Yahoo CEO Cutting Jobs and Reorganizing Company

Story first appeared in Yahoo News.

SUNNYVALE, Calif. (AP) — A week after announcing a painful round of job cuts, Yahoo CEO unveiled a plan Tuesday that will reorganize the company into three main divisions focused on users, advertisers and technology.

He unveiled the plan at an "all hands" meeting for employees at the company's headquarters in Sunnyvale, Calif. It will take effect on May 1.

According to a memo obtained by The Associated Press, the new structure aims to improve users' experience with Yahoo, work closely with advertisers in different regions of the globe, and strengthen the company's technology group.

The changes separate what had been a mixed reporting structure that made regional groups sometimes responsible for both creating content and selling ads against it.

The consumer group will contain media properties such as the Yahoo home page, news, finance, sports and entertainment products, under the executive vice president of the Americas.

The consumer group also takes over the company's search business and products that consumers use on a daily basis such as email and instant messaging tools.

The current Yahoo CEO, a former executive at online transaction processor PayPal, also told employees that Yahoo will renew its focus on commerce, an area he said will play a critical role in Yahoo's future growth. The commerce team will focus its efforts on Yahoo pages devoted to autos, shopping, travel, jobs, personals and real estate.

Last week, he announced that Yahoo would begin laying off 2,000 employees, a 14 percent cut to its workforce and the biggest in its 17-year history. Since he joined Yahoo just three months ago, is under increasing pressure to turn the Internet giant around. His chief critic is the hedge fund manager, who controls a 5.8 percent stake in the company and has been angling for representation on the board.

Yahoo's stock closed down 11 cents at $14.99 on Tuesday as the Dow Jones industrial average had its third triple-digit decline in four trading days.

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Desperate For Cash AOL to Sell Unused Patents to Microsoft

Story first appeared in The Wall Street Journal.

AOL Inc. agreed Monday to sell more than 800 patents and related applications, along with a nonexclusive license to its remaining portfolio of patents, to Microsoft Corp. for about $1.1 billion.

The news sent AOL shares surging as the online media company said it intends to return a "significant portion" of the sale proceeds to shareholders. The deal comes six weeks after activist shareholder Starboard Value LP, which is mounting a proxy contest for seats on AOL's board, highlighted AOL's patent portfolio as an "underutilized" asset and complained that the company wasn't acting to realize value from the patents.

At the time AOL said it had already hired advisers to realize the value of the patents. On Monday, the AOL Chief Executive  said that the deal with Microsoft represents the culmination of a robust auction process for our patent portfolio.

Assuming the deal had been done at the end of 2011, AOL said it would have had some $15 a share in cash on hand.

Shares of AOL surged 43% to $26.32 in early trading, while Microsoft slid 1.5% to $31.06.

The transaction is expected to close by year's end, and at that point AOL will have an announcement for shareholders on what the company will do with its cash.

Starboard has been critical of the strategy of investing heavily in online content businesses as a way of building up the company's ad sales. The investor, which owns 5.2% of AOL's shares, wants AOL to take action to create value.

In a letter to AOL's board in late February, it said it had heard from multiple parties specializing in intellectual property valuation who believed AOL's patents could produce in excess of $1 billion of licensing income if appropriately harvested. These parties had expressed severe frustration that AOL has been entirely unresponsive to their proposals.

Starboard was unavailable for immediate comment. The firm has nominated up to five candidates for election to AOL's board at this year's annual meeting, which is scheduled for June 14.

AOL hasn't said exactly what the patents cover, but the company noted that its remaining patents and patent applications include advertising, search, content generation, social networking and mapping technology.

The AOL spokesperson has said previously that the company made a point of securing the patents from Time Warner Inc. when AOL spun off from them, and that the company began taking a close look at them in September.

The race for patents has heated up in the tech space. Among other recent deals, Google Inc. agreed to acquire Motorola Mobility Holdings Inc. last year for about $12.5 billion, partly to secure its lucrative patent portfolio, and a number of bidders pursued Nortel Networks Corp.'s patents at auction as well.

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JOBS Act Helps Small Businesses

Story first appeared in The New York Times.

The JOBS Act passed by Congress last week and being signed by the president on Thursday helps smaller public companies avoid for a few years the internal controls reporting and audit requirements put in place in 2002 in the wake of prominent accounting scandals.

But just a few days after the bill was passed, Groupon disclosed that it had to restate its results from the fourth quarter of 2011 and that its outside auditor had found weaknesses in its internal controls.

There are always trade-offs when it comes to enforcing rules for proper financial reporting. The question is whether this exemption is a benefit to investors who purchase shares in these companies, whether they are well-known brands like Groupon or promising start-ups just getting their bearings.  Startup companies should consider employing a New York Business Entity Formation Lawyer to confirm that they are following proper legal protocol.

Section 404 of the Sarbanes-Oxley Act was adopted in response to the accounting scandals that enveloped companies like Enron, WorldCom, and Adelphia Communications, where significant accounting frauds went undetected by outside auditors, sometimes for years.

To prevent a repeat of the scandals that cost investors billions, companies are now required in annual reports to have chief executives and chief financial officers attest to the effectiveness of the internal control structure and procedures of the issuer for financial reporting. The outside auditors also have to test the internal controls and give an opinion on their effectiveness.  Austin Business Lawyers are interested in the outcome of such tests.

The initial costs of developing the required internal controls can run as high as $5 million to $10 million for a small company once it goes public because private firms do not have to have the same accounting and compliance structures in place as larger corporations. In addition to the expense of putting in place the program for the first time, the annual review by a company’s accountants adds to the costs of the audit.

There was no more reviled provision in the Sarbanes-Oxley Act than Section 404 because of the significant costs it imposed on corporations of every size, especially smaller companies that do not have a large accounting and compliance staff already in place. The law takes a one size fits all approach to internal controls, so the burden on small firms can be much more significant.

That’s where the JOBS Act (an acronym for Jumpstart Our Business Startups) steps in to help some companies avoid those costs, at least temporarily. The law exempts an emerging growth company from the requirements with Section 404. The statute defines such a firm as one with less than $1 billion in annual gross revenue or a $700 million market capitalization, and the exemption can last for up to five years if the company does not grow too large within that period.

The new law is a boon to small companies because it will lower costs by allowing them to avoid the attestation and outside auditor review requirements for internal controls. All publicly traded companies have to make accurate financial reports, but now an emerging growth company can limit its compliance and auditing costs for up to five years.  Keeping and providing accurate financial reports are an absolute must, say Washington DC Corporate Lawyers.

Compliance programs do not generate revenue for companies, and they can lead to significant costs as a company grows and has to spend increasing amounts on internal controls. The act may allow smaller companies to skimp on this part of the business when there is no requirement to comply with Section 404.

Groupon is an example of the almost inevitable problems that can arise when a company develops a popular new market. Emerging growth companies in the technology and social media fields are the type of firms that can quickly outgrow the internal controls needed to comply with the accounting rules.

Though it does not technically qualify as an emerging growth company because its rapid growth has taken it well over the $1 billion revenue limit, in many ways, Groupon is the epitome of an early stage company. Groupon is less than four years old and already has moved from annual revenue of $14.5 million in 2009 to over $1.6 billion in 2011.

(Because it just had its I.P.O., Groupon is not yet covered by Section 404, but it will have to comply with the requirements when it files its next annual report in March 2013.)
Groupon stated that it had begun taking steps and plans to take additional measures to remediate the underlying causes of the material weakness, primarily through the continued development and implementation of formal policies, improved processes and documented procedures, as well as the continued hiring of additional finance personnel. There are no assurances that it will be successful, or that other accounting issues will come to the surface, according to Washington DC Business Lawyers.

Even before its initial public offering last year, Groupon had problems with how it presented its financial results. In one filing, it used a metric called adjusted consolidated segment operating income that gave a highly favorable view of its revenue, even though it was not sanctioned as an appropriate accounting method. Groupon later dropped that approach in favor of more traditional measures that ended up showing a much lower revenue figure. The Deal Professor called the company’s approach to its accounting “Grouponomics.”

Another provision of the act exempts emerging growth companies from putting in place new accounting rules, so there is also the potential for disparate financial reporting between newer companies and more established ones. That could present problems for investors trying to evaluate a company’s financial performance as it moves beyond the early stage and will be subject to all the applicable accounting and internal controls requirements.

The act does not encourage fraud at small companies, and emerging growth companies that hope to survive more than five years will have to plan on meeting the stringent requirements of Section 404. From one point of view, the law gives newer companies a chance to grow the internal controls environment they will have to implement at some point in time.

But they are also the firms that can face the greatest risk of internal controls issues. The new law means investors in start-ups will have to be especially vigilant because the protection afforded by Section 404 will be missing.

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Huffington Post Acquisition A Bright Spot for AOL

Story first appeared in The New York Times.

One year after its acquisition by AOL, The Huffington Post has become a source of growth for the beleaguered company, which is still trying to shed its dial-up Internet image. Now, in what the Huffington creator characterizes as a move to keep the Web site’s growth accelerating, she has taken several of its business functions out of AOL and under her control.

The revamping is intended to help The Huffington Post maintain the innovative spirit of a start-up. Technology, business development, marketing and communications units that were woven into AOL last year will begin to report to her. The advertising sales unit will remain inside AOL at the moment.

The changes appear to give the creator more authority within the closely watched media company, where her title is president and editor in chief of the Huffington Post Media Group. She will continue to report to the AOL chief executive, whose contract was extended last week to run through early 2016.

In the year after the merger, editors reported to the creator, but employees in other departments, like technology and marketing, reported to various departments in AOL.

On Thursday, the Huffington creator is expected to announce that she has chosen a top executive at NBC News to run global strategy, marketing and communications.

In the last year, the Web site started four international editions — in Canada, including a French edition in Quebec, Britain and France — and announced plans for two more in Spain and Italy. It has also added dozens of content sections, which show great potential with SEO optimization.

Those additions have helped the site become a bright spot for AOL. While visitor totals for AOL as a whole have dipped slightly in the year since the $315 million acquisition was completed, visits to the Huffington Post Media Group (a combination of The Post and some of AOL’s sites) have shot up, according to analysis of comScore data. That is a sign of how significantly The Post’s traffic has helped AOL; executives say The Post helped stabilize AOL’s traffic statistics.

The weaving and unweaving of operations may reflect the difficulties that mergers and acquisitions routinely create.

The combination of AOL and The Huffington Post has been a source of fascination for many in the media business for many reasons, chief among them Huffington’s own force of personality and her sites’ tendencies to collect the work of others. They are trying original reporting on The Huffington Post, citing recent series about foreclosures and poverty in America.  Proper SEO implementation would greatly increase the visibility of these new original series.

The Post is preparing to start a streaming video network that will have 12 hours a day of live programming. It is scheduled to start by the end of June. And a former editor for The New York Times who is now the executive editor of The Post, is in charge of a magazinelike app, now in the prototype stage, that would come out weekly and would contain highlights of the site. The app’s creation was first reported last month by Forbes.

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Sci-Fi Inspired Glasses in the Works

Story first appeared in The Detroit Free Press.

If flying cars and uncannily dexterous robots haven't tipped you off already, know this: the future is here. We're living in an age when "Star Trek" tech is getting realized little by little, and Google's just revealed a secret undertaking that checks one more sci-fi innovation off the proverbial list.

Meet Project Glass: an augmented reality undertaking that's emerged out of the company's black ops innovation lab, known as Google X. With Project Glass, Google is taking a serious look at augmented reality. What would life be like if rather than reaching into our pocket for a phone, the data we need was fluidly woven right into our lives?

Google casts a wide net when it comes to researching projects that are a bit closer to the cutting edge than email and search. Its best known future-tech project is a small fleet of self-driving cars which have already hit the streets for testing in California, but it's reportedly also quietly working on a space elevator and as many as 100 other covert futuristic projects.

Not to be confused with Google Goggles -- an app that lets you search for anything just by snapping a photo -- Google's glasses superimpose what's known as a head's up display (HUD) over your visual field. The visual display provides contextual information and lets you do just about anything a smartphone would, from texting and geosocial check-ins to turn-by-turn directions -- all without lifting a finger. Of course, Google's conception of this ties right into its umbrella of products, from Maps and Latitude to Google+. According to the minds behind Project Glass, technology should "be there when you need it and get out of your way when you don't".

While the lofty technology is far from market-ready at the moment -- a launch by the end of 2012 looks very unlikely -- the glasses are very much real. There are reportedly many models, ranging from a "Star Trek"-inspired visor to a design that sits over a person's normal eyeglasses. And Google employees will actually be testing them in the wild, so don't be alarmed if you bump into a seeming cyborg near the company's Mountain View headquarters.

The idea of a system like Google's Project Glass is to steep reality in immersive, nondisruptive data. All tasks would be integrated right into your visual field, keeping your hands free while still providing the informational amenities we've come to expect from smartphones and tablets. In the world of Project Glass, our devices' screens would melt away altogether in favor of translucent data draped right over the world as we know it. Who needs a high-resolution display when you've got everything you need, right before your eyes?

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British Broadcasting Giant in Deep for Email Hacking

Story first appeared in The New York Times.

LONDON — Sky News, a British satellite news broadcaster whose parent company is part-owned by a News Corporation, admitted Thursday that one of its reporters had hacked into e-mails on two occasions while pursuing news stories, the first time that Britain’s hacking scandal has spilled into television news.

The acknowledgment came just two days after the News Corporation's son resigned as chairman of Sky’s parent company, British Sky Broadcasting, or BSkyB. Company officials said there was no link between the resignation and the hacking revelations, which were made public only as a result of a recent inquiry by the newspaper The Guardian.

Sky said the hacking, while illegal, had been authorized by its executives for journalistic reasons — in pursuit of a story that benefited the public interest — and in one instance had helped a police investigation. And the company said that a continuing review of its e-mail records and accounts had so far turned up no evidence of impropriety in Sky’s reporting practices.

The admission came after months of overlapping police, parliamentary and judicial inquiries into phone hacking, e-mail hacking and paying bribes to public officials at two company-owned tabloids, The Sun and the now-defunct News of the World. In general, broadcasters abide by higher standards of news gathering in Britain than newspapers do. Sky News operates separately from the newspaper business and has asserted its independence by aggressively reporting on News Corporation’s troubles.

Still, the disclosures of e-mail hacking come at an awkward time for BSkyB, which is 39.1 percent owned by News Corporation and which has suffered from its association with the owners as the hacking scandal has unfolded.


Last summer, stung by sustained criticism in Parliament and across Britain, News Corporation withdrew one of the owners' cherished goals: its $12 billion bid to take over the portion of BSkyB that he did not own already. On Tuesday, in announcing the chairman's resignation from BSkyB, the company said the continuing phone hacking investigation was making him a lightning rod for dissatisfaction and proving distracting to the company.

A report from a House of Commons select committee investigating phone hacking is scheduled to be released within the next few weeks, and is expected to criticize the chairman for what some members believe was incomplete and misleading testimony during hearings last summer.


A representative of Sky said Thursday that one of the e-mail hacking cases occurred in 2008 and concerned a Briton who staged his death in a fake canoeing accident in 2002 but actually moved to Panama and, in collusion with his wife, collected £500,000 in life insurance.

Known in the tabloids as the “canoe man,” he returned to Britain and lived in a secret apartment in his old house until 2007, when he turned himself in to a police station, claiming at first to have no idea what he had been doing for the last five years.

The next year, a Sky News reporter pursuing the story sought permission to hack into e-mails he suspected had been used by the Darwins to communicate after the fake death.

A second case involved e-mails relating to a suspected pedophile, a spokeswoman for Sky News said. On both occasions, she said, the managing editor of Sky News authorized the hacking.

The company likened the e-mail hacking to other instances in which journalists broke the law for the sake of journalism. In 2004, Sky News journalists bought an Uzi machine gun to highlight how easy it was to buy illegal weapons in Britain. The year before, a reporter penetrated airport security to show how porous it was.

BSkyB has suffered various upheavals in the last year. As a result of the allegations surrounding the Murdochs’ newspaper business in Britain, the broadcaster is being investigated by Ofcom, the British broadcast regulator, over whether it is “fit and proper” to hold a television license.

Critics seized on Sky’s disclosures as evidence of impropriety at the company.


But the head of Enders Analysis, a media research firm in London, said she thought that the biggest potential obstacle to BSkyB’s retaining its broadcast license had been the chairman, and that his resignation had removed much of the problem.

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Google Settles AdWords Lawsuit Over Illegal Pharmaceutical Ads

Story first appeared in Vator News.

Google's Apparent Profit Off of Ads From Illegal Online Pharmacies Has Ruffled the DOJ

Google's legal woes are never-ending, but now it's apparently getting slapped with such deep-impacting allegations that it's willing to shell out a sizable chunk of its yearly revenues just to make them go away. Google has set aside $500 million to resolve a case with the Department of Justice over illegal ads from bogus online pharmacies that offer to sell drugs without a prescription, according to a report from the Wall Street Journal.

The Justice Department is investigating how much the company knew as it accepted ads for online pharmacies in Canada and abroad—ads that it subsequently made hundreds of millions of dollars in ad revenue from.

Much of the pressure comes not only from the Department of Justice, but from the Food and Drug Administration as well, according to people familiar with the matter. Back in 2003, Google began banning ads from U.S. pharmacies that offered to sell prescription drugs like Vicodin and Viagra without a prescription, as did Yahoo and Microsoft. The shift largely came from pressure from the FDA to crack down on such ads.

But a year later Google incensed the FDA and U.S. pharmacies once again when it announced that it would continue to serve ads from Canadian pharmacies. When the FDA began probing into Google pharmacy ads recently, the company changed its policy once again and promised to serve ads from licensed U.S. pharmacies only.

If Google does, indeed, end up paying $500 million to the Department of Justice, it would be the largest penalty ever paid by a company to settle a dispute with a government agency. In 2007, Yahoo, Microsoft, and Google together paid a combined fine of $31.5 million to settle a case with the DOJ over allegations that the companies had accepted ads from illegal gambling sites, in violation of the Federal Wire Wager Act.

And yet if Google were to pay the $500 million, it would still be little more than a drop in the proverbial bucket.  Of the $29.3 billion that Google made in revenues for the entire year of 2010, a whopping $28.2 billion came from ad revenue alone.

Apple Manufacturer Provides Poor Working Conditions

Story first appeared in The Detroit Free Press.

A long-awaited report on conditions at Chinese factories that make Apple products confirmed the worst: long hours, low wages and poor working conditions for employees.

Apple, in response, says it will ensure that overseas employees have better working conditions.

Investigators from the Washington-based Fair Labor Association, at Apple's request, went to China to look at Foxconn Technology Group factories in Guanlan, Longhua, and Chengdu, where Apple iPads and iPhones are assembled for sale across the world. Products for other companies, including Dell, Microsoft and Hewlett-Packard, are made there, too.

At the Foxconn factories, the average workweek for an employee is 60 hours, which exceeds both the FLA code standard and Chinese legal limit, the month-long investigation found. Some employees worked as many as 70 hours a week in November and December 2011. However, FLA said Foxconn has agreed to remedy this by July 2013, and bring it down to the legal 49 hours, while protecting workers' pay.

Apple has come under fire recently for producing hit products overseas with low-paid workers in less-than-optimum conditions. Monthly salaries range from $360 to $455. CEO Tim Cook was in China on Wednesday visiting a new Foxconn factory, not the ones mentioned in the report.

Consumer watchdog groups say that the report is a start but that Apple must really change.  Supposedly workers put in many more hours per week than is legal -- will take more than a year to change direction. Foxconn has more than 1.2 million employees.

SumofUs, along with Change.org, has received more than 250,000 signatures from consumers asking Apple to require its suppliers to treat overseas workers better.

Yahoo No Longer Trying to Keep Merger Bid Secret

Story first appeared in the Wall Street Journal.

Yahoo Inc. has ended an effort to keep documents related to a 2008 merger bid from Microsoft Corp. sealed, more than a week after activist shareholder sought to have the material exposed to public view.

Yahoo has opted to withdraw its application to continue restrictions on public access to the documents, which it had filed with a Delaware court earlier this month, according to court records. The documents had been filed as part of a roughly four-year-old shareholder lawsuit -- since settled -- against the Sunnyvale, Calif., company.

The activist's hedge fund Third Point LLC has recently mounted a proxy challenge to Yahoo, in which it has obtained a stake of more than 5%. Third Point is seeking to have four of its nominees elected to the embattled Internet firm's board of directors.

Yahoo countered over the weekend with three of its own board appointees.

As part of its proxy challenge, Third Point filed a motion in a Delaware court on March 15 opposing Yahoo's efforts to keep under seal the shareholder litigation documents related to its decision to rebuff a $31-a-share takeover bid from Microsoft.

Third Point has said in public filings that the Yahoo board's rejection of Microsoft's bid was among its "misjudgments and failures."

Yahoo's shares closed Monday at $15.54. The company is seeking a turnaround under their Chief Executive, who was hired in January.

It wasn't immediately clear when the Microsoft-related documents stemming from the shareholder litigation would become publicly available.

Yahoo and Microsoft have formed a partnership in the years following their scuttled merger talks that has Microsoft powering Yahoo's Internet search results in a revenue-sharing arrangement.

Yahoo! Files Advertising Lawsuit Against Facebook

First appeared in Bloomberg News

Yahoo! Inc. accused Facebook Inc. in a federal court lawsuit of infringing patents related to Internet advertising and information sharing.

Lawyers for Yahoo, in a complaint filed today in federal court in San Jose, California, seek a court order barring Facebook from infringing 10 patents and awarding it triple damages. The patents cover website functions such as advertising, privacy protection, information customization, social networking and messaging, according to the complaint.

Yahoo, owner of the most popular U.S. Internet portal, said in February that Facebook must license its technology, pointing out that other Web companies have licensed its intellectual property. Yahoo is looking for ways to revive growth after losing ground to Facebook in the display advertising market and trailing Google Inc. in Web searches.

“For much of the technology upon which Facebook is based, Yahoo! got there first,” according to the complaint. “Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo!’s patented social networking technology,” Yahoo said in the complaint.

Yahoo lost its No. 1 spot to Menlo Park, California-based Facebook last year in the U.S. market for display advertising, which includes video and graphically based marketing messages, according to EMarketer Inc. In January, Yahoo, based in Sunnyvale, California, reported fourth-quarter revenue of $1.17 billion, excluding sales passed on to partner sites. That fell short of analysts’ estimates of $1.19 billion.

‘Longtime’ Partner

“We’re disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation,” Facebook said in a statement.

“Once again, we learned of Yahoo’s decision simultaneously with the media,” Facebook said. “We will defend ourselves vigorously against these puzzling actions.”

Yahoo said in an e-mailed statement that its patented technologies attract more than 700 million unique visitors each month.

“Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court,” Yahoo said in the statement. “We are confident that we will prevail.”

The case is Yahoo! Inc. v. Facebook, 12-cv-01212, U.S. District Court, Northern District of California (San Jose).

LulzSec Hackers Busted

Last appeared in Mercury News

A group of expert hackers who attacked governments and corporations around the globe has been busted after its ringleader -- one of the world's most-wanted and most-feared computer vandals -- turned against his comrades and secretly became an informant for the FBI months ago, authorities announced Tuesday.

Five people, including a Chicago man, were charged in court papers unsealed in federal court in New York, and authorities revealed that a sixth person, Hector Xavier Monsegur, a legendary figure known in the hacking underworld as "Sabu," has pleaded guilty in New York, where he lives.

Authorities said it marked the first significant prosecution of major Internet hackers.

According to court papers, members of the group got their start as part of a large worldwide hacking organization known as Anonymous, which authorities said has been operating at least since 2008. Court papers accused Anonymous of a "deliberate campaign of online destruction, intimidation and criminality."

In chat rooms and on Twitter, Anonymous supporters erupted into a chorus of disappointment, confusion and anger. Some wondered whether the news was an elaborate fraud.

As members of Anonymous surveyed the damage Tuesday, one of its most popular Twitter feeds assured its followers that it was still OK.

"We're sailing close to the wind," the feed read. "Our crew is complete and doing fine."

Monsegur was portrayed in court papers as the ringleader of some of the group's more infamous deeds. Authorities said he formed an elite hacking organization last May -- a spinoff of Anonymous -- and named it "Lulz Security" or "LulzSec." "Lulz" is Internet slang that can mean "laughs" or "amusement."

Despite the organization's lighthearted name, authorities said Monsegur and his followers embarked on a dastardly stream of deeds against business and government entities in the U.S. and around the world, resulting in the theft of confidential information, the defacing of websites and attacks that temporarily put victims out of business.

Google Play Has Launched

First appeared in Mercury News

The Android Market, where Google (GOOG) distributes mobile apps and other digital content, is getting a revamp -- to be replaced starting Tuesday with a newly named "Google Play" store as the company moves to compete more directly with Apple (AAPL) and Amazon as a seller of digital music, video, games, apps and books.

First launched in October 2008 after the first Android smartphone went on sale, the Android Market was primarily a place to download smartphone apps. But with Google adding movie rentals and a streaming music service in 2011, the company now is trying to create a unified, easier to navigate online store that it says will make things better for consumers and content creators alike.

Google Play launches worldwide Tuesday on the Web and over the course of the week for people connecting with Android smartphones and tablets. Analysts said Google is making a crucial, necessary step to match its competitors by putting all its digital offerings in one store, and posting the equivalent of virtual signs in the aisles so consumers can more easily find the things they are looking for.

"For the users, it's really about delivering this simpler, more integrated experience," Chris Yerga, Google's engineering director for digital content, said in an interview. "It's sort of like the chocolate and peanut butter thing -- the whole is greater than the sum of the parts. It's going to attract more purchasers to the store. It's good for us -- it's good for Google -- but it's also good for our content partners."

As Google tries to compete with Apple's integrated system of iPhones and iPads connected to the music, video and books in its iTunes store, a better, easier-to-use content store is critical for the Mountain View Internet giant, said Mike McGuire, an analyst with Gartner who follows the digital content market.

"The biggest challenge they have is they don't have near the level of control that Apple does," McGuire said. "They don't control all the hardware like Apple does, but they can make the navigation and the discovery of either content or apps easier. They have to do this. It's a crucial step for them."

Google's content model differs from Apple in that it is more oriented around the Internet cloud, meaning digital music or books are generally stored on Google's servers, and streamed to Android phones and tablets through an Internet connection, rather than being stored locally on the device as it typically is with Apple's system.

The upside of the Google model is that there is no need to plug one device into another to sync content, and your books, games or music follow you seamlessly from device to device. The downside is that in remote areas where no broadband connection is available, there's sometimes no way to access what you want.

For content providers like Glu Mobile, a mobile gaming company that makes games for smartphones and tablets that run Google's Android, Apple's iOS and Microsoft's Windows Phone software, a new Google Play store that allows people to easily find games is critical to the success of Android.

"You can have the best game in the world, but if people can't find it you're dead in the water," said Adam Flanders, senior vice president of sales and marketing for Glu Mobile. "If people can find the great content, then it benefits the game companies like us."

Flanders said Glu Mobile is "absolutely excited" about the Google Play store, because it can help the San Francisco company take better advantage of the Android smartphones and tablets in use, a huge number that despite its size, analysts say, is not as lucrative as Apple's. Android chief Andy Rubin said last week that 850,000 new Android devices are being activated every day.

Yerga said the consolidation of separate stores for e-books and music into Google Play is just one step in how Google intends to improve its digital content offerings.

"I think of this as a commitment or a confirmation that Google is really serious about digital content," he said. "One of the great things about Google Play is it kind of solidifies things, and it gives us a great foundation for building new features and expanding our offerings going forward."

Microsoft Isn’t Convinced by Google

First appeared in Information Week

Microsoft wasted little time launching an effort to cash in on concerns about Google's controversial new privacy policies, under which the search giant said it would monitor user activity across all of its major Web services--including YouTube, Gmail, and its namesake search engine.

"The changes Google announced make it harder, not easier, for people to stay in control of their own information," said Microsoft chief spokesman Frank Shaw, in a blog entry Wednesday. "We take a different approach--we work to keep you safe and secure online, to give you control over your data, and to offer you the choice of saving your information on your hard drive, in the cloud, or on both."

Shaw said that, in contrast to some versions of Google's products, Microsoft services like Hotmail and Office 365 don't serve up user information to advertisers. He also touted Internet Explorer's built-in tracking protection feature. To further emphasize the point, Microsoft is running an ad in major newspapers this week that says the company is "Putting People First."

The ad says Google's changes are "cloaked in language like 'transparency,' 'simplicity,' and 'consistency'" but in fact are "really about one thing: making it easier for Google to connect the dots between everything you search, send, say, or stream while using one of their services."

The hubbub arose last week, after a Google exec announced the changes in a blog post. "Our new privacy policy makes clear that, if you're signed in, we may combine information you've provided from one service with information from other services," said Alma Whitten, Google's director of privacy, product, and engineering.

"In short, we'll treat you as a single user across all our products, which will mean a simpler, more intuitive Google experience," said Whitten. Google said the changes would go into effect "in just over a month."

Google insists the revamp will benefit users by making its services more efficient. For instance, a search on "German restaurants" would yield results not just from the Web, but from Google+ posts or Gmail messages.

But critics, including key lawmakers, fear the changes could put users' privacy at risk. "It is imperative that users will be able to decide whether they want their information shared across the spectrum of Google's offerings," said Edward Markey (D-Mass.), in a statement.

Microsoft is hoping the controversy will lure users to its online services, including Bing search, most of which lag well behind Google in user numbers and market share. "If [Google's] changes rub you the wrong way, please consider using our portfolio of award-winning products and services," the company said in its newspaper ad.

Google Insists New Policy is Legal

First appeared in Information Week

Google has consolidated its privacy policies, as it said it would, despite the concerns of regulators in the U.S., Europe, and Asia.

Alma Whitten, Google director of privacy, product and engineering, said in a blog post that the consolidation effort makes it easier to understand the company's privacy policy, enables a better experience for signed-in Google users, and leaves existing privacy controls intact.

Although EU Justice Commissioner Viviane Reding told the BBC that Google's privacy policy consolidation violates data protection laws, Google maintains that its changes are legally compliant.

"We are confident that our new simple, clear and transparent privacy policy respects all European data protection laws and principles," a company spokesperson said in an email. "It provides all the information required in Articles 10 & 11 of the directive, plus much additional information, and it follows the guidelines published by the Article 29 Working Party in 2004."

NYU Stern School of Business professor Arun Sundararajan says Google is moving in the right direction, but hasn't yet done enough to protect consumers.

"On the one hand, I do give Google credit for providing a greater level of transparency about what information they have about their consumers," Sundararajan said in a phone interview. "What Google isn't doing enough of is telling us what they're going to do with this information. That's a little troubling to me. The policy doesn't say enough about what limits Google will place on this information for advertising purposes. And beyond one small assurance they've given us [about not sharing personal information], we don't know how much they're going to share with marketing partners."

Sundararajan says he doesn't see Google's privacy policy consolidation as altering the privacy risks consumers face. "I see it as a move where Google is reducing its own risk. But I'd like to see them be more forthright in spelling out what they will and won't do with customer data."

Sundararajan suggests that Google's distinction between "personally identifiable information" and "non-personally identifiable information" is outdated, given the extent to which non-personally identifiable data can be correlated to identify someone.

"Re-identifying people based on their [anonymized] activity data is not hard and it's getting increasingly easier," he said.

Sundararajan proposes that companies and regulators adopt an "intent-based" approach to privacy as an alternative to burdensome rules that attempt to define permissible privacy practices.

As he sees it, companies should consider the intention of the customer who provided the data as a guideline for how the customer's data can be used. If a customer signs up for an online service with an email address, for example, the company should be able to use that address to contact the customer about the service but not to identify the customer for an activity profile or some other purpose.

"If companies start to align the way they use their data with the intent the customer had when providing the information, this will go a long way toward mitigating the privacy risk," he said. "There are good-intentioned firms out there that just don't have good guidelines about how to responsibly manage consumer data."