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Google is One Step Closer With Motorola Mobility

2012-02-14T09:46:00.003-05:00

First appeared in Associated Press

Google's $12.5 billion bid to buy cellphone maker MotorolaMobility has won approvals from U.S. and European antitrust regulators, movingGoogle a major step closer to completing the biggest deal in its 13-yearhistory.

Monday's blessings mean Google Inc. just needs to clearregulatory hurdles in China, Taiwan and Israel before it can take control ofMotorola Mobility Holdings Inc. and expand into manufacturing phones, tabletcomputers and other consumer devices for the first time.

Getting government approval in China looms as the biggeststumbling block remaining. Google's relationship with China's ruling party hasbeen on shaky ground since the company blamed hackers in that country forbreaking into its computers two years ago. The breach prompted Google to moveits Internet search engine from mainland China in protest of laws requiringsome results to be censored.

Google prizes Motorola Mobility's more than 17,000 patents -a crucial weapon in an intellectual arms race with Apple, Microsoft and otherrivals maneuvering to gain more control over smartphones, tablets and othermobile devices. Google announced the deal six months ago.

The deal will "enhance competition and offer consumersfaster innovation, greater choice and wonderful user experiences," DonHarrison, Google's deputy general counsel wrote in a blog post.

Besides signing off on the Motorola Mobility deal, theJustice Department also approved two other moves in the mobile patent battles.The approvals cover the $4.5 billion purchase of Nortel Networks patents by agroup including Apple, Microsoft and BlackBerry maker Research in Motion Ltd.and a separate Apple acquisition of Novell Inc. patents.

The Justice Department ended its investigations afterconcluding the new patent owners won't try to drive up the prices of competingmobile devices by demanding exorbitant licensing fees. The agency said it wasparticularly concerned about key patents held by Motorola Mobility and Nortel.

Apple Inc. and Microsoft promised to license the Nortelpatents on reasonable terms while Google's commitments on the Motorola Mobilitypatents were "more ambiguous," according to a statement from theJustice Department's antitrust division.

Nevertheless, the Justice Department didn't find anyevidence that Google's ownership of Motorola Mobility would lessen competitionin a mobile device market that is becoming increasingly important as morepeople connect to the Internet on smartphones and tablet computers instead ofdesktop and laptop computers.

In granting its approval, the European Union also raisedconcerns about Motorola's aggressive enforcement of its patents. EU CompetitionCommissioner Joaquin Almunia said regulators will "keep a close eye on thebehavior of all market players in the sector, particularly the increasinglystrategic use of patents."

In its statement, the Justice Department also vowed to crackdown on any sign that mobile patents are being used to throttle competition.Microsoft said it was encouraged by the regulatory commitments.

Other key concerns centered on Google's Android operatingsystem, free software that now powers more than 250 million mobile devices madeby a variety of manufacturers, including Motorola Mobility. Competition couldbe hurt if Google gives Motorola Mobility the most advanced versions of Androidor withholds the mobile software from other cellphone makers.

Google, though, has pledged to make Android available to allits mobile partners. Even if Google were to discriminate, cellphone makersstill could rely on mobile software from Microsoft Corp., Research in Motionand Hewlett-Packard Co., among others.

The European regulators see no danger that Google willprevent other device makers from using its popular Android operating systemafter the takeover.

"Android helps to drive the spread of Google's otherservices," the Commission said. "Given that Google's core businessmodel is to push its online and mobile services and software to the widestpossible audience, it is unlikely that Google would restrict the use of Androidsolely to Motorola," which only has a small market share in Europe.

The government reviews in U.S. and Europe have come asregulators also have been conducting a broader inquiry into whether Google hasbeen abusing its dominance in Internet search to hobble its rivals. Thoseinvestigations are still ongoing.

Assuming Google eventually takes over Motorola Mobility, theunion will open new opportunities and pose potentially troublesome challengesfor a management team that so far has concentrated on Internet search, ad salesand other software-driven online services.

Motorola Mobility's expertise in mobile devices and set-topboxes for cable TV will allow Google to play an even more influential role inshaping the future of hand-held computing and home entertainment. Even as itnavigates the regulatory gauntlet, Google has begun testing a device forconnecting electronic components within homes, according to a filing with theFederal Communications Commission.

Absorbing Motorola Mobility also threatens to crimp Google'searnings growth and drag down its stock price. That's because Motorola Mobilityhas been struggling on its own as Apple's iPhone and other smartphones made byrivals such as Samsung Electronics undercut sales of its products. Google SEO is curious what the changecould bring.

Google is making a huge bet that Motorola Mobility can dobetter. The $12.5 billion price is more than the combined amount that Googlehas paid for the 185 other acquisitions that it has completed since goingpublic in 2004.

Google's stock rose $6.29, or 1 percent, to close Monday at$612.20. Motorola Mobility's gained 18 cents to $39.63, just below the proposedsale price of $40 per share. Google is based in Mountain View, California,while Motorola Mobility has its headquarters in Libertyville, Illinois.

Google’s Good to Know Campaign

2012-02-13T09:47:00.000-05:00

First appeared in LA Times

In its Good to Know effort, Google will spend tens ofmillions on ads in U.S. newspapers and magazines and in public places such assubways to urge people to protect their personal information online.

Reporting from San Francisco — Google Inc., under scrutinyfrom privacy watchdogs for changes it made to its search engine, is launching asplashy ad campaign designed to alleviate privacy concerns.

Google is rolling out the Good to Know campaign in two dozenU.S. newspapers and magazines, including the Los Angeles Times, and in publicplaces such as the subways in New York and Washington to encourage people toprotect themselves and their information on the Web. The campaign offerspractical advice and tips, including how to manage what kind of data peopleshare with Google and websites.

Google, whose success depends on users feeling comfortableenough to spend huge chunks of their time online, originally launched thecampaign in Britain in October.

The Internet search giant is trying to drum up publicitystateside as discomfort spreads with its new search feature called Search plusYour World, in which photos, updates and other private information from itsGoogle+ social network are blended with search results.

Last week, the U.S. Federal Trade Commission widened itsantitrust probe of the search engine to include Google+, according to a personwho is familiar with the investigation but requested anonymity because theperson was not authorized to speak on the matter. The agency is examiningwhether the company is giving preferential treatment to its own services inviolation of antitrust laws. The FTC made the move after the Electronic PrivacyInformation Center, a Washington advocacy group, filed a complaint about thesearch changes on privacy and antitrust grounds. Twitter Inc. has alsocomplained that the new search feature harms competitors.

Google, which handles about two-thirds of all search queriesin the U.S., is looking to blunt competition from social networking giantFacebook Inc., which has an alliance with Microsoft Corp.'s Bing search engine.Bing began displaying information from Facebook last year. Facebook has morethan 800 million members, compared with more than 40 million for Google+ as ofOctober.

Google's director of privacy, Alma Whitten, called the Goodto Know privacy campaign "quite ambitious."

"Given who we are, we have a strong incentive to makethe Internet a place that people feel safe to do interesting things,"Whitten said.

Google, one of the world's biggest advertising companies, isincreasingly using advertising on television and elsewhere to promote itspowerful online brand offline. With the Good to Know campaign, it's spendingtens of millions of dollars to connect with users over privacy and security asregulatory storm clouds gather.

Google, which has come under fire for privacy blunders inthe U.S. and Europe, is wrestling with heightened government scrutiny aroundthe world.

Last year it agreed to settle FTC claims that it useddeceptive tactics and violated its own privacy policies when it introduced theBuzz social networking service. The settlement is in effect for 20 years andcovers future situations such as Google's collection of Wi-Fi data. Googleagreed to an independent audit of privacy procedures every other year. TheElectronic Privacy Information Center asked the FTC to investigate whetherconsumers were harmed when users of Google's Gmail service had private emailcontact information automatically displayed when they enrolled in Buzz, whichGoogle has since shut down.

Google is banking that the campaign will cast it in apositive light and help it sidestep some of the regulatory issues that stymiedMicrosoft's ability to innovate, said Danny Sullivan, editor of the websiteSearchEngineLand.

"Google is thinking, 'We had better do a better jobexplaining this or we will have Congress stepping in to regulate us in a waythat might be harmful to our business,' " he said.

Google Is Moving Toward Consumer Electronics?

2012-02-13T09:40:00.000-05:00

First appeared in LA Times

Sounds like Google is changing its tune.

The company behind the Web’s most popular search engine isworking on a home entertainment device, according to a filing with the FederalCommunications Commission. And reports say that device will stream musicwirelessly in people's homes.

Google plans to test 252 of the devices in its employees’homes in Mountain View, Calif., where it has its headquarters; in Los Angeles;in New York; and in Cambridge, Mass. The device uses wireless home networks and“requires testing outside the laboratory environment,” the filing said.

The device isn’t ready to ship yet. The company says it’sstill in the “prototyping phase.”

Google is looking for promising gushers other than itsgangbusters search advertising business, which accounts for nearly all its revenue.

It may be targeting consumer electronics, which would bringGoogle into closer competition with Apple.

Last May at its annual Google I/O developers conference,Google showed off Android@Home devices that played music. Android@Home enablesAndroid apps to connect with devices in the home. Late last year, Googlelaunched a music service that sells songs through the Android market.

Google is also trying to close its $12.5-billion acquisitionof Motorola Mobility Holdings Inc., which makes set-top boxes and mobilehandsets.

The Wall Street Journal reported Thursday that the newdevice would stream music wirelessly in the home and would be marketed as aGoogle product. According to the report, the device has been in the works foryears and will be out this year.

That would be a departure for Google, which has created theAndroid operating system for other companies to use in devices such assmartphones, tablets and televisions.

Testing of the device was first reported by technology blogGigaOm.

A Google spokeswoman declined to comment.

New Yahoo CEO Has Plans for Ads and Revenue

2012-02-10T11:28:00.000-05:00

First appeared in Wall Street Journal

New Chief Executive Scott Thompson's plan for turning aroundYahoo Inc. is beginning to take shape: He wants to push the Internet companyaway from its advertising roots and get more of its revenue from fees andcommissions, according to people familiar with the matter.

The 54-year-old executive, who was hired last month, hasn'tmentioned specifics during meetings with employees and business associates.

He has made clear, however, that Yahoo's nearlysingle-minded focus on its existing websites and online-advertising saleshasn't worked, and that the "market" places little value on thecompany's core online-ad business, these people said.

Yahoo's online-ad sales have been flat in recent years whilethose of rivals like Facebook Inc. and Google Inc. have charged ahead.

In the past few weeks, Mr. Thompson has held intimatelunches and large-scale gatherings with Yahoo employees in which he has toldattendees that he plans to divert more time and resources to Web services aimedat capturing future revenue, rather than trying to manage the profit margins ofthe company's current services, the people said.

Mr. Thompson hasn't ignored the online-ad business entirely.He has met with several top executives of Yahoo's major advertising-agencypartners since his tenure began, people familiar with the matter said.

He appeared to make a minor gaffe last month during a briefappearance at a regularly scheduled meeting between Yahoo executives and onesuch ad agency, Interpublic Group of Cos., which controls hundreds of millionsof dollars in digital-ad spending by big marketers.

When asked for his views about ad agencies, he said heprefers to be "as close to the customer as possible," and that"I don't like intermediaries that add no value," the people familiarwith the matter said.

While Mr. Thompson added that good intermediaries "canchange the equation," his comments surprised some attendees because adagencies have previously clashed with Yahoo and other Internet companies thathave tried to work directly with marketers, effectively cutting them out, thesepeople said.

A spokeswoman for Yahoo declined to comment or to make Mr.Thompson available for comment. An Interpublic Group spokesman didn't respondto requests for comment.

While Mr. Thompson's tenure at Yahoo remains in its earlydays, his remarks provide clues as to the direction that he plans to take thecompany.

The executive, who was previously president of eBay Inc.'sPayPal unit and has no online-ad experience, faces an enormous task in tryingto make Yahoo relevant again.

Some Yahoo employees, however, said they have beenencouraged by Mr. Thompson's words and enthusiasm for changing the company.

His predecessor, former CEO Carol Bartz, was fired late lastyear after failing to rev up Yahoo's revenues. The company has since explored asale of all or parts of itself and has revamped its board.

On Tuesday, Yahoo Chairman Roy Bostock said he was steppingdown, along with three other board members; last month Yahoo co-founder JerryYang resigned from the board.

Looking beyond Yahoo's online-ad business might not producequick results for the Sunnyvale, Calif., company. In 2011, it derived $3.4billion, or 78% of its net revenue, from online ads.

Yahoo also generated nearly $1 billion fromtransaction-related fees on its auto, travel, shopping and other sites, whereit takes a commission from the sale of products or services. Profit margins ine-commerce tend to be lower than those for online ads.

Mr. Thompson appears to have set his sights on non-adrevenue sources early on. Last month, he said publicly that he plans to exploitthe data that Yahoo has collected on the hundreds of millions of people whovisit its email, news, sports, and other websites every month.

Such information is the "single most underrated,underappreciated and underused asset" at the company, he said in aconference call with analysts.

Sameet Sinha, an Internet analyst at B. Riley & Co.,said one way for Yahoo to get closer to people's "purchase decisions"and take a cut of transactions would be to acquire a company such as BankrateInc., which helps consumers find mortgages or other investments; Angie's ListInc., which publishes reviews of contractors, doctors and other serviceproviders; Yelp Inc., which also provides information on local businesses; orTrulia Inc., which helps people search for real estate.

Among his other efforts, Mr. Thompson has invitedprivate-equity firms Silver Lake Partners and TPG—which had expressed interestin taking a minority stake in Yahoo—as well as McKinsey & Co. and BostonConsulting Group, to company headquarters to hear their views about thecompany's direction, said a person familiar with the matter.

Representatives of Silver Lake, TPG, McKinsey and BCG alldeclined to comment.

Mr. Thompson may shake up Yahoo in other ways. He isconsidering potential candidates to join his executive team.

And he has indicated that the company could make layoffs,people familiar with the matter said. Yahoo had 14,100 employees at the end of2011, up 4% from a year earlier, though it has weathered years of brain drain.

As he digs into the company, Mr. Thompson may have to makesome more tough decisions.

People familiar with the situation said he is evaluatingwhether to continue buying up advertising-technology companies to compete withGoogle in selling graphical online ads through automated systems, a field inwhich Yahoo has lagged behind.

Mr. Thompson and Yahoo's board also are continuing to grapplewith Yahoo's valuable stakes in two Asian companies, Alibaba Group Holding Ltd.of China and Yahoo Japan, and are negotiating with its partners in thosecompanies to shed some of its holdings as part of a complex asset-swap dealvalued at roughly $17 billion, people familiar with the matter have said.

More Uproar About New Google Privacy Policies

2012-02-09T11:05:00.001-05:00

First appeared in USA Today

An advocacy group went to court on Wednesday to block Googlefrom making a policy change that could lead to the search giant assemblingricher behavior profiles of people who use more than one of its popular onlineservices.

The Electronic Privacy Information Center filed a complaintasking a Washington, D.C., district court judge to restrain Google from makingthe policy change on March 1. EPIC also asked the judge to order the FederalTrade Commission to enforce a standing court order that prohibits Google frommisrepresenting its privacy policies.

"We believe Google went way over the line in a varietyof ways," says Marc Rotenberg, EPIC's executive director.

Google spokesman Chris Gaither indicated the company has notseen the court filings. "We welcome discussions about our approach,"he says.

Google recently announced that it would institute a newprivacy policy applicable to anyone using any of its popular online services.The new policy would make it easier for Google to cross-reference users'activity data culled from its most popular services, including search, Gmail,Google Apps, Google+, Picasa and YouTube.

Rotenberg contends that Google is repeating deceptivepractices that got the company into hot water in early 2010 when it launchedBuzz, a new social network that was intended to be part Facebook, part Twitter.

Google piggy-backed Buzz onto the Gmail accounts of 176million users of its free online e-mail service without asking theirpermission. To instantly establish a list of Facebook-like friends, a Googlealgorithm selected up to 50 of each Gmail user's contacts and designated themas Buzz followers, akin to how Twitter users follow each other's postings.

A lengthy FTC deceptive practices probe of Buzz, sparked byan EPIC complaint, resulted in Google agreeing to a consent order thatprohibits the company from misrepresenting its privacy practices. The companyalso agreed to obtain users' consent before disclosing personal data and tocomply with a comprehensive privacy program, subject to audit for 20 years.

Google later also agreed to pay $8.5 million to settleprivacy invasion claims stemming from the launch of Buzz.

Rotenberg contends the same general privacy concerns sparkedby Buzz apply to Google's new privacy policy, which opens the door to thesystematic cross-referencing of users' behaviors across all of the company'smost popular consumer services.

"Buzz involved the combining of data from discreteservices and it gave rise to the consent order," Rotenberg says."This is about combining data across the entire Google platform, evenafter they were made subject to the consent order. As a legal matter we thinkit is far more serious."

Gaither counters that the company is not changing thevisibility of users' information, nor how it shares that information withothers parties.

He emphasizes that the company has undertaken "the mostextensive notification effort in Google's history to ensure that users havemany opportunities to learn about the changes." He insists that the newpolicy "will make it easier to understand our privacy commitments."

Two Google executives made those same points in a closeddoor briefing last week with 10 members of Congress.

Rep. Joe Barton, R-Texas, said he was disturbed by theexecutives' answers to questions about users' inability to delete data fromsensitive e-mails or data that reveals visits to certain websites, such as onewith information about cervical cancer.

"It was obvious to me, as I left the room, that thiscompany has established this policy so instead of the consumer being the masterof the Internet, Google is the master of the consumer," Barton says."I think that is just wrong."

Rep. Mary Bono Mack, D-Calif., said Google's explanationsduring the briefing lacked clarity. Bono Mack said she intends to convene fullhearings on Internet privacy this spring.

The FTC on Wednesday acknowledged being aware of EPIC'scourt filing, but declined to comment specifically on it.

"The FTC takes compliance with our consent orders veryseriously and always looks carefully at any evidence that they are beingviolated," says spokeswoman Cecelia Prewett.

Online Tax Rules

2012-02-09T10:35:00.000-05:00

First appeared in USA Today

Attention, online shoppers. The days of tax-free onlineshopping may be coming to an end.

More than a dozen states have enacted legislation or rulesto force online retailers to collect sales taxes on purchases, according to taxpublisher CCH.

Similar legislation is pending in 10 states.

Reasons for the spread of online sales tax laws:

Budget shortfalls. The National Conference ofState Legislatures estimates that uncollected state sales taxes will coststates $23 billion this year. Residents of sales-tax states are supposed to paytaxes on online purchases, but because retailers don't collect them, theyrarely do.
Heavy lobbying from retailers. Retailers havelong argued that exempting online purchases from sales taxes gives onlineretailers an unfair advantage over brick-and-mortar stores. The pressureescalated in December after online giant Amazon offered customers a one-day 5%discount if they used its Price Check app to make a purchase while in aphysical store, says Jason Brewer of the Retail Industry Leaders Association,which supports taxing online purchases.
"A store manager has the power to say,'I'll match that price,' but they don't have the power to say, 'I won't chargeyou a sales tax,' " he says. "They go to jail if they do that."
Gridlock. Legislation has been introduced in theHouse and Senate that would give states broad authority to require onlineretailers to collect state sales taxes, as long as they streamline thecollection process.

Amazon supports the legislation, says spokesman Ty Rogers.Federal legislation to permit interstate collection of sales tax "is theonly way to level the playing field for all sellers and provide states theright to obtain more than a fraction of the revenue already owed," hesays.

Despite bipartisan support, though, the bill has languishedin Congress. "Many of the states have gotten somewhat frustrated waitingfor Congress to act," Brewer says.

In 1992, the Supreme Court ruled that states couldn'trequire retailers to collect sales taxes unless the retailers had a physicalpresence in the state.

Increasingly, though, states have interpreted thatrequirement to include subsidiaries or affiliates of online retailers, oronline retailers with a warehouse or distribution center in the state.

Critics say the measures would force online retailers tocollect sales taxes in dozens of states and jurisdictions, with different ratesand definitions of which products are taxable.

"A brick-and-mortar retailer only has to keep track ofone sales tax rate," says Joseph Henchman, vice president for the TaxFoundation, a non-profit tax research group. "An online retailer wouldhave to collect tax based on where their customer is located."

The administrative burden would be particularly difficultfor small businesses that sell their products online, says Jerry Cerasale,senior vice president for the Direct Marketing Association.

These merchants could be forced to raise prices to cover theadded compliance costs, Cerasale says.

"That's going to harm e-commerce, which is one of thefew promising growth spots in this somewhat stagnant economy."

Investors Don’t Know Companies Were Hacked

2012-02-06T09:23:00.002-05:00

First appeared in Reuters

At least a half-dozen major U.S. companies whose computershave been infiltrated by cyber criminals or international spies have notadmitted to the incidents despite new guidance from securities regulatorsurging such disclosures.

Top U.S. cybersecurity officials believe corporate hackingis widespread, and the Securities and Exchange Commission issued a lengthy"guidance" document on October 13 outlining how and when publiclytraded companies should report hacking incidents and cybersecurity risk.

But with one full quarter having elapsed since the SECrequest, some major companies that are known to have had significant digitalsecurity breaches have said nothing about the incidents in their regulatoryfilings.

Defense contractor Lockheed Martin Corp, for example, saidlast May that it had fended off a "significant and tenacious" cyberattack on its networks. But Lockheed's most recent 10-Q quarterly filing, likeits filing for the period that included the attack, does not even list hackingas a generic risk, let alone state that it has been targeted.

A Reuters review of more than 2,000 filings since the SEC guidancefound some companies, including Internet infrastructure company VeriSign Incand credit card and debit card transaction processor VeriFone Systems Inc,revealed significant new information about hacking incidents.

Yet the vast majority of companies addressing the issue onlyused new boilerplate language to describe a general risk. Some hacking victimsdid not even do that.

"It's completely confusing to me why companies aren'treporting cyber risks" if only to avoid SEC enforcement or private lawsuits,said Jacob Olcott, former counsel for the Senate Commerce committee. The chairof that committee, John D. Rockefeller, urged the SEC to act last year.

Stewart Baker, a corporate attorney and former assistantsecretary of the Department of Homeland Security, said the SEC guidance wasdetailed enough that companies that know they have been hacked will "haveto work pretty hard not to disclose something about the scope and risk of theintrusion."

Otherwise, "this is an opportunity for enforcement thatpractically hands the case to the SEC on a platter," Baker said.

Lockheed spokesman Chris Williams said hacking was coveredunder the company's most recent annual securities filing, which has as one ofmany risk factors "security threats, including threats to our informationtechnology infrastructure, attempts to gain access to our proprietary orclassified information, threats to physical security of our facilities and employees,and terrorist acts."

Williams said the May attack had "no material effect onour business."

Mantech International Corp, CACI International Inc and otherdefense and technology firms that have been reported by security researchers ashacking victims were likewise silent in their most recent filings. NeitherMantech nor CACI responded to interview requests.

"It's common knowledge" that most large defensecontractors have been penetrated, said Olcott.

Sikorsky Aircraft, mindful of a strict New Hampshire lawwarning individuals at risk of identity theft, wrote to that state's attorneygeneral in August that hackers had gotten into its system and could haveaccessed Social Security numbers of 55 employees who lived in the state.

Sikorsky said the employee data likely was not the hackers'target, which suggests that they might have been after designs or other tradesecrets. But Sikorsky parent United Technologies Corp did not mention the Mayintrusion in subsequent SEC filings.

"Like other companies, our businesses are subject to(information technology) security attacks at times. We monitor systems andcooperate closely with the government when appropriate," said United Technologiesspokesman John Moran.

DEARTH OF CONFESSIONS

Melissa Hathaway, a former intelligence official who ledU.S. President Barack Obama's initial cybersecurity policy review and helpedpush the SEC to enact a disclosure policy, said she was "surprised"at the dearth of new confessions.

"The SEC division of corporate finance has anobligation to ask these companies why they didn't disclose," she said."We need to have transparency on the state of the situation, and we needto have a national conversation regarding the near-term impact of economicespionage and the long-term health of the nation."

The SEC declined to comment. The agency's guidanceofficially clarifies previous policy instead of establishing a new rule, aprocess that takes longer and requires a vote of the commissioners. A personclose to the agency said it expects fuller disclosures in annual 10-K filingsthat will begin appearing in volume this month.

Cybersecurity has been an increasing concern in Washington,and Obama asked during his State of the Union speech for action on legislativeproposals. Security experts believe hackers are frequently targeting valuabledigital information including strategic plans, blueprints and secret formulas.

But security experts in and out of government havecomplained for years that most companies don't disclose even very successfulhacking attacks, because they never find out about them or simply don't want tospook investors, customers or business partners.

The U.S. National Counterintelligence Executive, in alandmark November report that openly accused China of sponsoring military andeconomic cyber espionage, said that it is hard for companies to estimate theimpact of losses that might not be apparent for years.

One Pentagon contractor that did go into some detailrecently about the threat was Northrop Grumman Corp, which warned:"Cybersecurity attacks in particular are evolving and include, but are notlimited to, malicious software, attempts to gain unauthorized access to data,and other electronic security breaches that could lead to disruptions inmission critical systems, unauthorized release of confidential or otherwiseprotected information and corruption of data. These events could damage ourreputation and lead to financial losses from remedial actions, loss of businessor potential liability."

A few technology companies gave even more specific warnings,including Juniper Networks Inc, which makes gear for routing Internet traffic,and chip-maker Intel Corp. Intel had been one of the few to disclose asuccessful breach in the past, along with Google Inc, which has complained ofattacks originating in China.

In a November filing, Intel repeated that hackers had gotteninside and warned that "the theft or unauthorized use or publication ofour trade secrets and other confidential business information as a result ofsuch an incident could adversely affect our competitive position and reducemarketplace acceptance of our products."

Some companies asserted that they had not been hacked, or atleast averred that they had not been subject to a "material" or"catastrophic" intrusion.

Others confessed to breaches for the first time, includingVeriSign and VeriFone Systems, which said it had experienced "securitybreaches or fraudulent activities related to unauthorized access to sensitivecustomer information."

The company did not respond to requests for elaboration.Point-of-sale terminals including VeriFone's models are popular targets forcriminal hackers, who can tamper with them in order to record passwords andcard numbers.

VeriFone has been reported as a supplier of machines toMichaels Stores Inc, a retail chain of hobbyist stores that had to replace morethan 7,000 terminals last year after discovering tampering in 20 states.

Two other companies said they disclosed breaches because ofthe SEC guidance. Tumi Holdings, the luggage maker that is pursuing an initialpublic offering, said in a stock prospectus that security systems in some ofits retail stores had been compromised in the past.

In an interview, Tumi Chief Financial Officer Michael Mardysaid there had been no theft of a database or other massive breach. Instead, hesaid there had been occasions where store employees had conspired withoutsiders on a small scale, for example by giving refunds to people who had notmade purchases.

"We felt it was necessary to list as a risk factorbecause it actually is a risk factor," Mardy said.

University of Phoenix parent Apollo Group Inc, which in thepast had noted attempted breaches, for the first time said some attempts hadsucceeded.

"We are facing an increasing number of threats to ourcomputer systems of unauthorized access, computer hackers, computer viruses,malicious code, organized cyber attacks and other system disruptions andsecurity breaches, and from time to time we experience such disruptions andbreaches," it wrote in a 10-Q.

Apollo spokesman Rick Castellano declined to say howextensive the breaches had been. "Cybersecurity is an area of growing areaof concern for all companies", Castellano said. "We devotesignificant resources to manage any potential threat."

EU Wants Changes in Google Privacy Policy to Stop

2012-02-06T09:19:00.002-05:00

First appeared on Reuters

A group of European regulators has written to Google Inccalling on it to halt the introduction of its new privacy policy, saying itneeds to investigate whether the proposals sufficiently protect users' personaldata.

Google said in January it was simplifying its privacyregulations, consolidating 60 guidelines into a single policy that willfunction across all its services, including YouTube, Gmail and Google+, itssocial network site.

The Article 29 Working Party, an independent body thatbrings together data protection authorities from each of the EU's 27 countriesand the EU's executive European Commission, said it needed to examine Google'splans more thoroughly before the search group's policy comes into effect onMarch 1.

"Given the wide range of services you offer, and thepopularity of these services, changes in your privacy policy may affect manycitizens in most or all of the EU member states," the group wrote toGoogle Chief Executive Larry Page on Feb. 2.

"We wish to check the possible consequences for theprotection of the personal data of these citizens in a coordinated way,"it said, explaining that France's data protection authority would be in chargeof the investigation.

"In light of the above, we call for a pause in theinterests of ensuring that there can be no misunderstanding about Google'scommitments to information rights of their users and EU citizens, until we havecompleted our analysis."

The European commissioner in charge of data protection,Viviane Reding, welcomed the move, saying it was a necessary to establish thatEU data rules were being firmly applied.

"The Commission therefore calls on Europe's dataprotection authorities to ensure that EU law is fully complied with in Google'snew privacy policy," she said in a statement.

Google said the raising of concerns came as a surprise.

"We briefed most of the members of the working party inthe weeks leading up to our announcement," said Al Verney, Google'sspokesman in Brussels.

"None of them expressed substantial concerns at thetime, but of course we're happy to speak with any data protection authoritythat has questions."

Google's director of public policy has explained the newpolicy as a commitment to simplicity, with the company trying to explain itsguidelines far more concisely.

"We're explaining our privacy commitments to users ofthose products in 85 percent fewer words," Pablo Chavez wrote on his blogon Jan. 31.

The new policy explains what information Google collectsfrom the millions of people who use its services every day, why the informationis collected, how it is used and what choices are then offered to limit how itis accessed and updated.

While Google is not obliged to wait for the conclusion ofthe Article 29 Working Group's investigation before adopting its new policy,the company has tended in the past to be as cooperative as possible withEuropean authorities.

The move by the EU regulators comes days after the EuropeanCommission set out legislative plans to overhaul its 17-year-old dataprotection rules, putting in place much more stringent policies on the protectionof individual's data.

Under the new rules, internet companies such as Google,Facebook and Yahoo would have to ask users whether they can store and selltheir data to other businesses, such as advertisers, which is source of almostall their income.

Internet users can also ask for their data to be deletedfrom websites for good, the so-called "right to be forgotten."

Separately, Google remains the subject of an inquiry by boththe EU's competition authority and the U.S. Federal Trade Commission into howthe company ranks its search results. The inquiries are based in part oncomplaints from French rivals.

The FTC expanded its probe on Jan. 13 to include Google'ssocial networking site Google+.

Facebook IPO Is Unheard Of

2012-02-02T14:07:00.000-05:00

First appeared in Wall Street Journal

Facebook Inc. filed for an initial public offering Wednesdaythat could value the social network between $75 billion and $100 billion,putting the company on track for one of the biggest U.S. stock-market debuts ofall time.

The company hopes to raise as much as $10 billion when itbegins selling shares this spring, said people familiar with the matter.Potential buyers got their first look at its financials Wednesday, which showedthe company produced a $1 billion profit last year from $3.71 billion inrevenues. The company derives 85% of those revenues from advertising, with therest from social gaming and other fees.

In just eight years, Facebook has become the world's socialbazaar, where friends gossip, play games and swap 250 million photos per day.It has also emerged as a potent political tool, helping to topple regimes acrossthe Middle East last year.

But for all its success, the question remains just howFacebook will manage its growth into a mature, global business, keeping bothadvertisers and subscribers happy while balancing demands of privacy andprofits. The filing left a few clues that Facebook's founder, 27-year-old MarkZuckerberg, is worried about how wealth and public scrutiny may change thecompany's culture.

At Facebook's offices, employees went about business asusual Wednesday, said one person, enjoying a lunch of lobster bisque, braisedbeef, Moroccan couscous and apple, cream and honey galette for dessert, saidanother. A stack of giveaway posters left in a kitchenette at Facebookheadquarters read "Stay Focused & Keep Shipping," according to aphoto shared by Facebook employees. Mr. Zuckerberg shared a photo on Facebookof the flyer on his desk.

Looming a few months away is Facebook's giant offering,which would top rival Google Inc.'s 2004 IPO. It holds the record for thelargest U.S. Internet IPO by raising $1.9 billion at a valuation of $23billion. Among U.S. companies, only Visa Inc., General Motors Co. and AT&TWireless have held larger offerings than $10 billion. In the filing with theSecurities and Exchange Commission, Facebook said it is seeking to raise $5billion, but that figure is a placeholder and will likely grow.

While Facebook is growing fast—revenue grew 88% from a yearearlier—the sales figures it released were lighter than some had expected. Onewidely cited outside estimate from research firm eMarketer pegged Facebook'srevenue for 2011 at $4.27 billion.

Still, Facebook's membership growth has been staggering. Thecompany said in its filing that it has 845 million users globally, up 39% froma year earlier.

The IPO is set to unleash a wave of wealth across SiliconValley and yield potentially $100 million or more in fees for Wall Street banksmanaging the offering, including Morgan Stanley, J.P. Morgan Chase & Co.and Goldman Sachs Group Inc.

The company chose "FB" as its ticker symbol buthasn't decided whether it will trade on the New York Stock Exchange or NasdaqStock Market.

Mr. Zuckerberg had been famously reluctant to push forwardwith an IPO. In early 2010, he told The Wall Street Journal that he was in"no rush" for Facebook to go public.

The CEO owns around 28% of the company and holds 57% of itsvoting share power, according to the filing. Mr. Zuckerberg will sell shares inthe IPO and will use the proceeds to pay taxes, it said. The filing doesn't sayhow many shares the CEO intends to sell.

People familiar with Mr. Zuckerberg's thinking said he haslong been fearful of the damage an IPO could do to the company's culture. Hewants employees focused on making great products, not the stock price, they said.

Mr. Zuckerberg's thinking began changing when Facebookrealized in 2010 that it would have more than 500 shareholders by the end of2011, which would trigger a regulatory requirement that the company startpublicly reporting financials. Mr. Zuckerberg decided it made more sense forFacebook to go public and reap some financial benefit from an IPO.

Facebook also still faces questions about its commitment toits users' privacy, an issue that had dogged it since its earliest days.Despite a settlement last year with the Federal Trade Commission in which thecompany agreed to independent privacy audits for 20 years, privacy advocatesworry about the vast trove of user data it owns. Mr. Zuckerberg has promisedusers he is committed to protecting their privacy.

Facebook takes pains to mention the importance of privacy,mentioning the word 35 times in the filing, and even listing its "privacyand sharing settings" as one of the ways the company creates value.

In a letter to potential shareholders, Mr. Zuckerberg—whohas long eschewed the business side of Facebook—said he plans to continuefocusing on building products, rather than sales growth. "We don't buildservices to make money; we make money to build better services," Mr.Zuckerberg wrote. "These days I think more and more people want to useservices from companies that believe in something beyond simply maximizingprofits."

Overall, Facebook's annual revenue growth is slower thanother tech companies who have staged IPOs recently. Groupon's revenue grew 695%for the nine months ended September 2011 from a year earlier. Zynga's revenuemore than doubled for that same time period.

Unlike some other newly public Web companies, Facebook isprofitable, with 2011 profit up 65% from the year earlier period. But growthhas its costs. The company's research and development expenses ballooned lastyear to $114 million in 2011 from $9 million in 2010, primarily due to growthin employee head count and equity compensation. Facebook's costs and expensesare going up faster than revenue. It employs 3,200 as of December, up from2,172 a year earlier.

Debra Williamson, an eMarketer analyst who had estimatedFacebook's 2011 revenue at $4.27 billion, called the company's revenue"disappointing."

But Kevin Landis, portfolio manager of Firsthand TechnologyValue Fund, Inc., which has bought Facebook shares in the secondary market,said he wasn't disappointed and hopes to buy more stock when Facebook goespublic. "This is a company that has only just begun to scratch the surfaceof making money off those hundreds of millions of people getting on Facebookevery day," he said.

Social gaming has become an increasingly important part ofFacebook's business. The company generated $557 million in revenue frompartners such as Zynga who sell virtual goods last year.

Facebook's revenue is still driven by online ads. The numberof ads delivered on the site grew 42% and the average price per ad grew 18%over 2011 from 2010, according to the filing.

The company attributed the improvement to a vast trove ofinformation that allows marketers to "show their ads to a subset of ourusers based on demographic factors such as age, location, gender, education,work history, and specific interests that they have chosen to share with us onFacebook or by using the Like button around the web or on mobile devices."

Amazon is Faltering in Recent Revenue Estimates

2012-02-02T13:36:00.002-05:00

First appeared in Bloomberg

Amazon.com Inc. (AMZN) fell the most in three months aftersales missed estimates, signaling that its investments in media services,Kindle devices and shipping promotions have been slow to pay off.

Amazon shares dropped 7.7 percent to $179.46 after theSeattle-based company said yesterday that fourth-quarter revenue was $17.4billion, trailing the $18.3 billion estimated by analysts in a Bloombergsurvey. It was the biggest one-day stock decline since Oct. 26.

Amazon, the world’s largest Internet retailer, got lessrevenue from digital media than anticipated, especially in the video-gamemarket. The company also is relying more on third- party sellers, which canbolster profit but generate less revenue than direct sales. Amazon hasconditioned investors to expect stronger growth, making the latest resultsdisappointing, said Colin Gillis, an analyst at BGC Partners LP in New York.

“To miss on the top line, that’s what breaks the momentum,”said Gillis, who recommends selling Amazon stock.

Net income fell 57 percent to $177 million, or 38 cents ashare, from $416 million, or 91 cents, a year earlier, the company said in astatement.

First-quarter operating income may range from a loss of $200million to a gain of $100 million, the company said. Analysts were projecting aprofit of $268.1 million. Sales will be $12 billion to $13.4 billion, Amazonsaid, compared with an estimate at the top of that range.

Hard to Explain

Chief Executive Officer Jeff Bezos is squeezing margins insearch of growth, looking to add customers by pushing free shipping andoffering its Kindle devices at cut-rate prices. While investors were expectingprofit to take a hit, the sales slowdown is harder to accept, said Brian Nowak,an analyst at Nomura Securities International Inc. in New York. The reasonsoutlined by the company don’t seem to fully account for the sluggishness, saidNowak, who rates Amazon shares “neutral.”

Amazon’s third-party sellers use the company’s site to hawktheir products and then provide a commission. Unit sales by outside retailersincreased 65 percent during the holiday quarter and now make up 36 percent ofunits sold, Bezos said in the statement. Total sales rose 35 percent.

“Whenever there’s a mix-shift toward third party, it helpsmargins, but it reduces revenue,” said Colin Sebastian, an analyst at Robert W.Baird & Co. in San Francisco. He has an “outperform” rating on Amazon’sstock.

Earnings Top Estimates

The shift helped earnings top estimates last quarter, evenwith the sales shortfall. Analysts projected 16 cents a share. Still, theoperating margin tightened to 1.5 percent in the period, from 3.7 percent ayear earlier.

“Trying to predict during a seasonal Q4 is challenging,” TomSzkutak, Amazon’s chief financial officer, said on a conference call. “Thatthird-party increase is great for customers, great for sellers and helped ourbottom line.”

Amazon’s Prime program, which offers unlimited two-dayshipping for $79 a year, boosted expenses over the holiday shopping season,said Jason Helfstein, an analyst at New York- based Oppenheimer & Co.

“With shipping, if you look at that net loss number as apercentage of revenue, it keeps going up,” he said. “They’re trying their bestto offset that in other ways.”

The money-losing Kindle Fire tablet also has raisedexpenses. At $199, the device is less than half the price of Apple Inc.(AAPL)’s cheapest iPad. The expectation is that consumers will spend the moneythey save on Amazon’s e-books and video content, Jordan Rohan, an analyst atStifel Nicolaus & Co., said in a note this week. That eventually will morethan make up for revenue lost selling the device, he said.

Video-Game Decline

For now, Amazon’s media sales aren’t growing as quickly asanticipated. U.S. media revenue climbed 8.1 percent last quarter, about halfthe 15 percent that Sebastian was predicting. The decline in video-game saleshurt the unit’s results, Szkutak said.

Investors had speculated that the company would get a biggerboost from a 15 percent gain in industrywide holiday e- commerce spending,which ComScore Inc. (SCOR) pegged at a record $37.2 billion.

Shareholders may now be wondering if the stock has becometoo expensive, Gillis said. It trades at 141.9 times earnings over the past 12months, according to data compiled by Bloomberg. By comparison, Apple’sprice-to-earnings ratio is 13.

“When you have revenue growth start to stall, then thevaluation question marks start to rise,” he said.

The company also elaborated on its potential risks in afiling today. Amazon said it relies on third-party providers for thetechnologies that encrypt, authenticate and send confidential information, andthat a security attack could result in litigation.

Google Worries About New Data-Handling Privacy Laws

2012-01-27T09:41:00.003-05:00

First appeared in USA Today

They may be battling each other tooth-and-nail to win overonline advertisers. But Google and Facebook are on the same side when it comesto opposing new data-handling privacy laws fast-gelling in Europe and the U.S.

On Wednesday, the European Union formally proposed strictrules that could restrict much of the systematic tracking and profiling Googleand Facebook routinely do of Internet users, as part of delivering targeted adsto them.

If Europe's new rules are implemented as expected in 2013,the tech rivals could face hefty fines, up to 2% of annual revenue, for anyviolations. In Google's case that translates into a maximum penalty of $800million.

On Tuesday, Facebook Chief Operating Officer Sheryl Sandbergdelivered a statistics-filled speech at a tech conference in Munich outlininghow Europe's proposed rules are very likely to stymie the global economy.

Sandberg called for a "regulatory environment thatpromotes innovation and economic growth."

Google spokesman Chris Gaither echoed Sandberg's argument.He says the search giant "supports simplifying privacy rules in Europe toboth protect consumers online and stimulate economic growth."

Meanwhile, refinements announced this week by Google andFacebook, about how each tracks and profiles Internet users, added heat to thedomestic debate over the need for new data privacy rules here in the U.S.

Google signaled that it will begin cross-referencing userdata compiled from its most popular services, including search, Google Apps,Gmail and YouTube. The stickler: Users won't be permitted to "optout" of having their Google activities correlated.

"Google is taking that option away," says P.J.McNealy, analyst at Digital World Research. Younger Internet users may not caremuch, he says. But Google patrons who are "more cautious or conservativewith their personal data" may "cringe," McNealy says.

Meanwhile, the non-profit group SafeGov, which monitorssecurity issues for federal, state and local government agencies, is alarmedthat Google's new policy could put workers who use Google Applications forGovernment, a paid service, at heightened risk.

"Google should not be data-mining information ine-mails, text messages, searches and documents that workers are putting intoGoogle services," says Jeff Gould, SafeGov security analyst. "It's amatter of not making government workers unnecessarily exposed to hackers and toinadvertent disclosures of information."

Google Vice President Amit Singh says Google's new privacypolicy for consumer data is superceded by data privacy provisions in contractswith government agencies and other organization who use the paid version ofGoogle Apps.

"As always, Google will maintain our enterprisecustomers' data in compliance with the confidentiality and security obligationsprovided to their domain," says Singh.

But Gould checked the city of Los Angeles' contract withGoogle and found that the data-privacy provision referred back to Google'spolicy for consumers. "They didn't think through the consequences forgovernment users," Gould says.

Meanwhile, Google is busy fielding inquiries from a handfulof politicians who've proposed legislation that would restrict online trackingand establish rules for data privacy.

"Amazingly, we still don't have a law that sets therules of the road for fair information practices that everyone collecting,using, and distributing people's personal information must adhere to,"says John Kerry, D- Mass.

Kerry and Sen John McCain, R-Ariz., continue to work forpassage of the Commercial Privacy Bill of Rights. "Until Congress acts,Google and the rest of its competitors will continue to set that standardthemselves. "

Rep. Ed Markey, D-Mass., notes that "Googling is likebreathing for millions of kids and teens - they can't live without it."Markey, who has also been critical of Facebook's tracking practices, is callingon the Federal Trade Commison to review Google's new no-opt-out policy.

"Consumers - not corporations - should have controlover their own personal information, especially for children and teens,"says Markey.

Facebook is drawing more scrutiny too. It is makingmandatory a new, glitzier user interface, called Timeline, that chronologicallydisplays a member's preferences, contacts and online activities.

Facebook says Timeline does not present any new informationnor alter any privacy settings.

Even so, SafeGov analyst Gould, for one, is concerned."If you take the new Google policy and combine it with Facebook Timeline,the danger of hacking attacks for government users is multiplied by ten,"he says.

More intensive tracking and profiling by the tech rivalsputs richer data in cyberscammers' hands.

Gould worries about the all-too-common scenario where anintruder e-mails a government worker pretending to be an acquaintance."They can put information in an e-mail which they can get from yourFacebook Timeline, and trick you into downloading a piece of spyware," hesays.

Heightened cross-referencing of an individual worker's Google Search Company, Gmail andYouTube activities poses similar risks, he says.

Twitter Can Censor Tweets

2012-01-27T09:36:00.000-05:00

First appeared in USA Today

Twitter has refined its technology so it can censor messageson a country-by-country basis.

The additional flexibility announced Thursday is likely toraise fears that Twitter's commitment to free speech may be weakening as theshort-messaging company expands into new countries in an attempt to broaden itsaudience and make more money.

But Twitter sees the censorship tool as a way to ensureindividual messages, or "tweets," remain available to as many peopleas possible while it navigates a gauntlet of different laws around the world.

Before, when Twitter erased a tweet it disappearedthroughout the world. Now, a tweet containing content breaking a law in onecountry can be taken down there and still be seen elsewhere.

Twitter will post a censorship notice whenever a tweet isremoved. That's similar to what Internet search leader Google Inc. has beendoing for years when a law in a country where its service operates requires asearch result to be removed.

Like Google, Twitter also plans to the share the removal requestsit receives from governments, companies and individuals at thechillingeffects.org website.

The similarity to Google's policy isn't coincidental.Twitter's general counsel is Alexander Macgillivray, who helped Google draw upits censorship policies while he was working at that company.

"One of our core values as a company is to defend andrespect each user's voice," Twitter wrote in a blog post. "We try tokeep content up wherever and whenever we can, and we will be transparent withusers when we can't. The tweets must continue to flow."

Twitter, which is based in San Francisco, is tweaking itsapproach now that its nearly 6-year-old service has established itself as oneof the world's most powerful megaphones. Daisy chains of tweets already haveplayed instrumental roles in political protests throughout the world, mostnotably in the uprising that overthrew Egypt's government a year ago.

It's a role that Twitter has embraced, but the company cameup with the new filtering technology in recognition that it will likely beforced to censor more tweets as it pursues an ambitious agenda. Among otherthings, Twitter wants to expand its audience from about 100 million active usesnow, to more than 1 billion.

Reaching that goal will require expanding into morecountries, which will mean Twitter will be more likely to have to submit tolaws that run counter to the free-expression protections guaranteed under theFirst Amendment in the U.S.

If Twitter defies a law in a country where it has employees,those people could be arrested. That's one reason Twitter is unlikely to try toenter China, where its service is currently block. Google for several yearsagreed to censor its search results in China to gain better access to thecountry's vast population, but stopped that practice two years after engagingin a high-profile showdown with Chain's government. Google now routes itsChinese search results through Hong Kong, where the censorship rules are lessrestrictive.

In its Thursday blog post, Twitter said it hadn't yet usedits ability to wipe out tweets in an individual country. All the tweets it haspreviously censored were wiped out throughout the world. Most of those includedlinks to child pornography.

Financial Advisers Fear Hackers in Social Media

2012-01-26T16:23:00.000-05:00

First appeared on Reuters

Financial advisers may be overlooking one potential threatin the rush to develop new client relationships through social media: hackers.

Social media websites like Facebook and Twitter can helpfinancial advisers tap a rich source of potential business. But there are risksassociated -- beyond the fear of someone posting false information about you --that can compromise an adviser's reputation and computer network. Someso-called "friends" could actually be hackers working to take overprofile pages or infect users' computer systems with malware, say technologyprofessionals.

Hackers, for example, could post embarrassing comments usingthe adviser's name. They could also try to harvest tidbits of information,including names, birthdays and photographs, and use them to help create falseidentities which could be used to open credit or other accounts. What's more,an adviser's hacked account can automatically send messages that containmalware directly through social networking sites. Or an adviser couldunknowingly infect his or her own business network by opening a malware-lacedlink sent via message.

The trouble is, most people do not realize these things havehappened until after the fact. Advisers are no different.

"I don't think advisers have given much thought toprotecting themselves from hacking on social media sites," said KorrineKohm, vice president at Ascendant Compliance Management, a consultancy inSalisbury, Connecticut.

Companies typically have filters and firewalls in place toprotect their internal computer networks. But those types of precautionsusually do not extend to applications, or apps, advisers may run on portabledevices, such as iPhones, to access social networking sites, according to Kohm.

Knowing the risks before jumping in can help advisersprotect themselves from security breaches and possible regulatory trouble,compliance consultants said.

REGULATION AND RISK

The ramifications extend beyond annoying clients or anexpensive tech clean-up.

Advisers must archive posts and messages they send throughsocial networking for three years, according to recent regulatory guidance. Buthackers could distort those archives by deleting or rewording prior posts, accordingto Conrad Jacoby, a senior attorney at Winston & Strawn LLP in Washington.

That could raise eyebrows among securities regulators, saidJacoby, who advises clients on managing information that is storedelectronically. Altered posts could be embarrassing or violate securitiesindustry advertising rules.

Social media monitoring and archiving software can helpadvisers keep track of their social media communications, including anythingthat is removed or altered. That could help eliminate concerns that regulatorsmay have if a hacking problem crops up.

Facebook, Twitter and LinkedIn did not respond to emailsfrom Reuters requesting comment. However, each include security information ontheir websites that advisers should review. A Facebook page, for example,explains threats, such as Koobface, a computer worm, and how to identify them.LinkedIn audits its system for possible "vulnerabilities and attacks,"according to its site.

SAVING REPUTATIONS

Compliance programs that raise awareness of social mediaissues can help advisers manage hacking risks -- and potential regulatorytrouble, said Glen Gilmore, a social media lawyer and principal at GilmoreBusiness Network, a consultancy in Hamilton, New Jersey.

The SEC, in recent guidance, signaled that advisers shouldconsider social media training "to promote compliance and to preventpotential violations of the federal securities laws."

Training could include how to recognize sham messages thatmay contain viruses, or procedures to follow if a hacker takes over anadviser's profile page and spouts posts about, say, a new weight-losssupplement.

Advisers who diligently keep watch over their socialnetworking profiles are also more likely to avoid problems. Recent guidance toadvisers from Massachusetts Secretary of the Commonwealth William Galvinsuggested reviewing social networking sites daily to ensure that their contentcomplies with regulations.

Ongoing reviews of social media profiles can help adviserstackle problems early when they do occur. That could include telling clients --quickly -- that an embarrassing message about legalizing marijuana really camefrom a hacker.

"Companies have to anticipate there will beproblems," Gilmore said. "But how they handle it is what separateswho masters social media and who doesn't."

Facebook and Google May Be Going Too Far

2012-01-26T16:19:00.002-05:00

First appeared in USA Today

Google and Facebook might have finally gotten the averageconsumer riled up about privacy.

For the past two years, each company has experimented withdifferent ways to divine more and more about how people live their lives on theInternet, without sparking a revolt.

But the plans the rivals announced on Tuesday, which criticssay could dramatically rev up their respective abilities to gather intelligenceon individual Internet users, seem to have struck a chord. An informal andunscientific survey of Web users by USA TODAY found a majority speaking outagainst the new business practices announced by Google and Facebook.

"It's dangerous for two companies to have so muchpersonal data, regardless of whether the specific threats of that dataconsolidation are immediately clear," says Sarah Downey, a privacy analystat software maker Abine.

Compelled to tap what many experts predict will be the nextbig Internet mother lode — online advertising — Google and Facebook laid downvery big bets, during a week when European regulators are hashing out strictnew rules that could prevent much of what the tech giants seek to do.

Google signaled its intent to begin correlating data aboutits users' activities across all of its most popular services and acrossmultiple devices. The goal: to deliver those richer behavior profiles toadvertisers.

Likewise, Facebook announced it will soon make Timeline thenew, more glitzy user interface for its service, mandatory.

Timeline is designed to chronologically assemble,automatically display and make globally accessible the preferences,acquaintances and activities for most of Facebook's 800 million members.

Google and Facebook have repeatedly insisted that thechanges are intended strictly to improve users' experiences.

"Facebook works the way it always has," saysspokeswoman Meredith Chin. "There is no new information on Facebook as aresult of Timeline, and no privacy settings have been changed with theintroduction of it. It's simply an updated version of the profile."

But the changes have stirred anger from many consumers.Some, such as Joyce Norman, a writing consultant from Birmingham, Ala., areconsidering ways to limit their exposure to Google's and Facebook's newbusiness practices. "Mine is not a lone voice crying in thewilderness," says Norman.

Benjammin Gaultney of Montague, Mich., sees it differently,looking forward to the possibility of more appropriate ads coming to hisscreen. "You have to deal with ads all over the Internet either way,"he wrote on USA TODAY's Facebook page. "Advertisers could at least try tosell me something I'm actually interested in rather than life insurance."

Meanwhile, a high-stakes lobbying effort is unfolding inWashington aimed at shaping policies favorable to U.S. tech companies andblunting any potential move to follow Europe's more conservative proposals tolimiting online tracking by companies.

The tech giants sharply increased their lobbying spendinglast year. Google spent $9.7 million in lobbying in 2011, up from $5.2 millionin 2010, says the Center for Responsive Politics. Facebook spent $1.4 millionin 2011 vs. $351,000 in 2010.

The driver: advertising revenue. The global onlineadvertising market is expected to swell to $132 billion by 2015, up from $80billion this year, according to eMarketer. Google and Facebook are puttingtheir abilities to index individuals' online activity and behaviors into high gearto tap into this market, analysts say.

"If they can make the ads more relevant, the logicgoes, they can increase the number of advertisers and the price they can chargeper click (on each ad)," says Alex Daley, chief investment strategist atCasey Research. "Because the click will be from more qualified leads —customers who are more interested in the product — they can grow the revenuebase."

But security analysts, privacy advocates and technologistssay consumers probably should be very concerned. While making richer behavioraldata more readily available to advertisers, Google's new data-correlatingpractices and Facebook's new Timeline and Open Graph, a more powerful way toexpress preferences on third-party websites, also tend to aid and abet more unsavoryuses.

Beware of cybercrooks

Richer personal details are very beneficial to identitythieves and cyberspies, as well as to parties motivated to use such dataunfairly against consumers, such as insurance companies, prospective employers,political campaigners and, lately, hacktivists, security analysts say.

"What these unilateral decisions by Google and Facebookdemonstrate is a complete disregard for their users' interests andconcerns," says John Simpson, spokesman for Consumer Watchdog. "It'san uncommonly arrogant approach not usually seen in business, where thesecompanies believe they can do whatever they want with our data, whenever andhowever they want to do it."

Google has a long history of running into privacy problems.

Its Gmail raised hackles early on when the search giantdecided to mingle advertising alongside users' e-mail. The move initiallyconcerned people because the ads' relevancy was linked to e-mails inside users'accounts. For example, if a person was writing about buying a car, ads for carscould appear alongside that individual's e-mail. To many, that felt like aprivacy intrusion.

The search giant maintains that such contextual ads, whereadvertisers can bid on keywords that relate to a users' content, don't revealpersonal identities. Gmail users can turn some of the ads off, but adjustingthe feature requires some work.

Much of this type of product development is the result ofGoogle taking a very engineer-focused approach to mining data rather thanserving consumer interests, say industry experts. Google engineers want to playwith technology first, but they think about how the product plays withconsumers and privacy second, says IDC analyst Karsten Weide.

When Google tried to build its Buzz social network in 2010from Gmail contacts, it ran into privacy problems. It began publicizing users'contacts without asking. The Federal Trade Commission last year charged Googlewith "deceptive privacy practices" in the handling of Buzz.

Google "did not respect" consumers' expectations ofprivacy, says Helen Nissenbaum, a professor of media, culture and communicationat New York University. "They (Google) seem to be doing the same thinghere" with the privacy update.

Under terms of the FTC consent order, Google agreed to a20-year independent review of its privacy practices.

But the changes announced Tuesday may again set it on acollision course with the FTC.

"We do believe the proposed changes — they have not yetbeen adopted — violate the FTC consent order," says Marc Rotenberg,executive director of the Washington, D.C.-based Electronic Privacy InformationCenter. Those changes could subject Google to monetary damages under Google'sagreement with the FTC, says Rotenberg.

But Rachel Whetstone, Google's senior vice president forpublic policy and communications, says the company would not have proposedprivacy updates that run afoul of the FTC settlement.

"We try to be transparent about the data we collect andgive meaningful controls about how data is used," says Whetstone.

There are also concerns about Google's recent move to rollactivities on its Google+ social network into users' search results. The opt-inintegration of those two Google products mingles profiles, photos and posts ofpeople a user follows on Google+ into the user's search results if they choose.

Whetstone says it doesn't raise privacy issues because theinformation is viewed only by the user.

Facebook's issues

Facebook has had its own issues, most recently in Novemberwhen the FTC announced a broad settlement that requires the company to respectthe privacy wishes of its users and subjects it to audits for the next 20years.

The order, which claimed Facebook engaged in "unfairand deceptive" practices in December 2009, stems largely from the wayFacebook handled information its users deemed to be private information.

On Tuesday it announced that Timeline will become thedefault user interface for all members over the next few weeks.

Combined with the addition last week of some 60 appsspecifically written for Timeline, consumers can provide a detailed account,often in real time, of the music they listen to, what they eat, where they shop— even where they jog.

The deeper personal data of Timeline — which Facebook userswillfully share — are potentially online advertising gold for marketers andadvertisers. This is especially crucial, analysts say, as Facebook steamrollstoward an initial public stock offering this year.

The company is under pressure to increase sales and profitsto meet the lofty expectations of shareholders, and online advertising is themost logical place to do that. Facebook gleaned 89% of its estimated $4.3billion in revenue last year, or about $3.8 billion, from online ads, accordingto eMarketer.

"If Facebook has richer behavioral targeting data thanGoogle, then it has an edge up in relevance," says Casey Research's Daley."And an edge up in relevance is an edge up in revenue."

Some Wall Streeters believe the changes made by Google andFacebook will have only an "incremental" effect on the battle betweenthe two giants in going after online advertising dollars.

Both companies continue to be dominant in their markets,which "tend to be winner-takes-all markets," says Ryan Jacob of theJacob Internet fund. Google continues to hold strength in online search and isa strong player in online video with YouTube and in mobile with its Androidoperating system, he says.

But "Google has a long way to go before it can beconsidered a credible competitor to Facebook," he says.

Google's moves, if anything, are "somewhatdefensive," he says. "For them (Google) to maintain their position insearch, it's important for them to be players in other areas," he says.

Channing Smith of money management firm Capital Advisors,which owns shares of Google, is more optimistic. "If it continues to putup numbers for Google+, it can be a competitor to Facebook," he says.

Rep. Ed Markey, D-Mass., who has already been pressingFacebook to explain its tracking systems, said on Wednesday that he would askthe FTC to take a close look at Google's new privacy policies.

"Google's privacy policy changes mean consumers can'tsay no to sharing their personal information across Google's websites,"Markey said. "Consumers, not Google, should be able to make thesedecisions."

Selling Drugs On Google

2012-01-25T23:24:00.000-05:00

First appeared in Wall Street Journal
Wearing leg irons and guarded by federal agents, David Whitaker posed as an agent for online drug dealers in dozens of recorded phone calls and email exchanges with Google sales executives, spending $200,000 in government money for ads selling narcotics, steroids and other controlled substances.

Over four months in 2009, Mr. Whitaker, a federal prisoner and convicted con artist, was the lead actor in a government sting targeting Google Inc. that yielded one of the largest business forfeitures in U.S. history.

"There was a part of me that felt bad," Mr. Whitaker wrote in his account of the undercover operation viewed by The Wall Street Journal. "I had grown to like these people." But, he said, "I took ease in knowing they…knew it was wrong."

The government built its criminal case against Google using money, aliases and fake companies—tactics often used against drug cartels and other crime syndicates, according to interviews and court documents. Google agreed to pay a $500 million forfeiture last summer in a settlement to avoid prosecution for aiding illegal online pharmaceutical sales.

Google acknowledged in the settlement that it had improperly and knowingly assisted online pharmacy advertisers allegedly based in Canada to run advertisements for illicit pharmacy sales targeting U.S. customers.

"We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago," the company said in its sole comment on the matter. "However, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

The half-billion dollar forfeiture, although historically large, was small change for Google, which holds $45 billion in cash. But the company's acceptance of responsibility opened the door to potential liability for taking ads from other people involved in unlawful acts online, such as distributing pirate movies or perpetrating online fraud.

Google has long argued it wasn't responsible for the actions of its more than one million advertisers. But the forfeiture paid by Google represented not just the money it made from the ads, but also the revenue collected by illegal pharmacies through Google-related sales.

In an important shift, the settlement "signals that, where evidence can be developed that a search engine knowingly and actively assisted advertisers to promote improper conduct, the search engine can be held accountable as an accomplice," according to Peter Neronha, the lead prosecutor.

Unknown is whether the company will toss aside advertisers as a result. "If Google were to adopt a much more restrictive definition of problematic advertisements, everyone would immediately notice a drop in their revenue," said Eric Goldman, director of the High Tech Law Institute at Santa Clara University.

The government's case also contained potentially embarrassing allegations that top Google executives, including co-founder Larry Page, were told about legal problems with the drug ads.

Mr. Page, now Google's chief executive, knew about the illicit conduct, said Mr. Neronha, the U.S. attorney for Rhode Island who led the multiagency federal task force that conducted the sting. "We simply know from the documents we reviewed and witnesses we interviewed that Larry Page knew what was going on," he said in an interview after the August settlement.

Mr. Neronha declined to detail the evidence, which was presented in secret to a federal grand jury. Other people familiar with the case said internal emails showed Sheryl Sandberg, a former top Google executive who left in 2008 for Facebook Inc., had raised concerns about the ads.

Prosecutors could have used that evidence to argue Google deliberately turned a blind eye to lawbreaking to protect a profit stream estimated by the government in the hundreds of millions of dollars.

Ms. Sandberg declined to comment through a spokesman. Mr. Page also declined to comment.
Google says it has strict policies in place to prevent criminals from using its ad services and it bans advertisers who repeatedly violate its guidelines.

"We ban not just ads but also advertisers who abuse our platform, and we work closely with law enforcement and other government authorities to take action against bad actors," said Kent Walker, Google's general counsel.

Mr. Whitaker's story, told here for the first time, presents a different picture. Shuffling into federal court in handcuffs and beige overalls last month, the 37-year-old prisoner looked like he could pass for an employee of a Silicon Valley start-up.

The Tennessee native suffers from bipolar disorder, according to court submissions by his lawyers, and has a history of manic spending and fraud sprees. When he was 16 years old, Mr. Whitaker took his mother's credit card, rented a private jet and flew his girlfriend for a shopping spree in Knoxville, the documents said.

Mr. Whitaker's path to undercover operative began in 2005, when he took millions of dollars in orders for Apple iPods and other electronics at below market prices and skipped town without filling the orders, according to his account and court documents. He hopscotched around the U.S. in a private jet, evading arrest and protected by a private security detail. He briefly rented a Miami mansion for $200,000 a month.

He fled to Mexico in 2006 and started an Internet pharmacy, selling steroids and human growth hormone to U.S. consumers through Google ads, he said. The two substances—sold in the U.S. by prescription only—are sought by body builders to add muscle and by older consumers seeking to slow the signs of aging; they aren't approved in the U.S. for such uses. Google's policy prohibited advertising their sale online.

"It was very obvious to Google that my website was not a licensed pharmacy," Mr. Whitaker wrote to the Journal. "Understanding this, Google provided me with a very generous credit line and allowed me to set my target advertising directly to American consumers."

Mr. Whitaker was arrested in Mexico in March 2008 for entering that country illegally and returned to the U.S. to face charges of wire fraud, conspiracy and commercial bribery in the iPod case. Mr. Whitaker told U.S. authorities about the alleged role Google played in helping his Mexico-based pharmacy.

Federal prosecutors, seeking to test the allegation, set up a task force in early 2009 with Mr. Whitaker's help. On weekdays, he was escorted from the Wyatt Detention Facility in Central Falls, R.I., to a former school department building in North Providence, R.I. There, under the watch of federal agents, he set a snare for Google.

Posing as the fictitious Jason Corriente, an agent for advertisers with lots of money to spend, Mr. Whitaker bypassed Google's automated advertising system to reach flesh-and-blood ad executives. Federal agents created www.SportsDrugs.net, designed to look "as if a Mexican drug lord had built a website to sell HGH and steroids," Mr. Whitaker said in his account of the sting.

Google first rejected it, along with an anti-aging website called www.NotGrowingOldEasy.com. But the company's ad executives worked with Mr. Whitaker to find a way around Google rules, according to prosecutors and Mr. Whitaker's account.

The undercover team removed a link to buy the drugs directly—instead requiring customers to submit an online request form—and Google approved it. "The site generated a flood of email traffic from customers wanting to buy HGH and steroids," Mr. Whitaker said.

To pay Google's fees for the growing online traffic, undercover agents made payments every two or three days with a government-backed credit card.

Federal agents grew more brazen. They created a site selling weight-loss medications without a prescription, according to Mr. Whitaker and people familiar with the matter. They also added another site selling the abortion pill RU-486, which in the U.S. can only be taken in a doctor's office.

Google's ad team in Mexico approved the site, so U.S. consumers searching for "RU 486" would see an ad for the site. Google ad executives allowed the agents to add the phrase "no prescription needed."

Days later, federal agents added links to buy the drugs directly. Such sales broke U.S. laws prohibiting the sale of drugs from outside the country and without a prescription. "There were photos of the drugs, descriptions, labels that clearly printed out that we were shipping without a prescription and it was from Mexico," Mr. Whitaker said.

By the end of the operation in mid-2009, agents were buying Google ads for sites purportedly selling such prescription-only narcotics as oxycodone and hydrocodone. Agents also got Google's sales office in China to approve a site selling Prozac and Valium to U.S. customers without a prescription.

"Google's employees were instrumental in bypassing policy regarding pharmacy verification," Mr. Whitaker told the Journal. "The websites were blatantly illegal."

At the agents' direction, Mr. Whitaker said he signaled his illegal intent to Google ad executives, including Google's top manager in Mexico. As a tape recorder ran, he walked Google executives through the illegal parts of the websites. He said he told ad executives that U.S. Customs had seized shipments, for example, and that one client wanted to be "the biggest steroid dealer in the United States."

Agents at first ignored the flood of orders. But as the ersatz sites morphed into full-fledged Internet pharmacies, they worried that clients, some sick, would be expecting medication.

So customers were told they had to become members by filling out an online form and to receive a "membership kit." The kits never arrived, but it stopped users from placing orders, Mr. Whitaker said.

In the summer of 2009, U.S. agents visited Google's headquarters in Mountain View, Calif., to tell corporate executives about the evidence they had collected. Prosecutors served grand jury subpoenas and eventually collected four million pages of internal emails and documents, as well as witness testimony.

The federal task force, which also included the Food and Drug Administration's Office of Criminal Investigation, was preparing criminal charges against the company and its executives for aiding and abetting criminal activity online, prosecutors said.

Google hired attorney Jamie Gorelick, the former deputy U.S. Attorney General under President Bill Clinton. Two years later, the company reached a settlement with the government, a decision that stopped the likely introduction of emails to top Google executives had the case gone to trial.

"Suffice to say this was not two or three rogue employees at the customer service level doing this on their own," said Mr. Neronha, the U.S. attorney. "This was corporate decision to engage in this conduct."
Six private shareholder lawsuits have so far been filed against Google's executives and board members, alleging they damaged the company by not taking earlier action against the illegal pharmacy ads.

Google has other potential legal exposure. Record companies and movie studios say Google willfully profits from illegal Internet piracy—an issue raised last week, when Congress dropped antipiracy legislation after opposition from Internet companies, including Google.

A 2011 study commissioned by NBC Universal estimated that nearly a quarter of all Internet traffic relates to pirated movies, TV shows and games. "There's big business in being agnostic about what sites you place your ads on," said Jay Roth, national executive director of Directors Guild of America, which backed antipiracy legislation.

Online scams pose another potential legal threat. Searches relating to mortgage refinancing have been among the most popular on Google, Eric Schmidt said in 2009 when he was chief executive. An investigation by Consumer Watchdog, a consumer advocacy group, found that a large number of companies selling "mortgage modification" on Google bore the hallmarks of fraud.

The special inspector general's office for the Troubled Asset Relief Program in November said it had shut down 85 alleged online loan modification schemes that defrauded homeowners through Google ads.

"Google has a natural long-term financial incentive to make sure that the advertisements we serve are trustworthy so that users continue to use our services, and we aren't afraid to take aggressive action to achieve that goal," the company said.

To end the sting, federal agents killed off Mr. Whitaker's fictional character. They sent the Google employees a final email, allegedly from Jason Corriente's brother, saying the online entrepreneur died in a car crash.

Mr. Whitaker, who pleaded guilty and faced a maximum 65-year prison term, was sentenced in December to six years, following what federal prosecutors called "rather extraordinary" cooperation. He is due for release in two years.

"Lane-Keeping Technology"

2012-01-25T23:07:00.001-05:00

First appeared in NY Times
A DRIVERLESS car is not yet ready for the market. But in the meantime, automakers are continuing to market some components of one. The Ford Motor Company announced last month that it would offer “lane-keeping technology” as an option for its 2013 Ford Fusion and Ford Explorer. The price has not yet been set.

When lane-keeping technology works, it can save lives. But it is suited only for certain road conditions, and there are reasons to doubt that it will activate as consistently as it should.

Ford’s technology relies on a camera mounted to the rear-view mirror. When the system is switched on and the vehicle is traveling more than 40 miles per hour, it will use the road’s lane markings to sense veering near one edge of the lane or the other. If the turn signal is off, the system will assume that the drift is unintentional and will send a vibration to the steering wheel as a warning.

If the driver doesn’t correct the drift, the software is then supposed to engage the power steering and turn the car back toward the center of the lane.

When all goes well, this will be flat-out wonderful. But the camera may have difficulty detecting the lane markings — when the sun is at a low angle, for example, or during heavy rainfall or on curves. If it fails to see the markings, it simply remains dormant.

The National Highway Traffic Safety Administration has declined to give lane-keeping technology its blessing. Ronald Medford, deputy administrator of the agency, says, “We believe additional evaluation and research about lane-keeping systems is needed before we can decide whether we should recommend it to the public.”

Earlier research by the highway agency found performance problems in other systems then available. When asked about that, Michael Kane, a development engineer at Ford, acknowledges that certain conditions, such as when driving into direct sunlight, confound the system. “It’s not perfect,” he says.

But, he continues, “we’ve worked to enable the system to detect lane markings on a much higher percentage of situations, such as tree-lined curves with lots of shadows.”

When Toyota introduced similar technology in its 2010 Prius, it chose to call it “Lane Keep Assist.” Lexus and Mercedes also use similar language for their systems. That “assist” keeps expectations from getting out of hand. Ford is going instead with “Lane Keeping System,” without any namby-pamby qualifier.

Advanced automotive safety technologies, like lane-keeping systems, are most prevalent in Europe, says Eddy Llaneras, a staff member of the Virginia Tech Transportation Institute.

“In Europe, the driving population understands that ultimate responsibility remains with the driver,” he says. “Here in the U.S., we are inclined to believe the technology will do all the work for us. And if it doesn’t, we’ll sue.”

Mr. Llaneras expects that within five to 10 years we will see “lane centering,” in which the vehicle steers itself. “The technology exists today — it’s been tested on research vehicles,” he says. “But manufacturers hesitate to introduce it because the systems can never be 100 percent reliable and they introduce liability exposure.”

Mercedes makes its lane-keeping system active by default, but Ford, like Toyota and Lexus, insists that its system be turned on manually, every time; the driver doesn’t have the option to designate that it be activated by default, or when cruise control is used — a seemingly natural combination.

Ford’s new technology package also includes what it calls a “Driver Alert System,” which will provide warnings when the software detects a pattern of driving associated with drowsiness, such as weaving within the lane boundaries. For the first warning, Ford’s designers have chosen to sound a soft chime and to display this message on the dashboard: “Rest suggested.” If the problem persists, a louder chime and a new message — “Rest now” — follow.

Mr. Kane could not point to any test data, however, that suggests that a driver who is sleepy to the point of being dangerous is likely to find and heed display warnings. Notwithstanding the chimes, delivering the message with an insistent recorded voice would seem a better choice.

J. Christian Gerdes, director of the Center for Automotive Research at Stanford and an associate professor of mechanical engineering, has been testing driverless cars since the early 1990s. One such vehicle successfully climbed the twisty road to the top of Pikes Peak in Colorado — and did so multiple times. Its technology, however, isn’t coming soon to an auto showroom near you: its navigation relies on a base station in the area to transmit a Differential Global Positioning System signal.

Even if camera-based lane-keeping systems were to work well, we might not end up safer. Mr. Gerdes calls attention to the “risk accommodation” problem. “As vehicles are made safer, drivers may compensate by engaging in riskier behavior,” he explains.

As humans, we have one thing that works in our favor while driving: we are more likely to handle unexpected events successfully than the software in an autonomous car.

“Humans understand context,” Mr. Gerdes says. “If I’m driving along a row of parked cars and a ball rolls out into the street, I know to look for a child.”

Then again, we humans aren’t always exemplary in paying attention to the road. Ford’s system may lack perfect vision, but it will never be distracted because it’s checking its e-mail.

Picnik Is Retired

2012-01-25T22:48:00.001-05:00

First appeared on Yahoo! News
Google has announced it will be retiring the online photo-editing service Picnik, together with a number of other products that the web giant feels “replicate other features, haven’t achieved the promise we had hoped for or can’t be properly integrated into the overall Google experience.”

Services that are affected besides Picnik include:

- Google Message Continuity (GMC): support to be ended. “Current GMC customers will be able to use GMC for the duration of their contract.”

- Google Sky Map: to be open-sourced. Google will be “collaborating with Carnegie Mellon University in a partnership that will see further development of Sky Map as a series of student projects.”

- Needlebase: to be retired on June 1, 2012.

- Social Graph API: “The API isn’t experiencing the kind of adoption we’d like, and is being deprecated as of today.” To be fully retired on April 20, 2012.

- Urchin: “New Urchin Software licenses will no longer be available after March 2012.”

“Changing products that people love is hard….But we’re excited to focus on creating a beautifully simple, intuitive user experience across Google—an experience that will change the lives of millions of people,” Google’s vice president of product management Dave Girouard wrote on the company’s official blog explaining the decision.

Picnik, which was bought by Google two years ago, will be retired on April 19, however, Picnik announced on its homepage that some of its photo editing tools will be moved to Google+, the new social networking site which this week claimed to have 90 million users.

Until Picnik’s closure, users will have the chance to try its premium services for free, and anyone that’s already paid for them will receive a full refund.

Picnik is undoubtedly a very popular product, with an interface that makes photo editing a breeze. Anything from a simple crop to advanced special effects are offered, and the online tools will no doubt be missed by many. Consider Google SEO.

It’s not clear yet how many of Picnik’s photo-editing tools will be pushed across to Google+, but what if you don’t want to open a Google+ account but would still like a quick and simple web-based solution when it comes to tweaking your pics?

Here are some suggestions that should help you out:

FotoFlexer – very similar to Picnik in look and feel; offers many effects, including distortions; ability to work with layers, too. One imagines this site is going to see a big increase in traffic once Picnik disappears from the scene.

Phixr – not such a clean interface; consider it as a simplified version of Picnik. Offers a few interesting options such as noise removal and ‘fun effects.’

befunky – another site which operates along the same lines as Picnik, though befunky feels a little clunkier to use. Still, it offers lots of editing options and may appeal to some, especially those who like to jazz up their images with stickers and such like.

iPiccy – nice, clean interface; lots of options for editing and adding effects. The site is currently in beta, but we can see this one becoming pretty popular with those who enjoy using Picnik.

pixlr – a more Photoshop-looking interface, with a comprehensive set of adjustment tools. Decent filter list. Much more powerful than Picnik, but may be daunting for some. Clean interface though and well worth a look.

blekko--A New Option In Search

2012-01-20T13:54:00.001-05:00

A new kind of Search Engine?

Here are a few interesting additions to the search community:

blekko's mission: provide a differentiated editorial voice in search.
Search is the starting point for accessing information. A search engine is an editorial product. The algorithms that determine search results are created by humans and contain an editorial bias. Users deserve a choice in the editorial voice of their search engine.

blekko's Editorial Voice

Quality vs Quantity: blekko biases towards quality sites. We do not attempt to gather all of the world's information. We purposefully bias our index away from sites with low quality content.

Source based, not link based: blekko does NOT rely solely on link based authority.Too many people engage in efforts to game search by linking for purposes other than navigation. blekko relies on human beings and their judgement of the authority of sources to dictate search results.

Spam Free: blekko includes results from sites whose primary purpose is information, not monetization. Sites created solely to game search engines are not included in our results.

Human Curation: blekko believes that human beings should be involved in determining search results. Our community of users tag pages and sites for us every day to help insure the highest quality of search results.

Open and Transparent: blekko makes freely available to its users all of the data that provide the underpinning of our search results. This includes web data, ranking information and the curation efforts of our users.

There are more than 10 relevant results for every day queries such as "las vegas hotels" or "turducken recipes." We believe our results for these queries are better, but we leave that up to the user. The important point is that users have a choice.

Searching with blekko

blekko search results provide information and tools you can use to make decisions and improve your own search experience.

Content Box

Some searches will have a content box that appears above the search results. This box gives a quick snippet of information depending on the slashtag used.

Examples:

san jose, ca /weather | green lantern /movies | berkeley /map | verisimilitude /define

Top Search Area

The Top bar includes the search box and the slashtag bar. The top bar is fixed in place by default but you can change this in prefs.

Search box – enter your query and slashtags and hit “search” to search blekko, e.g., alpha dog /movies.

# of results – the number of results are shown. If a slashtag was used, there will be a link to that slashtag.

Sort options – /relevance is the usual default option, but you can change the sort order to /date or /likes. /date will order the results by date while /likes will only show results from you and your friends’ Facebook likes.

Slashtags – suggested based on your query. You can also access your own slashtags by clicking on the arrow next to your username.

Share – click the drop down to share the search result page on either Facebook or Twitter.

What is a slashtag?

A slashtag is an easy-to-create custom search engine. It is a tool used to filter search results and helps you to search only high quality sites, without spam or content farms.

Example: /health

Search keyword /health and trusted sites like will come up and more appear high in your results with content farms and spam sites banished entirely.

There are 3 types of slashtags:

topical – Created by blekko and curated by experts, topical slashtags are built to search only top sites for specific topics like health, tech, recipes, etc.

user – User slashtags are created by you or other members of the blekko community. You can personalize your own slashtags with sites you trust.

built-in – Built-in slashtags are programmed in the back-end by blekko and perform specific search functions, such as /date or /blogs.

Legislation to Tax Internet Purchases?

2012-01-19T14:16:00.000-05:00

First appeared in Up North Live

Governor Rick Snyder is set to deliver his state of thestate address -- and many retailers hope that this year he takes action on abill that would close a tax loophole on online sales.

If you shop online, chances are you're probably breaking thelaw. That's because internet retailers like Amazon.com don't collect Michigan's6% sales tax. They don't have to, but you are legally obligated to pay it.

The loophole is something many local businesses wantchanged.

Horizon Book Sales Manager, Amy Reynolds says it puts themat a competitive disadvantage.

By forcing internet retailers to charge the sales tax itcould also bring millions of much needed revenue to Michigan.

The legislation would require online businesses to offer alink to another website where the buyer would make purchases and the internetstore could then collect the taxes.

Yahoo Loses Jerry Yang

2012-01-18T16:46:00.000-05:00

First appeared in the Wall Street Journal

Jerry Yang rode Yahoo Inc.'s swift rise and subsequentdecline over 17 years. Now the co-founder of the onetime dominant Internetcompany has decided to stop hanging on.

Mr. Yang, 43 years old, said Tuesday he was resigning fromYahoo's board, severing ties to the company he co-founded with David Filo in1995 while both were Stanford University graduate students. Mr. Yang also saidhe would leave the boards of Yahoo Japan Corp. and Alibaba Group Holding Ltd.,in which Yahoo owns significant stakes.

Mr. Yang has been under pressure for weeks, grappling withcriticism over his multiple roles at the Sunnyvale, Calif., company—includingco-founder, director, former chief executive and large shareholder. Someinvestors questioned whether Mr. Yang had conflicts of interest as Yahoo inrecent months explored its strategic options, including whether to sell all orpart of the company.

Mr. Yang is leaving after Yahoo this month hired a new chiefexecutive, Scott Thompson, the former president of eBay Inc.'s PayPal unit. Hefills a void created four months earlier when the board fired Carol Bartz.Yahoo is also closing in on a deal to shed its Yahoo Japan and Alibaba stakeswithout creating a hefty tax bill.

Activist investor Dan Loeb's Third Point LLC in recentmonths has threatened a proxy fight against Yahoo and called for theresignation of Mr. Yang and several other directors. In a reflection ofinvestor sentiment toward Mr. Yang, Yahoo's stock gained 3% to $15.90 inafter-hours trading after the co-founder announced his departure from thecompany's board.

Mr. Yang himself made the decision to exit Yahoo's board,said two people familiar with the situation. Mr. Yang didn't immediately informall of his fellow directors that he would step down, these people added.

In making his decision, Mr. Yang also didn't discusspotential external pressures facing the board, said one of the people."Mr. Yang just decided that now was the time," this person said. "Anythingelse is speculation."

But another person familiar with the situation said Mr. Yangmay have wanted to avoid being a target if a proxy fight were to occur."He's rich. He doesn't need all this [fuss],'' this person said. "Hehas a great reputation and he doesn't need it sullied.''

Mr. Yang's departure comes several weeks before shareholderscan nominate rival directors to Yahoo's board, beginning Feb. 24, though thecompany could postpone the schedule. All nine Yahoo directors are up forre-election this year. Yahoo hasn't yet announced the date for this year'sannual shareholder meeting.

Earlier this month, The Wall Street Journal reported thecompany was searching for several new board candidates to replace possibleoutgoing directors, including Chairman Roy Bostock, according to peoplefamiliar with the matter.

In a statement, Mr. Yang said "the time has come for meto pursue other interests outside of Yahoo." He didn't respond to requestsfor further comment.

A spokeswoman for Yahoo said she had no information aboutwhether Mr. Yang would be replaced and who would take his posts on the boardsof Alibaba and Yahoo Japan.

Mr. Yang's exit is the latest chapter for Yahoo andunderlines the widening gap between old Internet companies and newer ones.Yahoo was part of an earlier crop of Web companies from the 1990s that helpedspark the dot-com boom and came of age as users world-wide began going online.

But after riding that wave, new companies such as GoogleInc. and Facebook Inc.—often with younger leaders like 27-year-old MarkZuckerberg at Facebook—came to prominence with Web technologies such as searchand social networking, leaving older firms like Yahoo struggling to catch up.

The resignation of Mr. Yang—who as of November still owned a3.8% stake in Yahoo, compared with a 5.9% stake held by co-founder Mr. Filo—isa far cry from the glory days of Yahoo. The company began as a hobby forMessrs. Filo and Yang, who created "David's and Jerry's Guide to the WorldWide Web," a list of their favorite websites.

In 1995, the duo dropped out of Stanford, took a $2 millioninvestment and incorporated Yahoo. The founders chose the name Yahoo largelyfor its dictionary definition: "rude, unsophisticated, uncouth,"according to an official company history.

When consumers started surfing the Web in the mid-1990s,Yahoo became their trusted guide, a kind of Yellow Pages for the new age. Yahoowent public in 1996 in an IPO that instantly made Messrs. Filo and Yangmulti-millionaires. The company adopted an anti-corporate image, withexecutives who wore jeans and put their feet on their desks.

Mr. Yang, the more visible of the two co-founders, quicklybecame a poster child of the dot-com boom. At its peak in 1999, Yahoo was worthmore than $120 billion—bigger than companies such as Cisco Systems Inc. andHewlett-Packard Co. today.

But even then, the seeds of Yahoo's decline were beingplanted. The company failed to realize a crop of "algorithmic"Web-search engines such as Google were a potential threat to its business. Morerecently, Yahoo grappled with the rise of Facebook while failing to establish abig footprint in mobile devices and new methods of selling online ads.

"The near-term Wall Street reaction is that he [Mr.Yang] wasn't doing a good job, but the longer-term perspective is that he willgo down as one of the top 10 Internet entrepreneurs," said Mark Mahaney,an analyst at Citigroup Inc. who has been covering the Internet industry since1998.

During the dot-com bust last decade, Mr. Yang used his starpower to help Yahoo draw in badly needed advertisers by meeting with thempersonally. "For big clients, Jerry was the man," said Greg Coleman,a former top Yahoo executive. "He was the iconic rock star…and he knew howto work that magic."

In the mid-2000s, Mr. Yang fostered a friendship with JackMa, CEO of Alibaba Group. In 2005, Yahoo opted to hand its Chinese operationsover to Alibaba, while buying a 40% stake in the Chinese firm for $1 billion.That stake was recently estimated at $14 billion, making it one of Yahoo's mostvaluable assets.

On Tuesday, Mr. Ma said his relationship with Mr. Yang"has withstood some ups and downs over the past few years, and I havegreat respect for what he has built and I wish him well."

Mr. Yang was Yahoo CEO between mid-2007 and early 2009,during which time he grappled with an offer from Microsoft Corp. in 2008 to buyYahoo for more than $45 billion. Mr. Yang and fellow directors turned down theoffer, igniting a barrage of criticism.

In an on-stage interview at a conference in San Franciscothat year, Mr. Yang deflected suggestions he had let his feelings for Yahoocloud his decision making. "I know I will be labeled with thatforever," he said.

After Ms. Bartz became Yahoo CEO in 2009, Mr. Yang recededfrom the spotlight. Following her firing last September, Yahoo beganentertaining potential investments by private-equity firms to take acontrolling or minority stake in the company.

Some Yahoo investors expressed concerns because one of theproposals discussed by Yahoo's bankers involved Mr. Yang aligning himself witha private-equity firm or other buyers and becoming part of a new Yahooownership group, people familiar with the matter have said. The activist hedgefund Third Point said Mr. Yang must "declare whether he is a buyer or aseller—he cannot be both."

Yahoo denied there was any conflict and people close toYahoo said Mr. Yang was acting with the board's blessing and that he hadretained his own lawyer to advise him on potential conflicts. Another personclose to Yahoo said company directors hadn't expressed any concern about Mr.Yang's motivations.

Within Yahoo, Mr. Yang stepped up his presence after thefiring of Ms. Bartz, people familiar with the matter have said. He has attendedhigh-level company meetings and been involved in engineering and corporatedevelopment strategy, including Yahoo's $270 million acquisition ofad-technology firm Interclick Inc., announced in November, these people said.

CEO Letter to Yahoo

2012-01-18T16:41:00.001-05:00

First appeared on Business Gear Live

So, Jerry Yang has left Yahoo!. Of course, we're interestedin knowing how new Yahoo! CEO Scott Thompson would handle addressing the newsto his crew, and we've got the full email below to show what he had to say.Spoiler: he has nothing but good things to say about Yang, and Yahoo! as awhole:

Dear Fellow Yahoos,

By now, I think everyone has heard that Jerry has decidedthat it is time for him to pursue other interests outside of Yahoo! and hasresigned all of his positions with Yahoo!.

Obviously, I’ve only been here a short time, but Jerry hashad a strong influence on me. I knowthat when the Board appointed me as CEO, it was one major step in their plan tohelp restore Yahoo! to a path of robust growth and industry-leadinginnovation. When I came on board, Jerryshared with me his confidence that the company had the foundation and resourcesnecessary to achieve those objectives. The more I dig in, the more I'm convinced that Jerry is right to havethat confidence that Yahoo! can realize its still enormous potential, and Ishare it.

So it was very encouraging that even as he leaves thecompany, Jerry expressed his enthusiasm for our ability to create “an excitingand successful future” together – a powerful endorsement from one of the twopeople who know this company best. Personally, I am grateful for the support and warm welcome Jerryprovided me in my early days here. Hisinsights and perspective were invaluable, helping me to dig deeper – morequickly than I could have on my own – into some of the key elements of thecompany and how it operates.

Jerry will clearly be missed, but he has left an indelibleimprint on this company he co-founded and built and an internet industry hehelped pioneer. The high standards heset for engineering excellence and a constant push for innovation will remainamong the guideposts for our path forward. Please join me in wishing him all the very best in this new phase of hislife. I assure you, we will make himproud.

Scott

Wikipedia Might Make People Mad

2012-01-18T16:33:00.000-05:00

First appeared on MarketWatch

Wikipedia’s 24-hour blackout, to attempt to stop Internetpiracy legislation under consideration by the U.S. Congress, is a terribleidea.

Wikipedia is only going to infuriate many of its users.

New-media entities like Wikipedia pride themselves onoffering services for free, unlike those evil capitalist, old-media fossils,who would do anything for a lousy buck. This kind of attitude has helpedburnish Wikipedia’s public-spirited image.

Today, Wikpedia wants you and me to carry its water in itsbid against Washington. It’s hoping it has amassed so much good will that we’llblindly follow its lead. Hmmm.

Problem is, Wikipedia, ultimately, will hurt itself by thisact. For 24 hours, we citizens are being locked out. We’re being told, Youcan’t use our service because we want to make a point. We want to show people,by virtue of this move, exactly how important we are. You can’t do without us,even for only one day.

That may well be 100% true, too.

But think about it from a completely different angle for amoment: Who is Wikipedia helping by making this show of foolishness? Is itenabling its users to live productive lives? Uh-uh. Is it making a contributionto the world? Not exactly.

And will the decision to shut down actually make animpression on the members of Congress? We’ll have to wait and see.

If Wikipedia really wanted to make a fuss, it would get itsusers to stop making campaign contributions to the hostile Congress folks.

There is a move that would make an impression in Washington.

Zappos Was Hacked, 24 Million Customers Affected

2012-01-16T09:45:00.003-05:00

First appeared in Forbes

Twenty-four million Zappos customers are getting an unpleasantSunday-evening surprise

The Amazon-owned e-commerce firm has revealed that it wasthe target of a cyber-attack that gained access to its internal network,including the accounts of 24 million of its users. Though the company says thatno complete credit card numbers were revealed in the breach, the intruders mayhave accessed customers’ names, e-mail addresses, phone numbers, addresses, thelast four digits of their credit card numbers, and encrypted passwords. Zappossays it’s taken the precaution of resetting the passwords of all its customersand directing them to set a new password upon visiting the site.

“We were recently the victim of a cyber-attack by a criminalwho gained access to parts of our internal network and systems through one ofour servers in Kentucky,” the chief executive wrote to Zappos employees in anemail posted to the site, declining to offer more information about the breach.”We are cooperating with law enforcement to undergo an exhaustiveinvestigation.”

Even after choosing a new Zappos password, users should becareful to also change their passwords on any site where they’ve used a similaror identical password, in case Zappos’ intruders are able to decrypt thescrambled passwords they’ve stolen. Zappos is also warning affected customersto watch out for phishing emails that will use their stolen email addresses tospoof official Zappos emails and ask for account credentials or financialdetails.

The chief executive wrote in his all-hands email that everyemployee at Zappos’ Henderson, Nevada headquarters will be assisting in thecustomer response to the breach, and that the company will only be respondingto emails rather than phone calls in its effort to answer the massive number ofqueries that it expects to receive. ”We’ve spent over 12 years building our reputation, brand, and trustwith our customers. It’s painful to see us take so many steps back due to asingle incident,” he wrote in the email. “I suppose the one saving grace isthat the database that stores our customers’ critical credit card and otherpayment data was not affected or accessed.”

Zappos customers can change their passwords.

Google Ecosystem

2012-01-11T13:38:00.000-05:00

First appeared on CNN Money

Technology innovations are often blended into buzzword trends like "curation" and "social graph." This is shaping up to be the year of "ecosystem."

What does that mean? Depends on who you ask. Google (GOOG, Fortune 500) chairman Eric Schmidt offered up his view during a panel discussion at the Consumer Electronics Show in Las Vegas on Tuesday.

Schmidt started with a canned answer about how he defines ecosystem -- "scalable network platforms that deliver the best customer value" -- but he warmed up when the talk turned to Google's Android operating system.

"We even have Android in refrigerators now," Schmidt said. "By open-source we mean, 'take it and have fun.' And people have."

The panel moderator, CNET's Molly Wood, pointed out the pitfall of that strategy: hundreds of devices are running dozens of various versions of Android. But as soon as she said the word "fragmentation," Schmidt cut her off.

"You have to be careful with that word, fragmentation," he said.

"So what would you say?" Wood asked.

"I would say differentiation," Schmidt replied. "Differentiation is positive, fragmentation is negative."

Whatever you call it, the approach is working: Google activated 3.7 million Android phones on Christmas Eve and Christmas Day, Schmidt revealed.

But Wood pressed the fragmentation issue, asking Schmidt whether the new Android operating system -- 4.0, codenamed Ice Cream Sandwich -- is a chance to "give [Google] a little more control."

Schmidt replied: "Well, control ... I mean, we want to get everybody under Ice Cream Sandwich, but we absolutely allow our developers to add or change anything, as long as they're not breaking anything."

He added: "The great thing is if you don't like one phone, you can choose another. You're not bound to certain hardware."

That potshot was aimed at Apple, whose iOS appears only on its own devices.

Schmidt's digs at competitors continued when Wood brought up Internet-connected TV and the success of Microsoft's (MSFT, Fortune 500) gesture-controlled Kinect system.

"How big a barrier is it that Microsoft seems to have all the pieces in place, with the Kinect and the Xbox and all, but hasn't really gotten it together yet?" Wood asked.

"Microsoft is trapped in an architectural problem it might not get through," Schmidt replied.

The blunt comment drew a few laughs from the audience. Schmidt shrugged them off saying, "My sense is that they're going to get there. It's a problem of user interface design. It's a matter of getting people with great taste into the company, designing."

Next on Schmidt's slam list: Amazon (AMZN, Fortune 500), whose Kindle Fire tablet runs on a highly altered version of Android. Schmidt said Google welcomed the customization, but that the tablet "has some limitations, [which] have been well documented."

Wood tried to close the discussion with a question based on the panel's theme: "Which is most important for the ecosystem: Hardware, content, services or software?"

Schmidt went the politician's route. He tossed that query out and swapped in his own.

"They work together," he said. "I'll answer a different question: What was the most surprising thing in 2011?" Schmidt asked himself, as attendees laughed.

"It's always surprising to people when they realize how significant these ecosystems are," he continued. "I saw this with respect to Apple, Amazon and even Facebook."

The open ecosystem allows multiple types of players to work together, Schmidt said. That means "everyone can be a winner" in a financial sense.

"All of these people can operate without your knowledge or control," he said. "It's about making it open enough so that the creative people, the app developers, the consumers -- you build something tremendously valuable for everyone."

Apple’s Siri Changes Voice Technology

2012-01-10T09:19:00.000-05:00

First appeared in Fox Business

Apple Inc. will again dominate conversations at CES, the world's biggest technology showcase. Only this time, the talk is extending beyond iPad and iPhone chatter to include "Siri," the voice app that is capturing consumers' imagination.

Apple's dulcet-voiced, speech-controlled personal assistant, a key factor in making the iPhone 4S a blockbuster, has breathed new life into the once-obscure and oft-maligned world of speech-recognition technology.

Siri, which can do everything from taking dictation for text messages and entering calendar appointments to answering general-knowledge questions, has intrigued users. Experts say it demonstrated emphatically that voice recognition has moved beyond the days of misheard commands, narrowly defined keywords and anguishingly slow speeds.

The smartphone industry is now scrambling to match and better Apple's offering. Google Inc and Microsoft Corp will likely want to cash in on an explosion of interest in an area they have invested in for years, without getting anything like the attention Siri is attracting.

"All the mobile phone manufacturers are investing in speech, expanding investments in speech, creating more elegant designs and integrating it more deeply into phones," said Michael Thompson, senior vice president for mobile at voice-recognition specialist Nuance.

Thompson was coy about his company's future plans but said he expects voice to be a central topic at the Consumer Electronics Show in Las Vegas as device makers jostle for attention from investors, media and consumers.

While voice is expected to be used in many areas of consumer electronics, the technology is particularly pertinent to cellphones because it simplifies functions from Web surfing to typing.

Internet merchants like eBay are also jumping on the bandwagon. And reports have emerged about a voice-control for TVS from South Korea's LG Electronics just before CES, which will open its doors in Las Vegas this week.

Many companies at CES are not yet ready to showcase products that can match or outdo Siri, Forrester Research analyst Charles Golvin said. But he said he expects the current flurry of activity to result in big voice product advancements in coming years as the technology is perfected.

Apple's rivals are planning to ship phones with improved speech technology in the fall, in time for the 2012 year-end holiday season, said Thompson at Nuance, which supplies and licenses technology to Apple but has its own voice app.

Even traditional PC makers will jump on the bandwagon: Intel announced at CES on Monday it will adopt Nuance's "Dragon NaturallySpeaking" voice-command technology on ultra-thin laptops -- dubbed UltraBooks -- coming out this year from the likes of Dell and Hewlett Packard.

"Voice as an input mechanism is going to be more and more useful and more and more prevalent," Golvin said. "Consumers have a lot of bad historical experience with it. They are going to encounter good voice interfaces more and more."

BANDWAGON ROLLS ON

Experts say the technology will evolve as more consumers get acclimated to it.

The interest in voice is already sparking acquisitions, with Nuance setting its sights on phones based on Google's Android operating system. Last month, it bought Vlingo, a developer of voice-control apps for a phones based on Android.

Android phone manufacturers -- all major rivals of Apple -- include Samsung Electronics Co Ltd, HTC Corp and Motorola Mobility, which Google is buying.

In the meantime, some developers are helping phone makers bridge the gap. A new app called "Ask Ziggy," launched a few weeks ago on Microsoft Windows-based smartphones, is generating buzz among users as it allows them to update Facebook, Twitter, answer texts and questions -- all through speech.

The free app helps a Windows phone mimic Siri's features and is already one of the top downloaded apps in its category.

"There's been a lot of interest globally," said Ask Ziggy developer Shai Leib, who told Reuters his inbox has been flooded with feedback from users, some even from Microsoft employees.

Leib plans to incorporate speech technology further in the app, to make phones completely hands-free. Microsoft's gesture-based Xbox Kinect gaming system has also raised the possibility of using hand gestures to manipulate screens and execute commands -- the so-called "Minority Report" interface named after the Tom Cruise sci-fi vehicle.

"With the success of the Microsoft Kinect and Apple's Siri, new ways to interface with CE devices have suddenly become top of mind," Ben Arnold, NPD's director of industry analysis, wrote in a blogpost last week. "I expect several companies to exhibit products using some of these new interface methods in an effort to differentiate themselves."

Leib argues there's nothing to stop smartphones also adopting gesture-recognition.

"The next level is to improve the speech, grammar and make the answers a little bit more conversational," he said. "The possibilities are amazing, especially with Kinect."

"I am looking forward to see what's going to happen with Windows 8 and if there are going to be future updates on the Windows phone that can recognize gestures."

HISTORY OF SPEECH

Apple was not the first to incorporate speech on phones. Google has had speech-recognition applications for Android smartphones for more than two years, and is now possibly trying to beef up its capabilities through the recent acquisition of a company called Alfred.

Alfred uses artificial-intelligence technology to sift through the Web's vast trove of data and recommend restaurants, bars and other real-world places users might like. Some experts say the technology could provide an important building-block that Google could pair with existing voice-recognition technology to create its own answer to Siri.

E-commerce companies are also playing catch-up, not wanting to be caught flat-footed should consumers become more comfortable using voice to search the Web and shop online.

EBay is planning a voice and image-based search function for its online market and "Red Laser" price-checking mobile software.

EBay Chief Executive John Donahoe has said he believes Siri is just the beginning, and sees a future where users can speak their preferences into phones to narrow down shopping choices.

Dan Miller of San Francisco-based Opus Research agrees. He was particularly intrigued by reports last November of an acquistion by Amazon.com of Yap, whose software coverts voice to text.

"The clock is ticking. In the next year or year and half expect a talking Kindle that supports commerce," Miller said.

Miller, who has studied voice technology for about 25 years, said he is gratified by the sudden spotlight on voice as he recalls years of consumer frustration over automated customer serivce systems.

"We're really happy to see this much positive attention," he said, "As opposed to "Oh the machine doesn't understand me."

Spam Attacks Social Media

2012-01-09T16:28:00.000-05:00

First appeared on Wall Street Journal

"Spammers have decided to move where the people are and where the defenses are weak: Facebook and Twitter," says Chester Wisniewski, an analyst at security firm Sophos Ltd.

Hackers commonly sow social spam by creating false Facebook profiles and then "friending" people they don't know. Once the new friend clicks on a bad link, the spam begins propagating as his other friends do the same. And it can get started through nefarious third-party apps, or when people download malware outside Facebook or Twitter that gives hackers control of their computers.

A common social-spam attack on Facebook, known as "like-jacking," involves duping users into clicking on an image that looks as if a friend has clicked the "Like" button, recommending it.

More nefarious are come-ons for seemingly irresistible posts—like getting a free iPad—that lead people to run malware that can take over a Web browser, or even entire computer. Some social malware impersonates users, starting eerie one-on-one Facebook chat sessions with friends. Security experts also warn that a growing volume of sophisticated hacker attacks take information gleaned from social-networking profiles to trick people with convincing targeted messages.

San Francisco resident Clint Wilson discovered firsthand that his Facebook account was spamming his friends when his co-worker, who shares Mr. Wilson's account for work purposes, clicked on an offer for free dinner vouchers at the Cheesecake Factory. The offer was fake, and included a link that installed Web-hijacking malware.

Mr. Wilson, chief executive of software maker Cazoomi Technology Corp., quickly posted a note onto his Facebook account warning his friends to ignore the spam. "It's worse than email spam, because it's hard to stop," he says. He eventually figured out how to uninstall the malware from his Web browser, but estimates it cost him $500 in lost productivity.

Fighting social spam requires manpower because spammers move quickly. At Facebook, the company's site-integrity team spends its days and nights scanning for spikes in what users report as spam, and other unusual activity, such as friend request rejections. Every day, Facebook says it blocks 200 million malicious actions, such as messages linking to malware.

About once a quarter, Facebook gets hit with a big attack—and it's all hands on deck until the spam is destroyed, say employees. Weeks like that turn into "a very intense battle," says Mr. Stein. A poster on his team's wall features a unicorn slaying a spam monster.

Spammers' weak spots are typically things that cost them money, such as Internet addresses to house malware or the human effort required to set up and manage accounts. Facebook can't prevent spam, but it is stepping up measures to make it harder to create and use fake profiles.

When Facebook is suspicious about an account, it asks the owner to prove his identity, even if he has the correct password. Sometimes it does this by asking users to identify their friends. The point is to ensure that a real person—not a computer—will have to complete the test, thereby increasing the costs of spamming.

Some of the combat efforts may be working. Twitter says its "spammy" tweet rate of 1.5% in 2010 was down from 11% in 2009. Those being affected by spam and the number of spammer accounts escaping detection are "not tracking in an upward direction," says Del Harvey, Twitter's head of trust and safety.

Facebook's Mr. Keyani says he is taking the long view: "This is a game where there is never going to be a winner or a loser. We're just going to be battling it out."

Yahoo Struggles With Content

2012-01-09T12:17:00.001-05:00

First appeared in the Wall Street Journal

Ousted Yahoo Inc. Chief Executive Carol Bartz faced a plight all too familiar to many of her peers: Making money off digital content isn't easy and it's getting harder.

As Web traffic explodes, Internet companies are struggling to profit off ads shown next to the articles, videos and other content offered to viewers.

It's a simple rule of any market. The more information that is created, the more the value is reduced. And despite attempts to woo spending with bigger, bolder and more targeted ads, services that help consumers navigate that content, namely search, remain the big money makers online.

"People tell me that content is king, but that is not true at all," says Rishad Tobaccowala, chief strategy and innovation officer at Vivaki, the digital-media unit of Publicis Groupe SA. "Most people make money pointing to content, not creating, curating or collecting content."

Internet pioneers Yahoo and AOL Inc. are losing out to Facebook Inc. and Google Inc., both of which are adept at helping point the way to pertinent or interesting material. As a result, Yahoo and AOL are getting left behind in the fast-growing U.S. market for online advertising, which ballooned 20% to $31.3 billion from 2010 to 2011, according to eMarketer.

Yahoo and AOL's shares of the overall U.S. online advertising market will drop to 11% and 2.7% in 2011, respectively, according to the research from, down from 16.1% and 4.4% in 2009.

Their businesses have been plagued by a range of missteps that extend far beyond their current regimes. Both were slow to recognize the appeal of social-networking and to update their once dominant email services to compete with new rivals.

Excessive turnover and extensive bureaucracies have strained their relations with Madison Avenue, say advertising executives. Ms. Bartz recently attributed Yahoo's weaker-than-expected ad sales to heavy turnover among advertising executives.

Yahoo said in a statement that the company has been meeting with advertisers and agencies who say they excited by the advertising opportunities at the company. A spokesman for AOL declined to comment.

A few years ago, scale virtually guaranteed profits if Internet companies had relationships with marketers, as there were few sites that could deliver large audiences to advertisers. But advertisers now can turn to a wide range of competitors to reach a similar number of people, and that has pushed down the amount of money they spend on those sites and the price for ad rates on the portals.

"What do Yahoo and AOL bring? In fact, they don't bring all that much," said Rob Norman, chief executive of WPP PLC's GroupM North America, who says marketers view them as large quantities of mostly commoditized inventory. "Just because you have a lot doesn't mean that you have something that is of distinct value."

Pricing trends across both properties vary depending on where the ads appear, advertisers say, but overall rates aren't rising fast enough to compensate for meager to flat traffic growth. In the second quarter, AOL's revenue fell 8.4% from the year earlier to $542.2 million.

Yahoo's revenue fell 23% to $1.3 billion.

The average cost to reach one thousand views across both Yahoo and AOL sites has fallen steadily in the past year, ad executives say. At Yahoo, that rate dropped to an average $6.50 in July 2011 from $7.65 in July 2010, while at AOL, that rate dropped to an average of $7 in July 2011 from $9.45 in July 2010, according to SQAD WebCosts. Back in July of 1998, Yahoo was fetching about $25 per thousand. A Yahoo spokeswoman said their internal data isn't consistent with WebCosts' data.

Some companies have responded by cutting back the number of ads to boost their value. AOL stripped ads off several of its marquee sites in recent years, including AOL.com, its fashion site Stylelist and movie site Moviefone to make room for more premium advertising.

Both AOL and Yahoo are under pressure from "advertising exchanges," the lingo for services that allows advertisers to bid for ad space across a multitude of properties that reach a particular type of user. Increasingly, marketers will turn to the advertising exchanges directly to buy high volumes of cheap online ads instead of negotiating with big publishers like Yahoo and AOL for more expensive ads.

In addition, marketers can target those ads bought via exchanges directly to people who are likely to be interested in their product or service, regardless of the context of the site where they appear. That gives the big portals less bargaining power, advertisers say. Yahoo runs a major exchange but the business isn't growing fast enough to restore overall revenue growth.

While it's a juggernaut, Facebook isn't immune from the problem of expanding inventory. Advertisers say most ad rates on the social network remain low, as its growing traffic leads to a proliferating number of pages it can show ads on.

"Sometimes there is an irrational desire to be involved with things that are just on upswings," says Mr. Norman. "The value of (marketing on Facebook) may be open to some questions."

Smaller publishers are also feeling the changing economics acutely. News sites such as Salon and Slate aren't consistently profitable. Upstarts like the Daily Beast have yet to reach profitability though executives say the three-year-old site is ahead of its pace. Slate last month laid off a handful of editorial staffers, citing unexpected "head winds" in advertising.

Cookies Aren’t Safe

2012-01-09T09:35:00.000-05:00

First appeared in SiliconValley.com

Your computer's appetite for cookies would put the Cookie Monster to shame.

Without letting you know, your Internet browser gulps down hundreds of the digital tracking beacons fed to it by the websites you visit, sometimes storing them for months or years, enabling an array of companies you've never heard of to monitor what you do online.

Cookies are not inherently dangerous -- they are a kind of virtual ID card that helps browsers perform a number of online tasks that most users have come to expect: allowing you to stay logged in to your Google (GOOG) or Yahoo (YHOO) email service, or to go from page to page on Amazon.com while filling up your shopping basket with books.

But the useful cookies are far outnumbered by those that serve no other purpose than to keep track of what you do online. They often come from sites you have never visited. This can happen when you open pages that carry embedded advertisements, which are capable of adding cookies to your browser without your permission or knowledge -- and often do.

These tracking cookies allow ad firms to follow you from site to site. Over time, the trail of sites you visit may allow them to build a demographic profile about you that includes your hobbies, place of residence, income level and even health status.

To remove all of your cookies in Internet Explorer 9, open the "Tools" menu at the top of the window and select "Delete Browsing History." Make sure the "Cookies" check-box is selected, and press "Delete." Internet privacy buffs may want to delete the other categories of data as well -- stored passwords, Web histories and temporary Internet files.

You can go a step further and prevent your browser from taking cookies from obscure advertising sites in the future. To do this in Internet Explorer 9, click again on the "Tools" menu and select "Internet Options." Click on the "Privacy" tab at the top of the dialogue box, then press the "Advanced" button (between "Import" and "Default"). Check the "Override automatic cookie handling" box, then check "Block" under "Third Party cookies." Leaving first-party cookies enabled will allow for easier use of Web email and commerce sites.

YouTube Display Ads Skyrocket

2012-01-06T13:19:00.000-05:00

First appeared on eWeek

YouTube unveiled its most-watched videos and most-viewed ads of 2011. Meanwhile, Piper Jaffray analysts expect YouTube to be the linchpin of Google's display ad efforts.

YouTube counted more than 1 trillion playbacks on the video-sharing site this year, or roughly 140 views for every person on Earth, Google's (NASDAQ:GOOG) video sharing Website said.

The Website, which said 48 hours of video are uploaded to the Website every minute, revealed its most-watched videos of 2011. The site gauged global view counts of popular videos uploaded throughout the year.

Rebecca Black's "Friday," video led the top 10 videos watched worldwide. YouTube rewarded her by letting her host this year's "YouTube Rewind" look back at the most-watched videos of the year.

YouTube isn't serving all that video content without some serious advertising. The video site also shared the most-watched ads on YouTube in 2011. This Volkswagen ad led the top 10 most-watched ads, while this Chevy ad came in third. Both were Super Bowl ads.

However, most of the ads never aired on broadcast TV, which illustrates the opportunity YouTube has going forward for pairing ads with original content.

These included T-Mobile's Royal Wedding at No. 2, and DC Shoe's Gymkhana Four, at No. 4. Both were exclusive to YouTube.

YouTube is evolving. While its first five years were a blur of user-generated content, YouTube hopes to boost user engagement by offering users streaming movie rentals and broadcast channels with original content. More users spending more time on YouTube significantly increases the ad-serving opportunities for Google.

Calling YouTube the "Super Bowl of the Web," Piper Jaffray analyst Gene Munster said that while YouTube may only account for 3.5 percent of Google's total gross revenue this year, YouTube portends great things for Google's display ad business.

The Website enjoys 800 million unique visitors per month, or the same volume as Facebook. YouTube also sees 25 billion searches a month, twice that of Yahoo and 10 times that of Facebook, he added in a Dec. 15 research note.

"We believe YouTube is the company's flagship offering in its display products and is encouraging advertisers to branch out to Google's other display products," Munster wrote. "We remain confident that YouTube will exceed $1.3 billion in gross revenue for 2011."

Moreover, he expects YouTube will grow revenue 60 percent year-over-year in 2012, surpassing $2 billion in gross revenue.

Mozilla Grows with Google

2012-01-06T13:15:00.000-05:00

First appeared in eWeek
Google will pay Mozilla $300 million a year for the next three years in a search deal it renewed earlier this week. The deal will give Mozilla much-needed cash to grow its business.

The Christmas holiday isn't the only thing Mozilla employees have to be cheerful about these days.

Google (NASDAQ:GOOG) is paying the software maker $300 million a year over the next three year to feature its search engine in its Firefox Web browser, AllThingsDigital learned Dec. 22.

If true, Mozilla will take in nearly three times as much in 2012 as it took in 2010, when nearly $100 million of its $123 million in revenues came from its previous search deal with Google.

AllThingsDigital said Mozilla was able to command such a handsome sum by including Google search rivals Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO) in the bidding process for the coveted slot in Firefox, which has anywhere from 22 to 25 percent market share, or hundreds of millions of users worldwide.

Google and Mozilla declined to comment on the financial terms of the new agreement, which Mozilla announced Dec. 20 and confirmed was good for at least the next three years.

In the arrangement, Mozilla drives searches to Google.com from the search box in Firefox and Google pays Mozilla a portion of ad revenues generated from those searches.

The arrangement is certainly interesting because it's not without some tension. Google launched its Chrome Web browser in September 2008, when Firefox was on its way to garnering 25 percent share by nibbling away at Microsoft's (NASDAQ:MSFT) Internet Explorer share.

Chrome commands anywhere from 18 percent to 25 percent market share, depending on whether you believe the more conservative number from Net Applications, or the loftier number from StatCounter.

By tripling its revenue with Google's search deal alone, Mozilla is the big winner in this deal. The company gets the cash to fund other projects beyond Firefox, which, while popular and steadily improving, is no longer growing.

Mozilla Messaging CEO David Ascher identified some of those projects as Boot2Gecko, a Firefox OS for smartphones; the identity-based BrowserID alternative to Facebook Connect and Google Account credentials; and Apps initiative, which is intended to help developers write programs that work on all devices.

Google wins on multiple fronts. One, it benefits from millions of searches driven by millions of Firefox users. Two, it keeps those searches away from Bing , which at only 15 percent market share is more desperate to have them.

Three, Google comes off as a benevolent benefactor, providing the majority of funds for a leading, fellow open-source Web browser with which it shares a lot of common interests.

Finally, Firefox and Chrome both win because together they account for anywhere from 40 to 50 percent market share, providing a nice pair of open-source alternatives to market leader Microsoft Internet Explorer, which has dominated the market for the last 15 years since stamping out Netscape.

Google Sued for Andriod

2012-01-06T13:11:00.000-05:00

First appeared in The Guardian

British Telecom is claiming billions of dollars of damages from Google in a lawsuit filed in the US which says that the Android mobile operating system infringes a number of the telecoms company's key patents.

The lawsuit, filed in the state of Delaware in the US, relates to six patents which BT says are infringed by the Google Maps, Google Music, location-based advertising and Android Market products on Android.

If successful, the suit could mean that Google or mobile handset makers will have to pay BT royalties on each Android handset in use and which they produce.

That could be expensive: Android is presently the most successful smartphone platform in the world, with its handsets making more than 40% of sales, equating to more than 40m produced every quarter. Google recently said that more than 500,000 Android devices are activated every day.

BT's move – which could also be repeated in Europe – means that Google is now fending off lawsuits against Android from six large publicly-traded companies, according to Florian Müller, an independent expert who follows the twists and turns of international patent litigation. BT joins Apple. Oracle, Microsoft, eBay and Gemalto, a digital security company.

A BT spokesman told the Guardian: "BT can confirm that it has commenced legal proceedings against Google by filing a claim with the US District Court of Delaware for patent infringement.

"The patents in question relate to technologies which underpin location-based services, navigation and guidance information and personalised access to services and content. BT's constant investment in innovation has seen it develop a large portfolio of patents which are valuable corporate assets."

A Google spokesman said: "We believe these claims are without merit, and we will defend vigorously against them."

In the filing, BT cites a number of US patents which were applied for and, apart from one, awarded in the 1990s which it says Android is infringing. BT has a long history in the mobile business, having been one of the original providers of mobile phone services with the Cellnet joint venture in the UK in the 1980s.

Müller says: "Android already had more than enough intellectual problems anyway. Now Google faces one more large organisation that believes its rights are infringed. BT probably wants to continue to be able to do business with all mobile device makers and therefore decided to sue Google itself."

Google is fending off multiple lawsuits relating to Android, while a number of handset makers including HTC and Samsung have yielded to patent claims by Microsoft against Android and are paying a per-handset fee for every one they make.

Many of the alleged infringements made by Android would also seem to apply to Apple's iPhone and iPad mobile devices – such as the "Busuioc Patent", which detects whether a mobile device is connected to a cellular or Wi-Fi network and allows streaming dependent on that.

Apple's iTunes Match service, launched in the US earlier this year and last Friday in the UK, also detects what sort of connection the device has before allowing file uploads or downloads. It is not known whether Apple has licensed use of the systems from BT, or whether BT has decided they do not infringe its patents, or whether litigation is pending.

BT points in the lawsuit to its large patent portfolio, from research at its Adastral Park centre near Ipswich, and that it has a portfolio of more than 10,000 patents.

The new lawsuit marks a return to attempts by BT to monetise its patent portfolio over web use.

In 2000 it asserted a patent claim in the US against Prodigy, one of the biggest internet service providers, claiming a patent on the hyperlink – the method by which people follow links between pages on the web. But embarrassingly for BT the claim was rejected when a judge said that no jury could find that the patent was infringed.

Asian Yahoo Sales

2012-01-06T12:46:00.000-05:00

First appeared on Yahoo! News

Yahoo appears to be getting closer to giving its frustrated shareholders something they've long wanted: a sale of the Internet company's holdings in China and Japan.

The prospect of Yahoo Inc. finally consummating a deal with China's Alibaba Group and Softbank Corp., the controlling owner of Yahoo Japan, emerged in online reports published Wednesday by The New York Times and The Wall Street Journal.

Citing unnamed people familiar with the matter, both newspapers reported Yahoo is exploring a proposal valued at about $17 billion, or $14 per share. The price reflects Wall Street's belief that Yahoo's investments in Alibaba Group and Yahoo Japan have become the company's most valuable pieces. Yahoo's U.S. business has lost its luster as the company's website loses traffic and advertising revenue to Internet search leader Google Inc. and Facebook's social network.

Yahoo ended Wednesday with a market value of about $20 billion, based on its stock closing price of $15.99. The shares gained 88 cents, with most of the surge occurring after the reports of Yahoo's talks with its Asian partners.

If the deal comes together, Alibaba and Softbank would contribute cash and certain assets to newly formed entities. Yahoo would then surrender its 35 percent stake in Yahoo Japan and most of its holdings in Alibaba to gain control of new entities, according to the Times.

Yahoo would retain a 15 percent stake in privately held Alibaba, down from 42 percent as of Sept. 30, according to the company's most recent quarterly report.

The transaction would be designed to avoid a big tax bill — a stumbling block in Yahoo's previous discussions to sell its Asian holdings.

Yahoo declined to comment Wednesday. Alibaba didn't respond to requests for comments.

The renewed talks among Yahoo, Alibaba and Softbank are the latest bit of boardroom intrigue that that has been unfolding since Yahoo abruptly fired Carol Bartz as CEO in early September after losing patience with her attempts to turn around the company during her 2½ years on the job.

Since then, Yahoo's board has been mulling a variety of options that have included selling the Asian holdings, selling a 20 percent stake to buyout firms or even auctioning off the whole company.

The nine-director board has been leaning in different directions as it ruminates. Just a few weeks ago, it appeared the board was leaning toward selling a large stake to a group led by Silver Lake Partners for $16.60 per share or TPG Capital for $17.60 per share.

That idea didn't go over well with some of Yahoo's major shareholders, including hedge fund manager Daniel Loeb, who has been threatening to overthrow the company's board.

Yahoo's board is scheduled to discuss the proposed divestiture of the company's Asian holdings in a Thursday meeting, according to the Times. The newspaper said the directors intend to decide whether to intensify negotiations that could last for a few more weeks.

More Than One Mark Zuckerburg?

2012-01-06T12:18:00.000-05:00

First appeared on Mashable

Facebook has threatened to sue Mark Zuckerberg, an Israeli entrepreneur who recently took the social network founder’s name. The new Zuckerberg, born Rotem Guez, legally changed his name Dec. 7.

Zuckerberg II’s website, MarkZuckerbergOfficial.com, states that he first filed a lawsuit against Facebook in January, after the social network refused to give him access to his profile, which it had shut down.

Zuckerberg (all further mentions refer to the Israeli entrepreneur) co-founded Like Store, a social marketing company, which sells companies Likes for their brand pages. The site states (translated), “Are you sad no one’s visiting your Facebook Page? We have a solution! Need 1,000 Likes? We’ll get them for you. Need 5,000 Likes? We’ll get them for you. Need 10,000 Likes? We’ll get them for you.”

In September, Facebook’s law firm Perkins Coie threatened to sue against Zuckerberg, claiming the Like Store violated the social network’s Terms of Service, by selling brands fans. The threat instructed Zuckerberg to shut his company and never return to the social network for any reason.

Zuckerberg officially changed his name Dec. 7. In the below video of his trip to the Interior Ministry to make the switch official, he says he plans to change his family’s names as well. One week later, Facebook again threatened a lawsuit against Zuckerberg’s still existing Like Store. Little did they know, they were threatening someone with the name of their own founder.

Though legally Facebook can, of course, sue someone named Mark Zuckerberg, it makes for quite the funny tale.

Perhaps anticipating the media attention he would receive, Zuckerberg has set up an Internet campaign for his new persona, including a Facebook Page and Twitter account, @iMarkZuckerberg, suggesting that he’s ready to make a splash with his new identity. His Facebook Page includes photos of his new identification card and passport.

Google Social Media Upsets Little Girl

2012-01-06T12:14:00.000-05:00

First appeared in Washington Post

Father Rich Warren sounded off on social media sites Reddit and Google+ about his upsetting morning: He had woken up to find that Google had suddenly, without warning, shut down his daughter’s e-mail account and blog. His daughter had used her Gmail to send e-mail to her grandparents, friends and classmates, and had started the Blogger blog as a class project.

Warren said he believed both accounts were disabled because his daughter was underage. Under the Children’s Online Privacy Protection Act (COPPA), Web sites collecting information from children under age 13 must take a number of steps to protect the child’s privacy. Warren says he’s not upset with Google for complying with COPPA, but how they went about it.

Back in May, Google seemed to encourage children’s memories be shared on Gmail, YouTube, blogs and other services. In a viral video commercial dubbed “Dear Sophie,” a father is shown creating a Gmail account for his baby daughter, and then using it to send her photos, videos, and messages that chronicle her growing up, so that she can read and see them when she’s older:

The difference between “Dear Sophie” and Warren’s situation is that Sophie’s father did all the actual uploading of information, not his daughter. But how does Google know that? And how did Google realize, after several years of ignoring it, that Warren’s daughter was underage? Why, as Warren asked in his Google+ letter, did the company not inform him or ask his consent before disabling the accounts? And how can parents work to make sure this doesn’t happen to their children?

A Google Support page provides some answers, writing that accounts can get disabled if a child enters a birthday indicating they are not old enough to use Gmail. Warren’s daughter may have filled in that information if she joined Google+.

In one part of his letter to Google, Warren laments, “Remember, we're talking about letters from grandparents and friends. I can't even log in and back them up. They're just gone.”

That’s not necessarily true. Google writes on its support page that accounts can be re-enabled if a parent sends a government ID or credit card information over email or fax to prove their age. Accounts can be re-enabled after several days, or even go back up instantly.

Warren’s post sparked hundreds of comments, in which many Google users argued about whether the online giant should be at fault or not. Several parents, saying they’d had enough with Google’s attitude toward child usage, suggested using different, more kid-friendly e-mail providers altogether.

Update, that afternoon:

A Google spokesman responded to request for comment on Warren’s letter, saying:

Asking for age information helps us provide features like age-appropriate settings to our users, who are interacting more every day with the people they know. Under our policies, Google doesn’t allow users who are under the age of 13 to have Google Accounts, unless they are using Google Apps for Education accounts through their school. This is similar to a lot of online services, as it's very complicated for many providers to offer better solutions for children that meet the relevant regulations. It's not as simple as just asking a parent for consent to let their child have an account — there are associated implications for data and privacy involved.

We know that this data is important to people, and we want to help by finding the right solutions. We're also working on designing special safety settings for teens.

Regarding the [“Dear Sophie”] video, the email address in the spot belongs to the Dad... The implied understanding is that the girl in the story does not have access to the account, but that she will have access to it “someday.”

Yahoo Makes Executive Changes

2012-01-06T10:52:00.000-05:00

Story first appeared in the Wall Street Journal.

Yahoo Inc. hired top eBay Inc. executive as its new chief executive in an effort to continue as an independent entity, but the move did little to stem questions about the struggling Internet company's future. Scott Thompson was hired by Yahoo Inc.

Mr. Thompson, the 54-year-old president of eBay's PayPal electronic payments unit, is tasked with turning around Yahoo's core online-advertising business, the company said. His hiring follows more than four months of strategic limbo when the Sunnyvale, Calif., company operated without a permanent leader following the September firing of the previous CEO.

But even with a new CEO, Yahoo faces a long list of strategic questions with many options still on the table, said people familiar with the matter.

In particular, Yahoo's discussions about whether to shed some of its valuable stakes in several Asian Internet companies and whether to sell a minority stake in itself to private-equity investors remain unresolved, these people said.

While the sale of a minority stake to private-equity firms now appears less likely, Yahoo's ongoing discussions about a tax-free exchange of its stakes in its Asian assets, Alibaba Group Holding Ltd. and Yahoo Japan, which are valued at around $17 billion, are likelier to move ahead, said other people familiar with the matter. Yahoo directors also haven't ruled out an outright sale of the company, said one of the people familiar with the matter, though some board members believe it's unlikely a bidder will emerge.

Mr. Thompson will play a big role in the ongoing strategic review that Yahoo's board is conducting, said one of the people familiar with the matter.

The new CEO will have a big role in Yahoo's final decision on its Asian Internet-company stakes and its discussions with private-equity investors, this person said.

In a conference call announcing Mr. Thompson's appointment, a Yahoo Chairman acknowledged that the strategic review of Yahoo isn't over.

But the Yahoo executives emphasized that their first priority would be to turn around Yahoo's core online-ad business, which rivals such as Google Inc. and Facebook Inc. have chipped away at over the years. In the conference call, it was discussed that Yahoo would almost certainly remain publicly traded.

Mr. Thompson, who will assume the CEO post, said in an interview that he wanted Yahoo's business to return to being "one of those great iconic brands" on the Web. "We'll be back to innovation and disruptive concepts," he said.

As CEO, Mr. Thompson said he expects to hire executives and to use Yahoo's "arsenal" of resources, including its balance sheet, to make acquisitions "if it is appropriate." He said Yahoo would build new Web services, and "if we don't have it, we will find it in the market...and we'll do it fast."

Mr. Thompson's appointment is the latest in a long-running game of musical chairs atop Yahoo. Mr. Thompson will be the company's fourth permanent CEO in five years.

Many of his predecessors were bedeviled by Yahoo's strategic challenges, as the one-time Internet leader fell behind Google Inc. and Facebook.

While Yahoo still has some of the Web's most popular destinations, including its Yahoo.com home page and sports, news and entertainment-content sites, it has struggled to keep pace with Facebook and such other content sites as ESPN.com.

Yahoo's share of the $12.3 billion spent in 2011 on graphical and video ads in the U.S. was 13.1%. That was down 14.4% from the previous year, according to research firm eMarketer. Yahoo's overall revenue has been about $6 billion annually for the past few years.

In making the leap to Yahoo from PayPal, Mr. Thompson is moving from a stable and fast-growing business to a bigger company grappling with its dimmed status. PayPal's annual revenue of about $3.4 billion in 2010 was about half that of Yahoo's, and while PayPal is growing at about 25% a year, Yahoo's revenue has been flat. PayPal has 11,000 employees, and Yahoo has 14,000.

Mr. Thompson, who joined PayPal in 2005 as chief technology officer and senior vice president and rose to president in 2008, has little online advertising experience.

Known for his cordial personality and thick Boston accent, he is expected to be a sharp contrast to his predecessor.

Investors appeared to be skeptical about Mr. Thompson's appointment. In 4 p.m. trading, Yahoo's stock closed at $15.78, down 3.10%.

Directors initially sought a CEO with experience in online advertising and content. But Mr. Thompson's candidacy was helped by his record running fast-growing PayPal, an acquaintance recalled. In addition, Mr. Thompson "was always interested" in the company's top job and expressed the interest during the early days of the search, the acquaintance said.

Mr. Thompson said in an interview that the talks with Yahoo began in November and then started to move at an "accelerated" pace. Yahoo directors approved his selection at a board meeting that some members attended by phone, according to one person familiar with the situation.

The appointment of Mr. Thompson is unlikely to interfere with Yahoo's discussions about the tax-free exchange of its stakes in Alibaba and Yahoo Japan for cash and other assets, some of the people familiar with the matter said. A deal could be struck within six to eight weeks, one person said.

Alibaba prefers a friendly deal with Yahoo, but it could still revisit an alternative plan to bid for the whole company in conjunction with buyout firms if the cash-rich split-off proposal falls through, people familiar with the matter said.

Alibaba's spokesman, said that "Scott Thompson is known to us as a strong leader, and we look forward to working with him to deliver value to Yahoo's shareholders."

Separately, private-equity firm Silver Lake hasn't taken its offer off the table and would be open to interacting with Mr. Thompson to understand his vision for Yahoo and assess ways to work together, a person familiar with the matter said.

New York Times Email Disaster to Millions

2011-12-30T16:45:00.000-05:00

Story first appeared in the Associated Press.
The New York Times accidentally sends an email to millions offering a 50 percent discount.

In today's digital age, it's easy to send out an email by mistake — even for a company that's in the business of communication.

The New York Times thought it was sending an email to a few hundred people who had recently canceled subscriptions, offering them a 50 percent discount for 16 weeks to lure them back.

Instead, Wednesday's offer went to 8.6 million email addresses of people who had given them to the Times.

That was the first mistake. The second came when the Times tweeted this: "If you received an email today about canceling your NYT subscription, ignore it. It's not from us."

But the Times did send the original email.

This email should have been sent to a very small number of subscribers, but instead was sent to a vast distribution list made up of people who had previously provided their email address to The New York Times. The NYT said they regret the error.

The damage had already been done, however.

Many people called or wrote in. The newspaper initially honored the discount, even to people who were already paying full price and had no plans to cancel. Murphy said the newspaper stopped giving out discounts to people who received the email in error by early afternoon. She did not say how much the gaffe cost the company or specify how many people contacted the newspaper.

A parody Twitter account called (at)NYTSpam amassed 152 followers by Wednesday afternoon by making fun of the slip-up. The account's description of itself says: "Parody account. Not affiliated with (at)NYTimes or actual spammers -- just sick of bad digital strategy."

The newspaper has made big strides in raising revenue from digital subscriptions. It says it has gained 324,000 digital subscribers since restricting full online access to paying subscribers in March.

Google Receives AdMeld Aquisition Approval

2011-12-09T13:52:00.001-05:00

Story first appeared in USA TODAY.
The Justice Department approved Google's acquisition of online advertising service Admeld after concluding the deal wouldn't diminish competition in one of the Internet's most lucrative marketing niches.

The decision announced Friday clears the way for Google (GOOG) to take control of Admeld six months after the companies agreed to the deal. Google said it plans to take control of Admeld within the next few days, although the two companies' products will remain separate for a while longer.

It's the fourth time since 2007 that that the U.S. government has taken a close look at a Google acquisition to determine if it would stifle competition or drive up prices. Google has gained regulatory approval in each instance. In 2008, though, Google backed out of a proposed partnership with Yahoo (YHOO) to avoid a legal battle with the Justice Department.

The Justice Department is still reviewing Google's proposed takeover of cell phone maker Motorola Mobility Holdings (MMI). That $12.5 billion deal is the biggest in Google's 13-year history.

The Federal Trade Commission is in the midst of a broader inquiry into whether Google has been abusing its dominance of Internet search to make it harder for people to find rival services and apply pressure on advertisers to pay higher prices. Google has consistently predicted that investigation will be resolved in its favor.

Google hasn't disclosed how much it is paying for Admeld, a New York company that works with websites to help them figure out how to make the most money from the amount of space they have available for display ads. It's a steadily growing field of advertising that emphasizes photos, video and illustrations instead of Google's specialty of distributing text-based commercial links alongside search results.

The Justice Department said that privately held Admeld, formed in 2007, raised about $30 million in 2010 to help fund its operations.

Google generated revenue of about $29 billion last year and analysts expect it to surpass $38 billion in revenue this year. Most of Google's revenue still comes from search advertising.

In an attempt to diversify beyond search advertising, Google bought DoubleClick for $3.2 billion in 2008. That deal is turning display advertising into a major moneymaker for Google, but the company's market share in the segment still lags behind Facebook and Yahoo, according to the research firm eMarketer Inc.

That apparently helped sway the Justice Department to approve the Admeld deal.

The Spread of Malicious Internet Ads

2011-11-23T16:46:00.002-05:00

Story first appeared in USA TODAY.
The online-advertising industry is scrambling to quell a long-standing problem that has taken a turn for the worse: the spread of malicious ads on the Internet's top commercial websites.

Several new twists have made so-called malvertisements a fast-rising threat to consumers — and a big headache for publishers, advertisers and ad networks, say technologists and security researchers.

The spread of infected online ads has spiked tenfold over the past year, according to research disclosed by security intelligence firm RiskIQ at a recent Online Trust Alliance conference in Washington, D.C.

RiskIQ documented a peak of 14,694 occurences of malvertisements in May of this year, up from 1,533 in May 2010. Each corrupted ad could have infected the PCs of thousands or millions of website visitors, based on how long the ad ran, says Elias Manousos, CEO of RiskIQ.

Organized crime gangs have streamlined the process of sneaking viral ads into the distribution system run by advertising networks, causing billions of tainted ad impressions to appear on the top 500 websites over the past 12 months, say technologists and security researchers.

Website security firm Armorize recently discovered criminals selling tutorials, tool kits and ad placement services to anyone who wants to get into the malvertising game. "There is a whole ecosystem designed to do this," says Matt Huang, Armorize's chief operating officer.

A recent rash of infections have been triggering bogus security warnings, followed by an offer for fake antivirus protection.

Last month, SpeedTest.net, a site that measures home broadband connection speeds, began displaying legit ads carrying instructions to load pitches for Security Sphere 2012. Simply navigating to the site launched the promos, which locked up the visitor's PC until he or she purchased worthless "protection" for $35.

Doug Suttles, chief operating officer of Web diagnostics firm Ookla, SpeedTest's parent, says his engineers spotted the attack and cleaned it up within three hours. The criminals, in this case, pioneered a novel technique. They corrupted legit advertisements as they arrived in the ad-handling program, called OpenX, used by the SpeedTest site.

However, tens of thousands of other websites that use the free OpenX ad-handling platform are wide open to this new type of attack, says Armorize's Huang.

In another twist, consumers bedeviled by bogus anti-virus pitches have started bad-mouthing websites they believe triggered the fake promos. Armorize has documented numerous consumer complaints that have gone viral on Twitter and other social networks, causing a drop in visits to the sites in question.

Some ad networks have begun participating in a working group discussing "information-sharing about malvertisers and their ads," says Steve Sullivan, the Interactive Advertising Board's vice president of digital supply chain solutions.

The Online Publishers Association, the industry group of major website publishers, has yet to closely examine malvertising. Obviously, stuff like this is disconcerting to the industry, says Pam Horan, OPA's president. They haven't done any research in this area, and she has not specifically heard anything from the members about this.

Even so, validating ads has become a major conundrum. Web publishers trust the ad networks to continually rotate ads to their Web pages. Meanwhile, the big ad networks, such as Google, Adobe, Microsoft and Yahoo, use automation to pull ads into rotation from a series of smaller networks and agencies.

Malvertisements are also used to spread stealthy infections that quietly take full control of the victim's PC, which is then used to steal data, probe deeper into corporate networks and pilfer from online financial accounts.

Consumers can protect themselves by making sure anti-virus programs and all updates for their Web browsers and popular applications, especially Adobe Flash and Adobe PDF, are current. Consumers who want to protect themselves further can use browser plug-ins, such as NoScript and AdBlock, that block all online ads.

Craig Spiezle, the Online Trust Association's executive director, says publishers, advertisers and the ad networks realize what's at stake.

The good news there is growing interest of some of the key stakeholders — including Yahoo, Microsoft and Google — on the need to employ countermeasures. It's clear that validating the ads everyone depends on is a shared responsibility. If consumers don't trust ads, they may not go to the site, or they'll start running ad blockers, and that will compromise everyone's ability to monetize.

Amazon Launches Digital Book Lending Library

2011-11-23T16:24:00.002-05:00

Story first appeared in the Wall Street Journal.

As the e-reader and tablet wars heat up, Amazon.com Inc. is launching a digital-book lending library that will be available only to owners of its Kindle and Kindle Fire devices who are also subscribers to its Amazon Prime program

The program will be limited, at least at the beginning, in what is available to borrow. Amazon will initially offer slightly more than 5,000 titles in the library, including more than 100 current and former national bestsellers, such as Stephen R. Covey's "The 7 Habits of Highly Effective People."

None of the six largest publishers in the U.S. is participating. Several senior publishing executives said recently they were concerned that a digital-lending program of the sort contemplated by Amazon would harm future sales of their older titles or damage ties to other book retailers.

Moreover, Amazon will restrict borrowers to one title at a time, one per month. Borrowers can keep a book for as long as they like, but when they borrow a new title, the previously borrowed book automatically disappears from their device.

The new program, called Kindle Owners' Lending Library, cannot be accessed via apps on other devices, which means it won't work on Apple Inc.'s iPad or iPhone, even though people can read Kindle books on both devices. This restriction is intended to drive Kindle device sales, says Amazon.

The program, which is effective Thursday, comes a few weeks before Amazon ships the Kindle Fire tablet on Nov. 15, which is a direct competitor with the iPad.

The lending library reflects a broader effort by Amazon to lure consumers to Prime, a service that costs $79 a year.

Amazon Prime began as a membership plan to offer package-shipping perks. Then, earlier this year Prime added a video-streaming feature to the subscription. Nearly 13,000 movies and TV shows are now available under the streaming feature.

Amazon, the market leader in e-readers, made Kindle titles available to libraries beginning in September and libraries said the impact already has been significant.

At the Seattle public-library system, e-book borrowing rose 32% in the month after Kindle books became available, said Seattle's electronic-resources librarian Kirk Blankenship. E-book borrowing had typically been rising 10% or 15% a month, he said.

Mr. Blankenship said he isn't worried about Amazon starting its own lending service. He said there's a lot of people that can't afford Amazon Prime, so we also want to be a resource for people looking for other things beyond the best-seller list.

Russell Grandinetti, vice president for Kindle content, said the vast majority of participating publishers were receiving a flat fee for their titles, while a more limited group is being paid the wholesale price for each title that is borrowed. For those publishers, we're treating each book borrowed as a sale, he said.

Despite concerns among major publishers about the potential impact on sales of the program, some see it as a positive. Arthur Klebanoff, chief executive of RosettaBooks LLC, an e-book publisher that is making Mr. Covey's title available under a flat-fee arrangement, said he did so because he believes it will spur sales of Mr. Covey's other works.

What is Yahoo Doing!

2011-11-23T15:57:00.002-05:00

Story first appeared in USA TODAY.

Even as Yahoo rolls out a fresh batch of social and mobile products and services, its strategic moves continue to baffle investors and analysts alike.

And at least one major shareholder isn't happy. Hedge fund manager Daniel Loeb, in a letter to Yahoo's board on Friday, pushed for the ouster of director and company co-founder Jerry Yang. Loeb, who owns a 5.2% slice of Yahoo through a fund called Third Point, asserts that Yang has too many conflicts of interest.

Chief among them is Loeb's contention that Yang is in discussions with several buyout firms about joining forces to acquire a controlling stake in Yahoo. Loeb's letter names the Blackstone Group, KKR, Providence Equity Partners, Silver Lake Partners and Texas Pacific Group as firms talking to Yang, who co-founded Yahoo in 1995 with David Filo.

Yang had no comment.

The shareholder hullabaloo is just the latest distraction for the scuffling Internet pioneer. Though the online display ad market is growing in the U.S.— especially in the sale of targeted ads based on unique data — Yahoo badly lags behind Facebook and Google. At the same time, Yahoo made "no strides forward in the dominant technology trends — social, mobile and cloud. And, if anything, they've lost even more ground," says Jonathan Yarmis, an independent tech analyst.

In September, Yahoo booted Carol Bartz as CEO after she failed to reverse its flagging fortunes despite 2½ years on the job. Then the board hired investment bankers Goldman Sachs Group and Allen & Co. to help the company explore its strategic options. In recent months, Yahoo has padded its editorial ranks, stealing key execs from CBS Interactive. Last week, the company bought online ad network Interclick for $270 million and bolstered its mobile and social efforts.

The confluence of seemingly conflicting strategies has confounded followers of the Internet company, inspiring the latest parlor game in Silicon Valley: What, exactly, is Yahoo's end game?

Yahoo's answer is that the board is exploring a wide range of options. The company says they can assure all Yahoo shareholders that whatever the outcome of the strategic review process may be, it will serve the best interests of all the company's shareholders.

In a Sept. 23 memo to employees, Yang, Filo and Yahoo Chairman Roy Bostock said the search is on for a full-time CEO and that company advisers are fielding offers from potential business partners. USA TODAY obtained a copy of the memo.

In the weeks since Bartz was bounced, Yahoo has had a flurry of activity under interim CEO Tim Morse. Last month, it announced a content-sharing and distribution partnership with ABC News and rolled out more than a dozen original Web series featuring actors such as Morgan Spurlock and Judy Greer.

But the purchase of Interclick — which reaches more than 120 million unique users a month, according to market researcher ComScore — is a head-scratcher because Yahoo already owns ad network BlueLithium, which has not panned out, analysts say.

Yahoo executives are betting the addition of Interclick makes it a stronger company or a more attractive acquisition target, Lee reasons. However, he said, "it is odd Yahoo decided its best option was to buy rather than to build on top of what" it already has.

Potential bidders

Yet the saber rattling by private-equity firms and other buyout shops storming the gates of Yahoo is building pressure on management. The company needs to move fast to prove its relevance or be sold at a bargain-basement discount. The problem: Yahoo isn't growing like it used to. And its prospects in the face of competition aren't great, either. Still, it's profitable and boasts a massive audience of 700 million users worldwide.

Much of the problem is leadership. Yahoo still doesn't have a permanent CEO. And then-CEO Yang's resistance to Microsoft's offer to buy the company in 2008 for $47.5 billion — double its current market value — has landed him in the doghouse. Yahoo's board ultimately rejected the bid.

Should Yahoo opt to sell, a long list of prospective suitors possibly awaits. Even Google's name pops up, although Alibaba Group, a Chinese Internet company partially owned by Yahoo, is the only bidder that has publicly declared its interest in mounting a takeover attempt.

Google and Yahoo declined to comment.

Others reported to be mulling an offer include Silicon Valley venture-capital firm Andreessen Horowitz and buyout firms KKR, the Blackstone Group and Silver Lake Partners.

Microsoft has been reported to be weighing whether to help finance a Silver Lake bid.

It would be folly for Microsoft, sitting on a heap of cash (more than $40 billion) to make another go at Yahoo, cautions independent analyst Damon Vickers. "These are two companies slowly fading away," he says. "If they merge, it would be like two cinder blocks sinking in water."

Despite its well-documented problems — three CEOs in a few years, for starters — Yahoo's audience of some 700 million people worldwide and its stakes in prized assets such as Alibaba and Yahoo Japan make it an attractive takeover candidate, says David Hallerman, an analyst at eMarketer.

By acquiring Yahoo, Google or Microsoft could eliminate a competitor and pick up valuable pieces from Yahoo in the process, says Carl Tobias, a professor at the University of Richmond's School of Law. But Google and Microsoft face antitrust scrutiny if they pursue Yahoo, he adds.

The takeover talk has helped lift Yahoo's stock price by more than 30% since Bartz's departure. Yahoo's shares rose nearly 3%, to close at $15.69 Monday.

Still, it is unclear if Yahoo will put itself up for sale as it explores ways to appease shareholders. Many stockholders are frustrated with the company's declining revenue at a time when the overall Internet advertising market is growing.

Yahoo's profit and revenue slipped year-over-year during its third quarter. Profits were $293 million, or 23 cents a share, compared with $396 million, or 29 cents a share, in the year-ago period. Revenue was $1.07 billion, vs. $1.12 billion a year ago, but in line with Wall Street expectations.

What the future holds

Yahoo's travails aren't likely to go away as it increasingly faces competitive pressure from Facebook and Google for users and advertisers.

Searches on Yahoo, for instance, were up only 1% in its third quarter, while search page views slumped 3%, the company said.

That, in no small part, has adversely affected Yahoo's online advertising business. While Yahoo's annual revenue from display ads is expected to improve 15% to $1.86 billion in the U.S. in 2012, Facebook's is expected to soar 45% to $2.9 billion and Google's 58% to $1.82 billion, according to eMarketer.

Yahoo said it has agreed to extend the revenue-per-search guarantee in its partnership with Microsoft through March 2013.

Earlier this year, however, Yahoo admitted the two-year deal was taking longer than anticipated to pay off because of technical imperfections in the search-advertising system.

Yahoo is being squeezed by Google's dominance in search and Facebook's in delivering targeted advertising to its 800 million members. With these two monster competitors offering scale, relevance and the power of the social graph — and with AOL's new Devil ad unit slowly gaining traction — the room for Yahoo to grow dramatically is narrowing.

In that Sept. 23 memo to employees, Yang, Filo and Bostock acknowledge Yahoo needs to "accelerate innovation, reignite inspiration, and give our users what they want now — great content that is engaging and easy to use on any device and provide an experience in which they can participate and contribute."

Such strategy dovetails with the advice of several industry observers, including Don Dodge, a former Microsoft executive who closely follows Yahoo.

He suggests that Yahoo hire a "product-driven CEO" who focuses on customers and eschews business deals; hold onto valuable equity holdings in Yahoo Japan and Baidu; and concentrate on Yahoo strongholds, such as Yahoo Sports and Yahoo Finance.

Web Suffix Debate

2011-11-23T15:43:00.000-05:00

Story first appeared in Bloomberg News.

A program to let companies acquire their own Web suffixes is failing to win over U.S. brand owners such as Procter & Gamble Co. and Hewlett- Packard Co. that don’t see a need to expand beyond .com.

P&G, the world’s largest consumer products company with more than 50 brands including Tide detergent, Pampers diapers and Crest toothpaste, won’t apply for new suffixes, said Paul Fox, a spokesman. HP, the biggest computer maker, considers the program costly and has no plans to take part, said Gary Elliott, vice president of global marketing.

The Internet Corporation for Assigned Names and Numbers, the nonprofit group managing the Web’s global address system under a U.S. Commerce Department contract, is preparing to consider almost any word in any language as a Web suffix, including company and brand names or terms such as .shopping or .nyc. The group will accept applications from Jan. 12 through April 12, 2012, for as many as 1,000 new suffixes a year. The application fee is $185,000 for each domain name.

Not one of 21 companies in the Standard & Poor’s 500 that Bloomberg informally surveyed in the past month said they plan to apply. Other responses ranged from still researching options to not commenting.

Six-Year Deliberation

Rod Beckstrom, the group’s chief executive officer, said the program isn’t for all companies when he told a meeting of the organization on Oct. 24 that “anyone who might be interested needs to do their own homework, develop a solid understanding of the program and then determine” whether a new name is worthwhile. “The clock is ticking,” he said.

The naming group, overseer of the Internet’s address system since 1998, currently manages 22 so-called generic top-level domains, including the commonly used .com, .org and .net. After six years of deliberation, the Marina del Ray, California-based group’s board voted June 20 to expand the number of those domains as a way to spur online innovation.

The expansion may foster competition in the domain sector, support new business models online and provide consumers with new ways to find products, according to an analysis prepared for the oversight group in June 2010.

The Commerce Department should delay the domain-name expansion to give businesses more time to assess the program, including brand and legal issues, the National Retail Federation wrote in an Oct. 21 letter to the agency.

‘Uncertainty Reigns’

Mallory Duncan, general counsel of the Washington-based retailers group, said in an interview that with the application date just months away, there’s not time to think all this through.

The Commerce Department is reviewing the letter and plans to respond in a timely manner, Moira Vahey, a spokeswoman for the agency’s National Telecommunications and Information Administration, said in an e-mail.

The Association of National Advertisers, a Washington-based organization where HP’s Elliott serves as chairman, criticized the domain-name expansion as increasing costs for businesses and sowing confusion among consumers.

The association represents more than 400 companies including Bloomberg LP, the parent of Bloomberg News.

Canon Inc. and Hitachi Ltd. are among the few large companies that have expressed public interest in the new domains.

Watching Competitors

General Motors Co., the largest U.S. automaker, has “thoroughly evaluated” the domain-name program and is weighing its options, Tom Henderson, a spokesman, said in an e-mail. Wal- Mart Stores Inc., the world’s biggest retailer, is assessing the program, Ravi Jariwala, a spokesman, said in an interview.

Adobe Systems Inc., the largest maker of graphic-design software, is opposed to the “unnecessary, wholesale expansion of generic top-level domains and is very concerned it will cause confusion for consumers and increase the potential for online and consumer fraud,” John Travis, the company’s vice president of brand marketing, said in an e- mail. Even so, Travis said the company is still evaluating whether to apply for domains.

Companies may ultimately apply for domain names because they don’t know what their competitors are doing and the next application round hasn’t been announced, said Josh Bourne, managing partner at FairWinds Partners LLC, a domain-name consulting firm in Washington.

Competitive Risk

Brands are looking at the risk of being left behind. If all of your competitors are using their .brand or .keyword in marketing campaigns and you don’t have one, it may make you look out of touch, out of date.

Bourne is president of the Coalition Against Domain Name Abuse, a nonprofit group that has criticized the structure of the expansion, including the lack of a timeline for a second application round. The group’s members include Eli Lilly & Co., Morgan Stanley and Nike Inc.

Hewlett-Packard will use its HP.com website rather than “fracture our dollars” on new domains, Elliott said. He estimated the cost of operating a Web suffix may eventually reach $1.5 million, including legal and consulting fees, Web development and other costs for the Palo Alto, California-based company.

Procter & Gamble, based in Cincinnati, will “focus on our existing .com sites and other ways to connect with consumers,” Tonia Elrod, a spokeswoman, said in an e-mail.

The program requires resources that they would prefer to focus on building relationships with customers. P&G already operates a range of .com brand sites, including Gillette.com for razors and Charmin.com for toilet paper.

Contract Scrutinized

The U.S. companies join corporations in Europe such as Porsche AG, Vodafone Group Plc and Puma SE that have said they aren’t attracted to new suffixes.

The name oversight group is operating under a Commerce Department contract that expires in March. The agency is reviewing public comments on whether the terms should be amended and plans to open the contract for bidding this year.

The Commerce Department should include ethics and conflict- of- interest rules in a future contract to manage the domain-name system, Senator Ron Wyden, an Oregon Democrat, wrote in a September letter to the agency.

Two Washington-based government watchdogs, the Center for Responsive Politics and Public Citizen, have raised concerns about the departure of the naming group’s former chairman, Peter Dengate Thrush.

Dengate Thrush left the organization four days after the vote on domain-name expansion and within a month joined a London company called Top Level Domain Holdings Ltd., which intends to acquire Web suffixes created by the new plan and offer Internet registry services.

Fast Retailing Co Looking to Purchase Rival

2011-11-23T15:38:00.002-05:00

Story first appeared in Bloomberg New.

Fast Retailing Co., Asia’s largest clothing chain, may buy a bigger rival in the U.S. or Europe after the yen’s advance to a postwar high against the dollar boosted the Japanese company’s purchasing power.

The yen strength and anemic stock markets make this a very good opportunity for M&A, Chief Executive Officer Tadashi Yanai, 62, said . He added that it won’t be something small, but a company of equal size or bigger.”

The billionaire aims to take advantage of the yen’s climb to expand outside Japan, where an unexpectedly long summer damped demand for fall and winter clothing, contributing to a 12 percent decline in profit in the year through August. Fast Retailing opened two New York stores last month and aims to be the world’s top clothing retailer, targeting a sixfold jump in sales from last year to 5 trillion yen

($64 billion) by 2020.

If there is a chance to do M&A in the future, they are thinking of doing it. Yanai, who turned his father’s tailoring business into a company with a market value of 1.4 trillion yen, making him Japan’s second-richest person.

Fast Retailing, the second-biggest gainer on the Nikkei 225 Stock Average in the past five years, “does not need any brands” and isn’t considering companies such as Esprit Holdings Ltd., Yanai said.

Polo Ralph Lauren Corp. probably won’t agree to an acquisition, according to Yanai.

Overseas Sales

Fast Retailing has said it intends to boost overseas sales to be greater than domestic revenue by 2015 as it expands in China, Southeast Asia and the U.S., competing with Inditex SA’s Zara, Hennes & Mauritz AB, and Gap Inc. Sales at Uniqlo stores in Japan that have been open more than a year dropped for a third straight month in October.

Making purchases was one of the ways the company was “investing for the future,” Yanai said in September. He remains Fast Retailing’s biggest shareholder with a 22 percent stake, according to data compiled by Bloomberg.

Fast Retailing has gained about 26 percent in the past five years. In dollar terms, its market value has soared 90 percent. The stock fell

0.2 percent to 13,390 yen as of the 3 p.m. close of trading in Tokyo, paring its advance this year to 2.8 percent, compared with a 14 percent drop for the Nikkei 225 and a 17 percent slide for the broader Topix index.

May List Overseas

Yanai said the company may also list overseas since the Japanese equity market lacks growth. He didn’t give a timeframe for any share sales.

The yen on Oct. 31 hit a post-World War II high of 75.35 against the dollar before the government intervened in the currency markets. The Japanese currency traded at 78.24 to the dollar on Nov. 4.

Fast Retailing had 202 billion yen in cash and short- term investments in August, the highest level since at least 2002, according to data compiled by Bloomberg.

The company bought out apparel maker Link Theory in two transactions in 2009 for $371 million after purchasing a minority stake in 2004, according to data compiled by Bloomberg. That’s Fast Retailing’s biggest acquisition to date, the data show.

Profit Outlook

Sales will probably jump 18 percent to 965 billion yen in the fiscal year ending Aug. 31, the clothing retailer said Oct. 12 in a statement. Profit is likely to rise 31 percent to 71 billion yen in the fiscal year.

Fast Retailing’s overseas sales comprised 18 percent of last year’s 820 billion yen total, compared with a share of about 16 percent in the previous year, according to its annual reports.

Fast Retailing has spent more than $875 million on 22 deals since 2003, according to data compiled by Bloomberg. It acquired a stake in Nelson Finance, owner of the French brand Comptoir des Cotonniers, in 2005, according to its 2010 annual report. Fast Retailing bought a further 64 percent in the company for $192.5 million in 2006, according to data compiled by Bloomberg.

Princesse tam.tam

The clothing retailer also took control of French fashion brand Princesse tam.tam by buying 95 percent of Petit Vehicule for $83 million in 2005, the data show.

The company paid a median of 20.6 times earnings before interest and taxes on seven of its deals, according to data compiled by Bloomberg.

That compares with a median of 11.6 times EBIT for 78 transactions in the clothing retail sector in the same period, the data show.

Fast Retailing in August 2007 dropped out of the bidding for New York luxury chain Barneys as Dubai’s Istithmar PJSC offered $942 million, raising its offer twice to counter the Japanese retailer.

Yanai at the time said Fast Retailing would spend as much as 400 billion yen, or about $3.5 billion, on acquisitions to double annual sales to 1 trillion yen by 2010. The company announced deals worth more than $400 million in the period from August 2007 through the end of 2010 and reported sales of 815 trillion yen in its 2010 fiscal year, according to data compiled by Bloomberg.

Focusing on Uniqlo

“We no longer think there is a reason to buy Barneys,” Yanai said.

“Currently, we are mainly driving our Uniqlo business, so in that sense, there is no meaning to buy Barneys.”

Fast Retailing aims to build a global production system capable of manufacturing 5 billion articles of clothes yearly by 2020, it said in September.

Yanai, with an estimated wealth of $7.6 billion according to Forbes, quit his job selling kitchen items and men’s clothing at a Jusco supermarket in Japan to join his father’s tailoring business, Ogori Shoji, in 1972. He became president in 1984, when he opened the first Uniqlo store, known at the time as Unique Clothing Warehouse.

Fifth Avenue Store

In Japan, Yanai is second in wealth only to Softbank Corp. Chief Executive Officer Masayoshi Son, according to Forbes.

Fast Retailing aims to make 1 trillion yen of pretax profit, excluding ordinary items by 2020, more than 10 times this fiscal year’s. It plans to open as many as 300 stores annually within a year or two, Yanai said last month.

Yanai opened two of Uniqlo’s biggest stores to date in New York last month, with one on Fifth Avenue and another on 34th street. The Fifth Avenue store has a floor space of 89,000 square feet. The company plans to open stores in Los Angeles, Chicago and San Francisco in the next three years, he said.

LG Said to Plan to Debut Google TV at Trade Show in January

2011-11-23T14:46:00.000-05:00

Story first appeared in the Bloomberg News.

Google Inc. and LG Electronics Inc. may unveil a television using the search giant’s software at the January Consumer Electronics Show in Las Vegas, according to two people with knowledge of the project.

The product would be LG’s first model with Google TV, said the people, who declined to be identified because the discussions aren’t public.

Support from the world’s second-largest TV manufacturer may boost Google’s attempt to bring its dominance in Internet search to living rooms with the Google TV software. Last month, the Mountain View, California-based company introduced a redesigned television service after sales of its initial version didn’t meet some expectations.

LG a Tokyo-based company, and Google, a US based company, both declined to comment on the discussions between the two companies.

Google, pushing into areas that boost competition with rivals Apple Inc. and Microsoft Corp., unveiled the TV service last year with partners Sony Corp., Logitech International SA and Dish Network Corp.

Google said last month the partners would receive the updated software.

YouTube, Android

LG and bigger rival Samsung Electronics Co. are embracing the Internet and 3-D images to revive TV demand amid a plunge in set prices. Sony, maker of the Bravia models, has forecast an eighth straight year of losses at its TV business.

The revamped version of the TV service Google unveiled last month has a simpler interface. The upgrade was designed to show the YouTube video-sharing service better and opens up the platform for Android developers to build applications for TV. Android is Google’s software platform for mobile devices.

After the debut of the TV service, Google failed to secure programming from the four major U.S. broadcast networks, led by CBS Corp. and News Corp.’s Fox. Logitech, based in Romanel-sur- Morges, Switzerland, cut the price of its Revue set-top box for Google TV in April, citing “a slow start.”

The Electronics Times, a South Korean newspaper, reported this month that LG was in discussions with Google to use the TV service. The report didn’t give a timeframe for the product’s unveiling.

Samsung, based in Suwon, South Korea, also was in discussions with Google to develop a Google TV product, Yoon Boo Keun, head of Samsung’s TV business, said in February.

Twitter changes business of celebrity endorsements

2011-11-23T14:44:00.003-05:00

Rapper Snoop Dogg gave props on Twitter to an ad for the Toyota Sienna minivan. Actress Tori Spelling linked to a website for rental cars. And reality TV star Khloe Kardashian soliloquized about the brand of jeans that accentuates the famous Kardashian derriere.

"Want to know how Old Navy makes your butt look scary good? Ask a Kardashian," the reality TV star tweeted.

These celebs aren't just writing about family cars and fashion choices for the heck of it. Stars can get paid big bucks to pontificate about clothes, cars and movies in the 140 characters or less allowed per tweet. That adds up to about $71 per character.

Twitter, which in its five-year existence has reshaped how people shop, vote and start revolutions, is now changing the business of celeb endorsements. A growing number of firms are hooking up companies with stars who get paid to praise products to their thousands -- sometimes millions -- of Twitter followers.

The endorsements range from subtle to blatant; the celeb pairings from sensible to downright odd.

Singer Ray J urged his 600,000-plus Twitter followers to see the horror movie "Saw 3D." Lamar Odom, L.A. Lakers forward, tweeted to his nearly 2 million followers about hip-hop artist and entrepreneur Jay-Z's book "Decoded": "My man Jay-Z ... only rapper to rewrite history without a pen. Until now."

Of course, anything on Twitter is short-lived and reaches only a small, self-selecting audience: Research firm eMarketer estimates that only 11% of U.S. adult Internet users are on the site. And even though some celebs have faithful followers, it can be hard to measure whether their tweets lead people to spend.

Still, celeb tweets can be a way to grab an audience. And paying a celeb to tweet is much cheaper than a traditional advertising campaign. Want a tweet from Khloe Kardashian? That will cost about $8,000, according to social media marketer Izea. Looking for a cheaper option? Ray J is about $2,300.

Companies like Izea, Ad.ly and twtMob usually pair products with celebs through a combination of software algorithms and Hollywood instinct. The companies say they use many metrics to gauge the effectiveness of a paid tweet, such as the number of times it gets reposted by others.

When Ad.ly got Charlie Sheen to tweet for

Internships.com in March, the actor was getting fired from his sitcom "Two and a Half Men." Within an hour of Sheen's first post, Internships.com got more than 95,000 clicks.

"I'm looking to hire a #winning INTERN with #TigerBlood," tweeted Sheen, who had just recently signed up for Twitter and now has more than 5 million followers.

Dan Smith, vice president of marketing for website CampusLIVE, which helps advertisers connect with college students, hired Izea to help him get a celebrity to tweet about his company.

Smith polled his interns and they picked Lindsay Lohan, the actress most famous for her run-ins with the law. According to Smith, CampusLIVE paid Lohan about $3,500 for one tweet: "These challenges for college kids on #CampusLIVE are SO addicting!"

The post to Lohan's 2.6 million fans drove about 4,500 clicks to the website, Smith said. But he also said he wasn't sure if he'd use her again -- because he's already tapped her fan base.

For her part, Lohan on her own time tweets about topics like fulfilling her community service sentence. But she has also posted comments for Izea on a few occasions, the company says. Her tweets about wind energy ("While saving the world ... save money! I love it!") and about a gold mining company ("R ur savings safe? Think again!") were paid endorsements, according to Izea.

Those posts, along with the CampusLIVE tweet, included the characters "#ad" at the end, which indicates that a post is a paid endorsement. But Lohan's publicist, Steve Honig, says that Lohan does not sell her tweets: "She uses Twitter to communicate with her fans and let them know what she's up to."

Like any endorsement, celeb tweets come with the risk that a star's behavior will not coincide with the company's image. And of course, there's a science to picking the right one: Will consumers buy that their favorite rapper drives a minivan?

Twitter generally allows the paid tweets, as long as they're posted manually and not automated by a computer program. The Federal Trade Commission suggests endorsers end their tweets with the # symbol, called a hash tag, and the letters "ad" or "spon," short for "sponsored by," to clarify that they're ads.

Google Reaches for the Stars

2011-11-23T14:42:00.002-05:00

This story first appeared in the New York Times.

In a top-secret lab in an undisclosed Bay Area location where robots run free, the future is being imagined.

It’s a place where your refrigerator could be connected to the Internet, so it could order groceries when they ran low. Your dinner plate could post to a social network what you’re eating. Your robot could go to the office while you stay home in your pajamas. And you could, perhaps, take an elevator to outer space.

These are just a few of the dreams being chased at Google X, the clandestine lab where Google is tackling a list of 100 shoot-for-the-stars ideas. In interviews, a dozen people discussed the list; some work at the lab or elsewhere at Google, and some have been briefed on the project. But none would speak for attribution because Google is so secretive about the effort that many employees do not even know the lab exists.

Although most of the ideas on the list are in the conceptual stage, nowhere near reality, two people briefed on the project said one product would be released by the end of the year, although they would not say what it was.

At most Silicon Valley companies, innovation means developing online apps or ads, but Google sees itself as different. Even as Google has grown into a major corporation and tech start-ups are biting at its heels, the lab reflects its ambition to be a place where ground-breaking research and development are happening, in the tradition of Xerox PARC, which developed the modern personal computer in the 1970s.

A Google spokeswoman said that investing in speculative projects was an important part of Google’s DNA. While the possibilities are incredibly exciting, please do keep in mind that the sums involved are very small by comparison to the investments we make in our core businesses.

At Google, which uses artificial intelligence techniques and machine learning in its search algorithm, some of the outlandish projects may not be as much of a stretch as they first appear, even though they defy the bounds of the company’s main Web search business.

For example, space elevators, a longtime fantasy of Google’s founders and other Silicon Valley entrepreneurs, could collect information or haul things into space. (In theory, they involve rocketless space travel along a cable anchored to Earth.) Google is collecting the world’s data, so now it could be collecting the solar system’s data.

Sergey Brin, Google’s co-founder, is deeply involved in the lab, said several people with knowledge of it, and came up with the list of ideas along with Larry Page, Google’s other founder, who worked on Google X before becoming chief executive in April; Eric E. Schmidt, its chairman; and other top executives.

Google may turn one of the ideas — the driverless cars that it unleashed on California’s roads last year — into a new business. Unimpressed by the innovative spirit of Detroit automakers, Google now is considering manufacturing them in the United States, said a person briefed on the effort.

Google could sell navigation or information technology for the cars, and theoretically could show location-based ads to passengers as they zoom by local businesses while playing Angry Birds in the driver’s seat.

Robots figure prominently in many of the ideas. They have long captured the imagination of Google engineers, including Mr. Brin, who has already attended a conference through robot instead of in the flesh.

Fleets of robots could assist Google with collecting information, replacing the humans that photograph streets for Google Maps, say people with knowledge of Google X. Robots born in the lab could be destined for homes and offices, where they could assist with mundane tasks or allow people to work remotely, they say.

Other ideas involve what Google referred to as the “Web of things” at its software developers conference in May — a way of connecting objects to the Internet. Every time anyone uses the Web, it benefits Google, the company argued, so it could be good for Google if home accessories and wearable objects, not just computers, were connected.

Among the items that could be connected: a garden planter (so it could be watered from afar); a coffee pot (so it could be set to brew remotely); or a light bulb (so it could be turned off remotely). Google said in May that by the end of this year another team planned to introduce a Web-connected light bulb that could communicate wirelessly with Android devices.

One Google engineer familiar with Google X said it was run as mysteriously as the C.I.A. — with two offices, a nondescript one for logistics, on the company’s Mountain View campus, and one for robots, in a secret location.

While software engineers toil away elsewhere at Google, the lab is filled with roboticists and electrical engineers. They have been hired from Microsoft, Nokia Labs, Stanford, M.I.T., Carnegie Mellon and New York University.

A leader at Google X is Sebastian Thrun, one of the world’s top robotics and artificial intelligence experts, who teaches computer science at Stanford and has developed a driverless car. Also at the lab is Andrew Ng, another Stanford professor, who specializes in applying neuroscience to artificial intelligence to teach robots and machines to operate like people.

Johnny Chung Lee, a specialist in human-computer interaction, came to Google X from Microsoft this year after helping develop Microsoft’s Kinect, the video game player that responds to human movement and voice. At Google X, where he is working on the Web of things, according to people familiar with his role, he has the mysterious title of rapid evaluator.

Because Google X is a breeding ground for big bets that could turn into colossal failures or Google’s next big business — and it could take years to figure out which — just the idea of these experiments terrifies some shareholders and analysts.

Mr. Page has tried to appease analysts by saying that crazy projects are a tiny proportion of Google’s work.