In the Windows version, the menu bar functions have been consolidated into a new orange "Firefox button" at the upper left, though you can turn the menu bar back on if you like. In another streamlining move, bookmarks are now accessed through a single button, though you can turn back to the familiar bookmarks toolbar.

Taking a cue from Chrome, Firefox now lets you permanently "pin" tabs for favorite sites to the tab bar. These appear as small icons to the left of the bar, and are always open. They are called app tabs, because Mozilla assumes they'll be used primarily for app-like sites such as Web email, which you check frequently.

If something changes on a pinned site, such as a new email arriving, the app tabs notify you with a slight glow effect. (IE embeds icons for favorite sites right in the Windows taskbar.)

Favorite Sites Fast

Another nice new feature is called Panorama. It allows you to group thumbnails of tabs representing favorite sites, name the group, and then open its contents in tabs at once. For instance, you might use this feature to quickly get to all your favorite news or sports sites.

I also successfully tested a synchronization feature, which allows you to view on one PC or Mac the bookmarks, history and open tabs from a copy of Firefox running on another.

It even worked when I tried it on the Android version of Firefox. This ability to sync with mobile devices is likely to be a bigger deal as Web surfing continues to shift away from PCs.

However, like a similar synchronization feature in Chrome, the one in Firefox doesn't work across different browsers. An add-on program called Xmarks, which I use daily, does.

Privacy Option

Like IE, the new Firefox also includes an emerging, optional privacy feature called Do Not Track that sends a signal to websites to stop tracking your Internet activity. However, the tool won't be fully useful unless a large majority of sites agree to obey it. The idea, though, is getting traction among some advertisers and publishers.

If you are a Firefox fan, the new version will take some getting used to, but I recommend upgrading, at mozilla.com.

If you currently rely on another browser, Firefox 4 is worth a look, but you aren't likely to see lots of big features you haven't seen before.

Wheaton Franciscan Healthcare Selects CareTech Solutions to Provide SEO Services

PR Newswire
March 28, 2011

CareTech Solutions, an information technology and Web products and services provider for more than 150 U.S. hospitals, announced today at the Sixteenth National Healthcare Marketing Strategies Summit, that Wheaton Franciscan Healthcare, one of the largest integrated regional health care delivery systems in Wisconsin, selected the company to provide search engine optimization (SEO) services for its website www.mywheaton.org. This turn-key organic SEO approach improves Internet search results in search engines such as Google, Bing and Yahoo through the modification of code, design and navigation structure.

"Consumers' first stop for medical and health information is an online Internet search," said Ann Saqr, vice president, Marketing, Wheaton Franciscan Healthcare. "Ensuring Wheaton Franciscan Healthcare appears at the top of specific Internet search results related to our organization and offerings, is critical when connecting with our patient community. By choosing CareTech Solutions, a leader in healthcare Web and Internet services, to manage our SEO, we guarantee our search engine dynamics are managed by industry experts in a real time manner."

The Organic SEO program begins with keyword research and includes the authoring of custom meta tags and SEO copywriting for key medical services and departments within the website. Additionally, search engine landing pages are optimized with copy and internal links while the link popularity program researches and implements referring links from trusted sites and communities. Tracking and evaluation is also provided with access to a monthly keyword ranking report, analytics dashboard, and data analysis. CareTech Solutions offers SEO services in partnership with Peak Positions, one of the Top 20 SEO companies in the world according to Top SEOs.

About Wheaton Franciscan Healthcare

Wheaton Franciscan Healthcare (WFH) is a Catholic, not-for-profit organization with more than 100 health and shelter organizations in Wisconsin, Iowa, Colorado, and Illinois. Started by the Wheaton Franciscan Sisters more than 125 years ago and formally incorporated in 1983, WFH has corporate services offices in Wheaton, Illinois and Glendale, Wisconsin. In Southeast Wisconsin, WFH is co-sponsored by the Wheaton Franciscan and Felician Sisters and has nearly 11,000 associates, making it the second largest private employer in the area. Hospitals include All Saints in Racine County; Wheaton Franciscan - St. Joseph and The Wisconsin Heart Hospital Campuses, St. Francis, Franklin Hospital, and Midwest Orthopedic Specialty Hospital in Milwaukee County; and Elmbrook Memorial in Waukesha County. The region also includes Wheaton Franciscan Medical Group with more than 350 physicians in more than 50 locations, a network of outpatient centers, three transitional and extended care facilities, Home Health, and Hospice. Wheaton Franciscan Healthcare is also affiliated with Affinity Healthcare in the Fox Valley and United Hospital System in Kenosha.

About CareTech Solutions

CareTech Solutions, Inc., an information technology and Web products and services provider for more than 150 U.S. hospitals and health systems, creates value for clients through customized IT solutions that contribute to improving patient care while lowering healthcare costs. From implementing emerging technologies to supporting day-to-day IT operations, CareTech offers clients expert health information management services across the entire patient data lifecycle earning it the 2008, 2009 and 2010 Best in KLAS award for IT Outsourcing (Extensive) as ranked by healthcare executives and professionals in the Top 20 Best in KLAS Awards: Software & Professional Services report.

For more information, please visit www.caretech.com.

Judge Rejects Google Books Settlement

Wall Street Journal
by AMIR EFRATI And JEFFREY A. TRACHTENBERG
March 23, 2011

Google Inc.'s six-year struggle to bring all the world's books to the Internet suffered another big setback at the hands of a federal judge.

Judge Denny Chin, in a ruling filed in U.S. district court in Manhattan, rejected a 2008 settlement that Google forged with author and publisher groups to make millions of books available online. The 48-page decision concludes that the $125 million deal would give the Internet giant the ability to "exploit" books without the permission of copyright owners, echoing the U.S. Justice Department's concerns about the deal.

"While the digitization of books and the creation of a universal digital library would benefit many," Judge Chin wrote, Google's current pact would "simply go too far." The deal would "give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission," he said.

In his decision, Judge Chin also noted antitrust concerns related to the settlement, including that "would arguably give Google control over the search market" for books.

The judge denied the settlement between Google and the Authors Guild and the Association of American Publishers "without prejudice," meaning they could submit a revised pact that would better protect copyright owners.

He also suggested a way to revise the deal: rather than let copyright owners of books "opt out" of the settlement, copyright owners should be given the choice to "opt in."

Google's lawyers had said in court last year that an "opt-in" structure wouldn't be viable.

Hillary Ware, a managing counsel for Google, on Tuesday said the decision was "clearly disappointing" and the company would consider its options. "Like many others, we believe this agreement has the potential to open-up access to millions of books that are currently hard to find in the U.S. today," she said.

Publishers held out hope that a settlement can still be achieved. "Publishers are prepared to modify the settlement agreement to gain approval," said John Sargent, chief executive of Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, in a statement issued by the Association of American Publishers on behalf of the publisher plaintiffs.

"We plan to work together with Google, the Authors Guild and others to overcome the objections raised by the Court and promote the fundamental principle behind our lawsuit, that copyrighted content cannot be used without the permission of the owner, or outside the law."

The decision is the latest in a series of blows to the ambitious plans of Google co-founder Larry Page to scan the world's 150 million or so books and make them accessible to users of Google's Web-search engine, an idea he broached shortly after the company was formed in 1998.

Google in late 2004 said it was working with several libraries to scan and digitize books and other writings in their collections, and has said it has completed 10% of the effort.

Google's plan was attacked in lawsuits by certain publishers and the Authors Guild in 2005. A settlement was reached in 2008. After objections were raised, the parties submitted this revised settlement.

The settlement, among other things, blessed Google's scanning efforts and also potentially allowed for ads to be shown on the book pages online. Google agreed to pay $125 million to establish a registry to allow authors and publishers to register their works and get paid when their titles are viewed online. It also allowed copyright owners to prevent Google from scanning their works and to collect money for each work that was previously scanned by Google.

For out-of-print but copyrighted books, the plan offered a chance for digital access. "There are tons of authors whose works may now never see the light of day, said Laurence Kirshbaum, a New York literary agent, on Tuesday.

But those who objected to the settlement, including the Justice Department, said Google would unfairly take advantage of millions of "orphaned" works whose content owners haven't been identified, or in cases where the copyright ownership is debated.

A Justice Department spokeswoman said: "We are pleased that the Court supported our position."

Gary Reback, a lawyer and co-founder of the Open Book Alliance, a group that opposed the settlement and includes Google competitors such as Microsoft Corp., Amazon.com Inc. and Yahoo Inc., said the rejection didn't resolve his concerns that Google uses scanned books to enhance its search engine by displaying snippets of the book's text, among other things.

A Google spokesman declined to comment.

Judge Chin's ruling changes little for Google users. About two million books that are in the public domain, such as works of William Shakespeare, currently can be viewed free on the Google Books site. They also are available through Google eBooks, a new online book store that allows people to purchase and read books on different devices.

Google Books users currently can view long previews of another two million books that are in copyright and in print, thanks to agreements between Google and tens of thousands of publishers that were separate from the legal settlement. Millions more books that are in copyright but out of print are currently available in Google Books in a shorter "snippet view." Had the settlement been approved, users would have been able to see longer previews and potentially buy those books.

For consumers and publishers, the impact of the decision may be lessened by the fact that digital books have now carved out a significant portion of the book business. One publisher chief executive said Tuesday that he expects his digital book sales to double in 2011. However, some voiced concern that absent a settlement, many authors may now no longer have clear digital future.

James Grimmelmann, an associate professor at New York Law School, said that the judge is clearly hinting that he would seriously consider approving the settlement if it is revised in a way that allows publishers and authors the right to opt into the settlement before Google can sell their works.

Mr. Grimmelmann said that the settlement basically consists of two parts: payment for what Google has done in the past, and the creation of an ambitious bookstore program to sell mostly out-of-print books. "If the parties can agree on an opt-in arrangement, it will give authors and publishers one more option for selling their works. This is pretty much how copyright works today," he said.

Jim Pitkow, who sold a Web-search company to Google in 2001 and is now an executive at Attributor, which helps publishers protect their copyrights, said yesterday: "Google has probably spent hundreds of millions of dollars scanning books and that has not been legitimized."

Privacy Measure Draws Support

Wall Street Journal
by JENNIFER VALENTINO-DEVRIES
March 17, 2011

Sen. John Kerry, a senior Democrat, and technology giant Microsoft Corp. on Wednesday backed the Obama administration's call for broad privacy legislation at a Senate hearing that also exposed hurdles to passing such a law.

"Modern technology allows private entities to observe the activity of Americans on a scale that is unimaginable, and there is no general law" governing the collection and use of that data, Sen. Kerry told the Senate Commerce Committee.

The Massachusetts lawmaker said he was working with others and soon planned to introduce a "privacy bill of rights."

The Commerce Department called at Wednesday's hearing for a privacy law that includes enforceable protections for consumers' personal information and a stronger role for the Federal Trade Commission.

Unlike the European Union, the U.S. doesn't have a federal law establishing a general right to privacy. U.S. laws protect only certain types of information, such as some data about health care or personal finances.

Concerns about the online tracking industry have increased the public's interest in privacy rights. In the past year, The Wall Street Journal's "What They Know" series has revealed that popular websites install thousands of tracking technologies on people's computers without their knowledge, feeding an industry that gathers and sells information on their finances, political leanings and religious interests, among other things.

The FTC and the Commerce Department both have issued recent reports calling for enhanced privacy protections. FTC Chairman Jon Leibowitz told the committee Wednesday that the Journal series "really was a motivation for us to step up our enforcement efforts and write" the report.

He also said one of the articles in the series alerted the FTC to the fact that new tools to stop tracking were technically feasible.

An executive of Microsoft, which makes the most popular Web browser and also operates one of the largest Internet advertising networks, echoed the call for a broad privacy law. The current piecemeal approach to privacy law "is confusing to consumers and costly for businesses," said Erich Andersen, the company's deputy general counsel.

Microsoft is incorporating two additional privacy protections into the new version of its Internet Explorer browser.

The push to enact a federal privacy law remains in its early stages. Sen. Kerry said he has been working on proposed legislation with Sen. John McCain, an Arizona Republican, suggesting support for such a measure crosses party lines.

A spokeswoman for Sen. McCain said he and Sen. Kerry are discussing specific language for the bill.

"Sen. McCain believes that any legislation, if necessary, should respect the consumers' ability to control the use of their personal information, while recognizing the need of companies" to innovate and target advertising to consumers, she said.

Skepticism about the need for a new law also cuts across party lines. Sen. Claire McCaskill, a Missouri Democrat, questioned whether limitations on data collection would hinder the ability of websites to provide free content.

"I just want to make sure that we don't kill the goose that laid the golden egg here under the very laudable rubric of privacy," she said.

Advertisers, too, are wary of new rules. The industry has been promoting an icon that appears on certain ads to alert consumers that they are being targeted, and to let them opt out of the system.

Meanwhile, industry executives have objected to the FTC's call for browser makers to create a "do not track" system that would let Internet users signal they don't want their online movements recorded.

Having both a do-not-track tool and the industry-backed icon could confuse consumers, said John Montgomery, an executive with GroupM Interaction, part of advertising giant WPP PLC.

"It's vitally important to avoid mixed messages," he said.

The FTC's Mr. Leibowitz, however, said a majority of commissioners believe the icon system isn't adequate, because it would allow marketers to continue to collect some data on Web surfers.

"We need to make sure 'do not track' is not an empty slogan," he said.

Clamor for Facebook Shares Heats Up

Wall Street Journal
by AMIR EFRATI And PUI-WING TAM
March 17, 2011

Investor clamor around Web companies such as Facebook Inc. and Zynga Inc. is continuing to heat up.

Institutional investors have been competing to get into Facebook by purchasing shares of the company from Facebook employees, with the firm's blessing, according to people familiar with the matter. At least one large institutional investor has recently been turned away, said one of these people.

Two people familiar with the matter said the Facebook investment talks value the social-networking company at around $75 billion, while another person said the discussions value the company at more than $60 billion.

At the same time, social-game maker Zynga has closed its latest financing, said people familiar with the matter. The round raised around $500 million for the San Francisco-based company, said one of these people. The Wall Street Journal had earlier reported that Zynga was in fund-raising talks that valued it at roughly $10 billion.

The activity is the latest sign of growing interest in a set of fast-growing consumer Web companies, which also includes messaging service Twitter Inc. and daily-deals website Groupon Inc. Over the past few months, investor interest in these companies has soared, bringing in Wall Street money and spurring talk of a bubble.

Unlike dot-com companies a decade ago, however, the new crop of Web companies have attracted a large base of users and are generating revenue through online advertising and other means. Their valuations have climbed rapidly lately and also triggered share trading on private exchanges.

It's unclear how advanced the latest Facebook discussions are and which investors are involved. But the clamor indicates how some investors are willing to pay eye-popping valuations above Facebook's last publicly known investment in January. That month, Facebook was valued at $50 billion in a deal that raised $1.5 billion from investors such as Goldman Sachs Group Inc. and Russian investment firm Digital Sky Technologies, as well as some of Goldman's non-U.S. clients.

AllThingsD, a website owned by News Corp., which also publishes The Wall Street Journal, said last month that Facebook was exploring a tender offer for as much as $1 billion of its employee shares at a $60 billion valuation.

The tender offer would give Facebook employees liquidity and wouldn't raise additional cash for the company, according to the people familiar with the matter.

One person briefed on the matter said the shares involved would be common stock that had one transfer right, meaning that the holders can't resell the shares unless the company is public.

Prior to its January investment round at the $50 billion valuation, Facebook's last major financing was in mid-2009, when Digital Sky bought roughly $100 million in shares from Facebook employees and invested $200 million into the company at a roughly $10 billion valuation.

Facebook has said it expects at some point this year to pass 500 shareholders, a threshold that would require it to make public financial reports by no later than April 30, 2012.

Meanwhile, Zynga's new financing includes investors such as T. Rowe Price Group Inc., Morgan Stanley, Fidelity Investments and Kleiner Perkins Caufield & Byers, said a person familiar with the matter.

Representatives for T. Rowe Price and Morgan Stanley declined to comment. Fidelity didn't immediately respond to requests for comment. A spokeswoman for Kleiner Perkins didn't immediately have a comment.

Google Is Said to Test Mobile-Payment System With VeriFone

Bloomberg News
March 15, 2011

Google Inc. plans to start testing a mobile-payment service at stores in New York and San Francisco within four months, letting shoppers use their phones to ring up purchases, three people familiar with the project said.

The company will pay to install thousands of special cash- register systems from VeriFone Systems Inc. at merchant locations, said one of the people, who requested anonymity because Google’s plans haven’t been made public. ViVOtech Inc., a provider of mobile-payment technology, will also play a role in the tests, which will include Los Angeles, Chicago and Washington, D.C., one of the people said.

The project would put Google in a growing field of companies experimenting with so-called near-field-communication technology, which lets consumers pay for products and services by tapping a device against a register at checkout, giving them an alternative to cash or physical credit cards. The Google service may combine a consumer’s financial account information, gift-card balances, store loyalty cards and coupon subscriptions on a single NFC chip on a phone.

The registers would accept payments from mobile phones equipped to take payments via NFC technology.

Nathan Tyler, a spokesman for Mountain View, California- based Google, and Lindsay Durfee, a spokeswoman for VeriFone in San Jose, California, declined to comment. Mohammad Khan, president of ViVOtech, also declined to comment.

Google, the world’s largest Internet search company, has used its Android operating system to take a leading role in the smartphone industry.

Android’s Reach

The company offers Android for free to phone manufacturers, aiming to boost revenue from services such as mobile advertising and expand the market for its search engine. Google’s software leads the market for smartphone operating systems, according to research firm Canalys.

Google’s mobile-payment service would face competition from EBay Inc.’s PayPal and ISIS, a joint effort of several mobile companies. The ISIS system, backed by AT&T and Verizon Wireless, will rely on Discover Financial Services to handle the payments. ISIS plans to test its mobile service this year, a person familiar with the trial said.

The adoption of NFC payment systems will hinge on the availability of phones with the technology. Samsung Electronics Co.’s Nexus S phone already allows for NFC transactions, while Nokia Oyj and Research In Motion Ltd. have vowed to bring NFC- enabled phones to market.

Google shares have declined 4.1 percent in 2011. VeriFone shares have jumped a record 7.4 percent in the first quarter of 2011.

Google Is Said to Test Mobile-Payment System With VeriFone

Bloomberg News
March 15, 2011

Google Inc. plans to start testing a mobile-payment service at stores in New York and San Francisco within four months, letting shoppers use their phones to ring up purchases, three people familiar with the project said.

The company will pay to install thousands of special cash- register systems from VeriFone Systems Inc. at merchant locations, said one of the people, who requested anonymity because Google’s plans haven’t been made public. ViVOtech Inc., a provider of mobile-payment technology, will also play a role in the tests, which will include Los Angeles, Chicago and Washington, D.C., one of the people said.

The project would put Google in a growing field of companies experimenting with so-called near-field-communication technology, which lets consumers pay for products and services by tapping a device against a register at checkout, giving them an alternative to cash or physical credit cards. The Google service may combine a consumer’s financial account information, gift-card balances, store loyalty cards and coupon subscriptions on a single NFC chip on a phone.

The registers would accept payments from mobile phones equipped to take payments via NFC technology.

Nathan Tyler, a spokesman for Mountain View, California- based Google, and Lindsay Durfee, a spokeswoman for VeriFone in San Jose, California, declined to comment. Mohammad Khan, president of ViVOtech, also declined to comment.

Google, the world’s largest Internet search company, has used its Android operating system to take a leading role in the smartphone industry.

Android’s Reach

The company offers Android for free to phone manufacturers, aiming to boost revenue from services such as mobile advertising and expand the market for its search engine. Google’s software leads the market for smartphone operating systems, according to research firm Canalys.

Google’s mobile-payment service would face competition from EBay Inc.’s PayPal and ISIS, a joint effort of several mobile companies. The ISIS system, backed by AT&T and Verizon Wireless, will rely on Discover Financial Services to handle the payments. ISIS plans to test its mobile service this year, a person familiar with the trial said.

The adoption of NFC payment systems will hinge on the availability of phones with the technology. Samsung Electronics Co.’s Nexus S phone already allows for NFC transactions, while Nokia Oyj and Research In Motion Ltd. have vowed to bring NFC- enabled phones to market.

Google shares have declined 4.1 percent in 2011. VeriFone shares have jumped a record 7.4 percent in the first quarter of 2011.

Rush to Fix Quake-Damaged Undersea Cables

The Wall Street Journal
by OWEN FLETCHER And JURO OSAWA
March 15, 2011

BEIJING—Asia's major telecom operators scrambled Monday to eliminate the impact on their operations from damage to several submarine cables following the massive earthquake and tsunami in Japan.

Many operators were reporting some disruptions in Internet access, though the partial restoration of service was accomplished by rerouting traffic over undamaged cables and via satellites.

About half of the existing cables running across the Pacific are damaged and "a lot of people are feeling a little bit of slowing down of Internet traffic going to the United States," said Bill Barney, chief executive of Hong Kong-based cable-network operator Pacnet. He declined to name the damaged cables operated by other companies, but said Pacnet's cable system connecting Japan to the U.S. isn't damaged so far.

Most international Internet-data and voice phone calls are transmitted as pulses of light via the hundreds of undersea fiber-optic cables. The cables, which can cost hundreds of millions of dollars, are typically owned by consortia of telecom companies, who share costs and capacity. While the clusters of glass fibers are enclosed in protective material, they remain vulnerable to undersea earthquakes, fishing trawlers and ship anchors. There are also many choke points around the globe, where a number of cables converge.

While the extent of the damage to undersea cables is unclear and financial losses unknown, operators said they are undergoing an inspection and looking to expedite restoration.

Pacnet aims to repair two damaged segments of its East Asia Crossing network connecting Japan to other parts of Asia, like Taiwan and Hong Kong, within five to seven days, Mr. Barney said. He played down concerns about any financial impact on Pacnet or regional telecom operators from the damaged cables.

"It's in our business plan that our cables will break, typically you get cuts in cables anywhere from five to 10 times a year," even though the damage on land after Japan's earthquake has drawn extra attention, Mr. Barney said.

Japanese telecom operator KDDI Corp. said on Monday that one of its undersea cables between Japan and the U.S. has been damaged by the earthquake and is unable to transmit any signals, but a spokesman said the company didn't know if the cable was cut or having connection problems..

The damaged part is far offshore and it may take a while for KDDI to identify and address the problem, but services are recovering after the quake, as the company can bypass the damaged part and use other cables instead, the spokesman said.

Pacific Crossing, a unit of Japan's NTT Communications Corp. that operates a cable network between Japan and the U.S., said on Monday that the Pacific Crossing PC-1 W and PC-1 N parts of its network remained out of service due to the earthquake.

NTT Communications said that some of its services for enterprises were partially unavailable in Japan's Tohoku region, but that for submarine cables between Japan, other parts of Asia and the U.S., the company is using backup cable routes to maintain uninterrupted service.

PCCW Ltd., the dominant broadband provider in Hong Kong, said Internet traffic to some international destinations, especially the U.S., is experiencing reduced speeds owing to several damaged cables that land in Japan. PCCW, which also provides broadband Internet in Hong Kong, but it didn't release details. The affected cables will be repaired in "the coming weeks," the company said in a statement.

An official from Taiwan operator Chunghwa Telecom Co. said Friday the earthquake caused damage near Kita on the eastern coast of Japan to an undersea cable that belongs to the Asia Pacific Cable Network 2, which is owned by a consortium of 14 telecom operators led by AT&T Inc. AT&T didn't immediately reply to a request for comment.

China Telecom Corp., China's largest fixed-line operator by subscribers, was making emergency repairs on Friday to undersea cables damaged by the earthquake, the state-run Xinhua news agency reported. The company said submarine fiber-optic cables connecting Japan and North America and a Pacific Crossing 1 cable near the city of Kitaibaraki, in Japan's northern Ibaraki Prefecture, were malfunctioning. A China Telecom spokeswoman wasn't immediately available to comment on Monday on the status of the repairs.

China Mobile Ltd., the world's largest mobile carrier by accounts, said most of the company's services are operating normally despite a surge in calls to Japan, Xinhua reported.

Telecom operator China Unicom Ltd. said most of its circuits had been repaired but cited connection problems with the network of Japan's NTT Communications, Xinhua reported.

Several companies said they avoided significant service disruptions by rerouting data traffic, including South Korean telecom operator KT Corp., which said a cable that is part of the Japan-U.S. Cable Network was cut; SK Telink Corp., an affiliate of South Korean operator SK Telecom Co.; and Globe Telecom Inc. of the Philippines.

Also in the Philippines, Bayan Telecommunications Inc. said the quake disrupted some of its digital-subscriber-line services. "Forty percent of our total capacity was affected…but we expect all to normalize within the day," said Bayan vice president for corporate brand and communications John Rojo.

Some operators were unaffected. A spokeswoman for Australian operator Telstra Corp. said none of the company's undersea cable infrastructure was damaged.

More than 5,000 people have been confirmed dead or missing because of the quake and ensuing tsunami, according to Kyodo News. Japanese Prime Minister Naoto Kan has called the earthquake and its aftermath the biggest crisis in Japan's post-war history.

Microsoft launches Internet Explorer 9, its prettiest browser yet

Venture Beat
by Devindra Hardawar
March 14, 2011

Microsoft’s long journey to revitalize Internet Explorer, and make it a competitive web browser against speedy upstarts like Google Chrome, finally reached its end tonight. A few hours ago, Microsoft made the final version of Internet Explorer 9 available on its Beauty of the Web site.

The official launch tonight marks the end to months of testing for IE9, which started with the beta release of the browser last September and continued with the launch of the first IE9 Release Candidate (the final step before a program’s final release) in February.

Internet Explorer 9 proved very popular with testers — its beta version hit 2 million downloads in its first two days, and it was downloaded 25 million times when its beta period ended. That’s a surprising amount of interest for a Microsoft browser, which tells us that the company’s big gamble to revamp IE9 — stripping away the confusing toolbar clutter from IE8 towards a more minimal design — paid off.

IE9 is a major departure for Microsoft. In addition to its minimal design, it packs in modern browser capabilities like a fast Javascript rendering engine and support for HTML5. IE9 also includes hardware acceleration for web-page rendering (it uses your graphics processor to do some of the work) — something that even geek-friendly browsers like Chrome and Firefox have yet to roll out (though it’s coming soon to both).

I’ve been using IE9 throughout its test phase and don’t really notice anything too different with the final release. For those heading into the browser for the first time, prepare to be wowed by its speed and design. Microsoft one-upped Google Chrome’s minimal design by moving the browser’s address bar right alongside its tabs, leaving even more room for web pages to shine. It’s also clear with this final release that IE9 is far faster than the latest version of Firefox (not including Firefox 4 beta releases).

Rick Bergman, head of the graphics chip and microprocessor business at Advanced Micro Devices, said in an interview with VentureBeat’s Dean Takahashi that IE9’s use of advanced graphics will lead to better web sites and more usage of graphics chips in everyday non-gaming computing tasks. That creates more demand for increased graphics processing power in future products and more demand for either powerful combo graphics-processor chips or stand-alone graphics chips.

Microsoft has also pumped up the capabilities of IE9’s address bar. You can perform searches from within it, but unlike its competitors, you can also view search results from within it as well. The address bar defaults to Microsoft’s Bing search engine, but you’re free to switch it to Google, Amazon and others.

The browser is fast enough to tempt power users who haven’t fully invested themselves in Chrome or Firefox. But the real value of IE9 is that it will bring the speed and features geeks are familiar with to general users. Those users will likely never get around to installing a third-party browser. At least with IE9, it’s less of a crime if they don’t.

Google to launch new social network at SXSW?

CNET News
by Chris Matyszczyk
March 13, 2011

When it comes to social networks, Google has not managed to garland itself in too much glory. Critics suggest Google doesn't quite understand what makes people buzz.

And yet an interesting report has emerged that says Google might be using an event at SXSW this evening to launch--or, at least, preview--a new social network.

According to ReadWriteWeb, Google's social network is to be called Circles. At its heart it purportedly has something that seems crucial in today's socially networked world--privacy.

The idea seems to be that this social network will allow you to share every part of your being--namely status updates, photos, and videos--with a very specific group of friends (hence the name "Circles"), rather than with the great unwashed and unfiltered.

The report suggests that Google might be at least offering a sneak peek of this concept tonight, at an event co-hosted by the ACLU, an organization that feels there is nothing mutually exclusive between privacy and freedom.

Philosophically, it would appear that this idea recognizes the fundamental truth that we are not one personality to everyone. As we connect to different social groupings, we offer a different side of ourselves--the side that we feel most comfortable showing to that group.

It may well be that after some time within a particular group, we feel better about revealing some of our more hidden traits. But that is our choice. One that this purported social network seeks reportedly to respect.

If Google Circles truly is as described in what is still a speculative report, one possible danger is that it will turn out to be complicated. It's hard enough in the real world to work out who your friends are. Worse, one day someone is your friend, and the next, they're someone you used to know.

Managing all the different permutations online might require a considerable amount of aforethought, accuracy, and alertness. These are things that don't necessarily rhyme with a world that is increasingly lazy and laissez-faire.

Still, the heart of the idea seems a very interesting one and one can only hope that it also puts pressure on Facebook to consider how much easier its own privacy controls have truly become. It will also put additional pressure on Google to consider even more carefully its own attitude to privacy, given such difficult snafus as the "Oops, we appear to have recorded some e-mails over Wi-Fi" incident.

I have contacted Google for confirmation of Google Circles and all who sail in it and will update should I hear from the company.

Google’s U.S. Share Falls as Bing Gains, ComScore Says

Bloomberg
by Brian Womack
March 11, 2011

Google Inc. (GOOG)’s share of searches in the U.S. market declined in February while that of Microsoft Corp. (MSFT)’s Bing increased, according to research firm ComScore Inc.

Google had 65.4 percent of searches last month, down from 65.6 percent in January, Reston, Virginia-based ComScore said. Microsoft’s Bing search engine had 13.6 percent, up about a half percentage point. Yahoo! Inc.’s share was unchanged at 16.1 percent.

Google, which gets most of its sales from search-engine advertising, is trying to refine the relevance of its results after receiving complaints that some websites game its system to get more prominent placement. Google is rolling out a tool that allows users to hide all listings from sites that they dislike, find offensive or see as low quality, it said in a blog post yesterday.

Last month, Google said it changed the way it carries out Web searches to feature more “high-quality” sites, affecting 12 percent of queries.

Google, based in Mountain View, California, fell $3.59 to $576.71 on the Nasdaq Stock Market at 4 p.m. New York time. Microsoft added 27 cents to $25.68.

Google's code change shifts billions from losers to winners

CNN Money
by David Goldman
March 8, 2011

NEW YORK (CNNMoney) -- Google's recent change to its search algorithm has dramatically shaken up organic seo marketing and the businesses of websites that moved up or down its search rankings. Sites whose rankings rose to the top found that their traffic and revenue soared -- but the adjustment had an equally devastating effect on those that were dropped.

The Online Publishers Association, a group of content producers comprising many of the Internet's largest properties (including CNN.com), estimates that the algorithm change shifted $1 billion in annual revenue.

Some of the losers felt the hit immediately. Mahalo.com laid off 10% of its workforce last week thanks to what CEO Jason Calacanis called "a significant dip in our traffic and revenue."

The stakes are high in the Google-placement game. The top spot on a search page typically attracts 20% to 30% of the page's clicks, according to Adam Bunn, SEO director of Greenlight. After that comes an enormous tail-off: Positions 2 to 3 generate 5% to 10% of the clicks, and links below the fold receive less than 1% of users' attention. Fall off to the second page and your search-engine-driven clicks will be negligible.

With control of two-thirds of the U.S. search market, Google (GOOG, Fortune 500) steers a tremendous amount of traffic to websites. Many of them rely exclusively on advertising dollars to make money.

That means that positioning in Google's search results can be a life-or-death issue for a business.

Google's change appears to have most harmed so-called "content farms" like Mahalo, which critics say amass content for the sole purpose of luring in search-engine traffic. Sites like Mahalo.com, Wisegeek.com, Ezinearticles.com and Yahoo's (YHOO, Fortune 500) Associated Content were among the biggest losers in the algorithm tweak. Google-generated traffic to each dropped more than 75%, according to software firm Sistrix.

Interestingly, Demand Media (DMD) -- one of the most oft-criticized content farms --appears to have gotten off relatively scot-free. Its most prominent site, eHow.com, even grew its traffic after the algorithm change, though some others like AnswerBag.com and Trails.com dropped off.

The biggest beneficiaries seem to be originators of what Google calls "high-quality" content, which the company defines as "information such as research, in-depth reports, thoughtful analysis and so on." Traffic to sites that belong to the Online Publishers Association grew between 5% and 50% the day after Google's tweak, according to Pam Horan, president of the OPA.

"This change was connected with who is driving the best experiences for the end user," Horan said. "This is good for the consumer, good for the Internet, and good for publishers of higher-quality content."

Impact on 'mom and pop' sites

Not everyone feels that Google got the change right.

Max Spankie, who operates customer review website My3cents.com, said his site lost a significant portion of its traffic and revenues overnight following Google's algorithm change.

That came as quite a surprise to Spankie, since My3cents.com was recently recognized as the top consumer complaint site by the non-profit Consumer Federation of America. Unlike some of the sites that now top My3cents.com in Google's rankings, all complaints on Spankie's site are moderated. Hundreds of companies use the site to interact with customers.

"I thought they flipped the switch wrong," Spankie said. "We work hard to be a quality site, and I definitely think the sites that are now winning in our niche aren't about quality."

Morris Rosenthal, a publisher of laptop repair how-to books and owner of the site FonerBooks.com, said that he too found Google's new results curious.

For instance, a search for his book Laptop Repair Workbook now puts the book's Amazon page as its first result (no problem there) -- and a site that allows you to illegally download his book as its second result (big problem).

He also noticed that a search for "laptop inverter test" -- a diagnostic test he wrote an instructional article on -- now features two sites that link to his article ahead of his own site. His site used to be the top result.

Righting a wrong

For those who feel that Google made a mistake by lowering their sites in its rankings, the company says there's an option: Webmasters can post in its discussion forum about the topic. Though no manual changes can be made, Google will often tweak its algorithm in response to legitimate challenges.

"Like many of the changes we make, we tested this update extensively and have found that the algorithm is extremely accurate at detecting site quality," a Google spokesman said. "That said, search is a constant evolution and we will continue to listen to feedback from publishers and the community as we further refine our algorithms."

Google said it is "very pleased" with the changes. Keywords like IC Component parts are one of many that have seen these changes.

But that's cold comfort to those who have seen their traffic and revenue tumble with little explanation why.

"It's a system of guilty until proven innocent, and I've read about a lot of mom-n-pop sites reworking their sites and examining their souls, trying to figure out if they offended Google in some way," said Rosenthal, who said traffic to his site tumbled 30%. "With Google it's just, 'Talk to the hand.' They have no genuine two-way communication."

Mahalo forced to lay off 10% of staff after Google’s recent search algorithm adjustment

The human-powered search engine, Mahalo, has experienced a heavy fall after Google made recent changes to its search engine algorithm, wrote Mahalo founder Jason Calacanis in an e-mail.

“The Google changes have led to a significant dip in our traffic and revenue. It’s hard not to be disappointed since we’ve been spending millions of dollars on producing highly professional content,” said the Mahalo founder.

The search engine's traffic slump will result in 10% of its staff being laid off and a temporary stop on its production of freelance content .

Over the past week, Google has been battling issues with the quality of its search engine results. The effort to reduce the number of useless content farms appearing at the top of the results pages was welcomed by users, however the way Google's motives affected Mahalo displays a fine line between quality content and search engine optimized copy typically found on such content farms.

Mahalo first started out as a search engine but later evolved into a portal for affordable content. Over the course of its life, the website has been criticized for questionable practices, such as building hundreds of almost identical landing pages for very similar topics.

Many of Mahalo's pages have a reputation for being too SEO-friendly, and in many cases, it is clear that the site has abused the concept of a "landing page." Although Mahalo has taken some precaution to provide a level content that offers some value, the overall perception of rendering poor quality content remains true for many Internet searchers and organic SEO experts.

The current controversy Mahalo is dealing with was bound to happen, however the issue was brought on more quickly after the recent algorithm adjustments made by Google.

Google is the overwhelming favorite among search engine providers, dominating about 66% of the global search volume. It has created an extensive library of content that regulated mysteriously by freshly tweaked search engine spiders.

Google Changes Its Algorithm To Improve Search Result Quality

In an effort to improve the relevancy and quality of its results, Google has revamped its search engine methods to sift out poor-quality Webpages.

The search giant said the change would increase the rankings of high-quality Websites and drop the results of lesser sites, affecting about 12 percent of total search queries.

Weary Websites that release articles or build links based on specific keywords people are searching, commonly known as link farms or keyword heavy landing pages, have recently made their way to the top of search engine results. Such sites have reputation for frustrating some users. High search engine rankings are critical because they enable Websites to receive more visibility and traffic, resulting in more business.

“I haven’t seen as much negative attention on Google’s results as I have in the last month or two — it’s been fairly unprecedented,” said Danny Sullivan, editor of Search Engine Land and an industry expert.

A key portrayal of Google to its users is that it provides the best results on the Web. The search engine giant has become the leader because its technology produced better, more relevant results for users. If users start to doubt the quality of its search engine results, Google risks losing not only its top reputation, but also its loyal users to other search competitors.

Although such "content farms" can sometimes offer valuable information, or at least a direction to good resources, many of their articles and outbound links are of debatable value yet still see high rankings in searches.

Google changes it's search engine algorithm roughly 500 times a year, most of them minor alterations. Amit Singhal, an employee at Google who was involved in the latest change, said in an interview that Google users were likely to notice the recent modification.

“We haven’t done a change where we have impacted low-quality sites at this level in years,” Mr. Singhal said. “It’s a clear evolution of the algorithm as the Web is evolving, the content on the Web is evolving, the user expectation is evolving.”

Google still the owns most of the Internet search market, capitalizing on 66 percent of all search activity in the United States. The company has larger proportions of the search pie in many other countries, according to comScore, a Web analytics company.

Hitwise, an analytics firm, measures statistics on "how happy" users are with their search results by observing how many inquiries are successful - meaning the user remains on the first Website they choose to click on. At Bing, a competing search engine that is growing in popularity, 82 percent of searches queries are deemed successful. At Google, the rate of 'user satisfaction' is 66 percent.

“This change is about more than just cleaning up content farms,” said Chris Copeland, chief executive of GroupM Search, an organic SEO (search engine optimization) firm. “Google has a relevancy problem, and they are trying to do something about it.”

The search engine company implemented the algorithm change after technology bloggers, industry experts and common users filed complaints that Google's results rendered useless pages. The feedback may in turn enhance Google’s reputation, Mr. Sullivan said.

“The change may not necessarily improve the results — hopefully it will — but it will definitely improve the perception of Google,” he said.

The change to Google's search formula does not address all techniques that problematic Websites use to achieve better results. The effort to improve the quality of search results is a cat-and-mouse game — once Google puts a change into affect, developers and SEO companies figure out a way around it.

When Google was first unveiled in 1998, the key advantage savvy Web developers realized was how the search engine algorithm valued sites based on the amount of links it had directed to its Webpages. But as users quickly learned how to take control of those links to increase their site's rankings, Google began focusing more on other factors.

“Our algorithm clearly gets attacked by these techniques every day,” Mr. Singhal said. “However, with the amount of information that we have, we are pretty far ahead in the game.”

Even though the announcement by Google did not specifically say anything of content farms, the leader of Google’s spam-fighting team, Matt Cutts, has spoken in recent weeks about the issues with content farms and added that Google was determining ways to deal with them.

“There are some content farms that I think it would be fair to call spam, in the sense that the quality is so low-quality that people complain,” Cutts said in an interview.

Certain Websites that are often considered “content farms” include Yahoo’s Associated Content, AOL’s Seed and Demand Media’s eHow and Answerbag. For instance, Demand Media uses software technology to find out what keywords users are searching on Google, automatically creates headlines based on those keywords, and hires freelance copywriters churn out link-heavy articles.

Frustrations spawning from these questionable Websites has been of serious concern for Google, and the company claimed it had been addressing such issues for over a year. At about the same time Demand Media went public a few months ago, technology bloggers began posting complaints that a Google search for new appliances had generated useless results.

The valuation of a Website's quality is naturally subjective, however Google has processes in place to address and determine relevancy and value. The company does things like “boomerang” search tracking - monitoring instances when users click on a link and immediately click back to the results.

Some Website search engine optimization consultants who help businesses improve their search rankings claim Websites like Demand Media might not be affected by the recent change. They said that Google’s true target was the hundreds of companies that post duplicate content on multiple of Websites.

Several of these sites will still figure out a way to get back up to the top of Google’s rankings, said Mr. Copeland of GroupM Search.

Search Engine's Software Bug Caused Deleted Emails

Earlier this week, Google claimed the reason why some Gmail users were unable to access their email accounts was due to a "software bug."

Google unveiled a software update that spawned the bug, resulting in about 0.02 percent of Gmail users without email access.

"When we discovered the problem, we immediately stopped the deployment of the new software and reverted to the old version." said the search giant's vice president of engineering.

Over the weekend as the small portion of affected Gmail users went to log into their accounts, they were unable to find their e-mails, folders, and other archived documents. Google's VP of engineering reassured users that the "e-mail was never lost and we've restored access for many of those affected."

"When I logged into my Gmail account to find some of my critical emails gone, my heart sunk into my stomach," said Bob Wiley who operates is own organic SEO company. "I rely on my Gmail account to communicate with my clients, in addition to all of the emails I have archived."

Fortunately for users like Bob, Google maintains several copies of its user's data in multiple storage centers. But even with such reliable back-up, the unexpected bug affected multiple copies of the data which resulted in some copies becoming deleted. Google is applying efforts to recover that data.

"To protect your information from these unusual bugs, we also back it up to tape. Since the tapes are offline, they're protected from such software bugs," the engineering VP wrote. "But restoring data from them also takes longer than transferring your requests to another data center, which is why it's taken us hours to get the email back instead of milliseconds."

The search engine company originally stated that 0.08 percent of Gmail users were affected by the bug, however later claimed that only 0.02 percent were influenced. The users affected by the bug were all random with no particular accounts being a target.

Hotmail users experienced a similar incident back in January when about 17,000 users were stripped of their email lists and folders. At the time of phenomenon, Microsoft claimed there was a script error that was designed to delete dummy accounts the company uses specifically for testing purposes. Although the script's sweep unexpectedly removed real user accounts, Microsoft's technicians were able to fully restore them.