Originally Appeared in USA TODAY
USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.
Q: Is Google and its stock unstoppable?
A: Apple stock is dead money. Yahoo is trying to get its mojo back. And Facebook is struggling with investors.
While the other titans of mobile communication and the Internet labor, investors can't get enough of Google. The company has effectively leveraged its dominance in online search to push into the faster-growing and emerging area of mobile access.
Google provides the Android operating system to smartphone makers for free, creating a vehicle that allows Google to bundle its search engine and get a leg up in mobile search.
Google's move into mobility isn't being lost on investors. Google's stock is rising almost as quickly as Apple's is falling. But even with Google's 31% rise this year to $924.69 a share, the stock is still rated "outperform" by the average Wall Street analyst. Analysts are calling for the company's earnings to grow by nearly 16% this year.
But it's often when companies seem unstoppable — as Google does now — that something unforeseen can hit. At a valuation of 28 times its trailing earnings, Google is not only more pricey than the market but pricier than some of its top rivals: Microsoft at 18 and Apple at 10.
Meanwhile, the company faces regulatory risk as governments step up investigations into the company's business practices.
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Tuesday, July 16, 2013
Tuesday, July 09, 2013
A New Tool Aims to Help Facebook Users Dig Deep
Originally Appeared in The New York Times
MENLO PARK, Calif. — Facebook is an excellent tool for certain kinds of social interaction. With a couple of clicks, you can share a cute photo of your newborn baby. You can pop over to the page of a college buddy and find out where he lives now and whether he is a fan of “Mad Men.”
But just try finding that photo of Mom and Dad in front of the Eiffel Tower during their 2008 trip to Paris, or the name of that lovely bistro nearby that they mentioned in a status update. Odds are, you would have to plow through a lot of old posts and photos to dig out that information, if you could find it at all.
Now, Facebook is trying to make it easier to find that lost photo or restaurant recommendation and unearth other information buried within your social network with a tool it calls Graph Search.
On Monday, the company will roll out the feature to its several hundred million users in the United States and to others who use the American English version of the site. Other languages will follow.
Developing a sophisticated search feature is vital to Facebook’s long-term success, both to deepen users’ engagement and to make it more appealing to advertisers.
Experts say that Facebook’s technical achievement so far is impressive. Privacy could still be an issue, however, as more user data becomes easily accessible. Also, the feature is dependent on Facebook users volunteering more information about their likes and dislikes.
Ever since Facebook released an early version of the tool in January, the development team has been observing and listening to millions of testers and making improvements. “We launched it early, when it still was in a pretty raw state,” Lars Rasmussen, the engineering director of the project, acknowledged in a recent interview.
Early on, Mr. Rasmussen said, users had trouble even finding the search box, which was blue and melded into the border at the top of every Facebook page. The team eventually made the box white and used words to explicitly describe its purpose.
The tool also has struggled to understand how people actually use language.
For example, typing in “surfers who live in Santa Cruz” confounded the search engine, which was tuned to recognize the phrase “people who like to surf” but not synonyms like surfers or “people who like surfing,” said Loren Cheng, who leads the team of linguists who are working to refine the tool’s natural language capabilities.
The engineers also had to adapt the algorithms to consider the many ways that people express interest in a topic.
For example, Mr. Rasmussen, a ballet fan, said that when he looked for “friends who like ballet,” only two popped up. But many more friends had liked the pages of individual ballet companies. So the search engine now takes into account related pages when assessing whether users like a topic.
Facebook’s Graph Search is still a work in progress, as company officials are quick to acknowledge. Its recognition of synonyms and related topics is spotty. It cannot yet find information in status updates, a top request from users. It does not yet incorporate information from third-party apps like Yelp or Instagram, which is owned by Facebook. And the new search tool is not available on Facebook’s mobile apps, which are increasingly the way that people use the service.
But Facebook believes it is now good enough for wide release. And despite the tool’s limitations, technologists praised the company’s work.
“There is a near infinite variety of ways to say anything in English or in any other language,” said Nick Cassimatis, an associate professor at Rensselaer Polytechnic Institute and a co-founder of SkyPhrase, a start-up working on similar natural-language search technology. “They are trying to memorize all the ways of saying something.”
Unlike Google’s familiar search engine, which typically takes the keywords entered into a search box and matches them to the most relevant Web pages that contain them, Facebook’s search looks primarily at structured data.
That means the company analyzes the virtual check boxes that people fill out on the site, like movie pages they have liked, restaurants they have checked into, the city they live in and their relationship status.
That creates particular challenges.
“We don’t go through and ‘like’ all the things that we really like,” said Danny Sullivan, founding editor of Search Engine Land and a longtime observer of the industry. “And if you don’t do that, the database is minimal.”
Privacy is another complication.
The company promises that Graph Search will show only information that the searcher would normally be allowed to see under the privacy settings defined by the person who posted the data. So a search for Christians in San Francisco who like to knit won’t pull up everyone who fits that profile, only those who have decided to publicly disclose their religion, love of knitting and location.
As Graph Search becomes widely available, Facebook users might be surprised at what information about themselves shows up in searches that others do, especially if old items were posted with looser privacy restrictions.
Finally, the company must deal with the flood of new data coming in. It said its 1.1 billion global users posted 3.3 million new items every minute in May.
If the company does make it easy for users to sift through all of that information, it could open a new era in search.
Google and specialized search sites present users with information from strangers, Mr. Sullivan said. Facebook “is potentially promising us the ability to search the knowledge of our friends.”
Mr. Cheng from the linguistics team said that based on Facebook’s current tests with about 20 million people, the most frequent queries are people searches, as users seek friends of friends that they might have met, potential dates and people who live in a particular city. Photo searches came in second, followed by recommendations for restaurants and bars, hotels, stores and gyms.
This year, Facebook intends to expand the search tool to include results based on scans of the actual words in status updates as well as data from third-party applications. Graph Search will also be added to Facebook’s mobile apps. The company is even experimenting with predictions, suggesting movies and books a person might like based on what else they like and what their friends like.
Facebook hopes that an ever-improving search tool will prompt users to spend more time on the service and share more information about themselves by, say, checking in to restaurants and liking more pages.
That would have myriad benefits for Facebook’s business. More detailed dossiers of its users would allow the company to better target advertising to people receptive to a marketer’s message. And since people tend to trust recommendations from their friends, the companies that pop up in search results could find it more appealing to advertise to searchers.
For Facebook’s users, a powerful search tool makes the service a better place to get information and connect with others.
“Finding people, finding activities, finding recommendations is part of what makes Facebook useful,” said Colin Sebastian, an analyst at R.W. Baird & Company. The problem, he said, “is that there hasn’t been a way for users to access that data.”
MENLO PARK, Calif. — Facebook is an excellent tool for certain kinds of social interaction. With a couple of clicks, you can share a cute photo of your newborn baby. You can pop over to the page of a college buddy and find out where he lives now and whether he is a fan of “Mad Men.”
But just try finding that photo of Mom and Dad in front of the Eiffel Tower during their 2008 trip to Paris, or the name of that lovely bistro nearby that they mentioned in a status update. Odds are, you would have to plow through a lot of old posts and photos to dig out that information, if you could find it at all.
Now, Facebook is trying to make it easier to find that lost photo or restaurant recommendation and unearth other information buried within your social network with a tool it calls Graph Search.
On Monday, the company will roll out the feature to its several hundred million users in the United States and to others who use the American English version of the site. Other languages will follow.
Developing a sophisticated search feature is vital to Facebook’s long-term success, both to deepen users’ engagement and to make it more appealing to advertisers.
Experts say that Facebook’s technical achievement so far is impressive. Privacy could still be an issue, however, as more user data becomes easily accessible. Also, the feature is dependent on Facebook users volunteering more information about their likes and dislikes.
Ever since Facebook released an early version of the tool in January, the development team has been observing and listening to millions of testers and making improvements. “We launched it early, when it still was in a pretty raw state,” Lars Rasmussen, the engineering director of the project, acknowledged in a recent interview.
Early on, Mr. Rasmussen said, users had trouble even finding the search box, which was blue and melded into the border at the top of every Facebook page. The team eventually made the box white and used words to explicitly describe its purpose.
The tool also has struggled to understand how people actually use language.
For example, typing in “surfers who live in Santa Cruz” confounded the search engine, which was tuned to recognize the phrase “people who like to surf” but not synonyms like surfers or “people who like surfing,” said Loren Cheng, who leads the team of linguists who are working to refine the tool’s natural language capabilities.
The engineers also had to adapt the algorithms to consider the many ways that people express interest in a topic.
For example, Mr. Rasmussen, a ballet fan, said that when he looked for “friends who like ballet,” only two popped up. But many more friends had liked the pages of individual ballet companies. So the search engine now takes into account related pages when assessing whether users like a topic.
Facebook’s Graph Search is still a work in progress, as company officials are quick to acknowledge. Its recognition of synonyms and related topics is spotty. It cannot yet find information in status updates, a top request from users. It does not yet incorporate information from third-party apps like Yelp or Instagram, which is owned by Facebook. And the new search tool is not available on Facebook’s mobile apps, which are increasingly the way that people use the service.
But Facebook believes it is now good enough for wide release. And despite the tool’s limitations, technologists praised the company’s work.
“There is a near infinite variety of ways to say anything in English or in any other language,” said Nick Cassimatis, an associate professor at Rensselaer Polytechnic Institute and a co-founder of SkyPhrase, a start-up working on similar natural-language search technology. “They are trying to memorize all the ways of saying something.”
Unlike Google’s familiar search engine, which typically takes the keywords entered into a search box and matches them to the most relevant Web pages that contain them, Facebook’s search looks primarily at structured data.
That means the company analyzes the virtual check boxes that people fill out on the site, like movie pages they have liked, restaurants they have checked into, the city they live in and their relationship status.
That creates particular challenges.
“We don’t go through and ‘like’ all the things that we really like,” said Danny Sullivan, founding editor of Search Engine Land and a longtime observer of the industry. “And if you don’t do that, the database is minimal.”
Privacy is another complication.
The company promises that Graph Search will show only information that the searcher would normally be allowed to see under the privacy settings defined by the person who posted the data. So a search for Christians in San Francisco who like to knit won’t pull up everyone who fits that profile, only those who have decided to publicly disclose their religion, love of knitting and location.
As Graph Search becomes widely available, Facebook users might be surprised at what information about themselves shows up in searches that others do, especially if old items were posted with looser privacy restrictions.
Finally, the company must deal with the flood of new data coming in. It said its 1.1 billion global users posted 3.3 million new items every minute in May.
If the company does make it easy for users to sift through all of that information, it could open a new era in search.
Google and specialized search sites present users with information from strangers, Mr. Sullivan said. Facebook “is potentially promising us the ability to search the knowledge of our friends.”
Mr. Cheng from the linguistics team said that based on Facebook’s current tests with about 20 million people, the most frequent queries are people searches, as users seek friends of friends that they might have met, potential dates and people who live in a particular city. Photo searches came in second, followed by recommendations for restaurants and bars, hotels, stores and gyms.
This year, Facebook intends to expand the search tool to include results based on scans of the actual words in status updates as well as data from third-party applications. Graph Search will also be added to Facebook’s mobile apps. The company is even experimenting with predictions, suggesting movies and books a person might like based on what else they like and what their friends like.
Facebook hopes that an ever-improving search tool will prompt users to spend more time on the service and share more information about themselves by, say, checking in to restaurants and liking more pages.
That would have myriad benefits for Facebook’s business. More detailed dossiers of its users would allow the company to better target advertising to people receptive to a marketer’s message. And since people tend to trust recommendations from their friends, the companies that pop up in search results could find it more appealing to advertise to searchers.
For Facebook’s users, a powerful search tool makes the service a better place to get information and connect with others.
“Finding people, finding activities, finding recommendations is part of what makes Facebook useful,” said Colin Sebastian, an analyst at R.W. Baird & Company. The problem, he said, “is that there hasn’t been a way for users to access that data.”
Monday, July 01, 2013
Secret court lifts veil, slightly, on Google, Microsoft lawsuits
Originally Appeared on CNET
A Foreign Intelligence Surveillance Court judge breaks with tradition by taking a tiny step toward more openness in lawsuits brought by Google and Microsoft. They're trying to clear their names.
The most secretive court in the nation, which has been criticized for authorizing domestic surveillance by the National Security Agency, has taken a tiny step toward openness in lawsuits brought by Google and Microsoft.
CNET has learned that Reggie Walton, the presiding judge of the Foreign Intelligence Surveillance Court, told the Obama administration last week that -- barring any objections from the government -- he would take the unusual step of disclosing procedural information about the Internet companies' litigation.
The Department of Justice responded yesterday by saying it had no objections. Neither Google nor Microsoft's legal briefs "contain information that is now classified, nor information that should be held under seal," the department said in a response submitted by John Carlin, the acting assistant attorney general for national security.
Edward Snowden, the former NSA contractor now staying in the transit area of Moscow's Sheremetyevo Airpot, has leaked a series of classified documents that outlined how the spy agency vacuums up Americans' confidential communications. The disclosures have roiled Washington officialdom and prompted a high-level diplomatic tussle over whether or not Russia will deport Snowden to face criminal charges under the Espionage Act.
Google, Apple, Yahoo, Microsoft, Facebook, and other Internet companies were left reeling after a pair of articles earlier this month, based on one of Snowden's disclosures, alleged that they provided the NSA with "direct access" to their servers through a so-called PRISM program.
By the next day, however, CNET reported that was incorrect, and the Washington Post backtracked from its original story on PRISM, eventually concluding there is no evidence that "the privacy of any American was illegally or improperly invaded." Google's filing before the surveillance court said the initial news coverage was "misleading," and Microsoft's lawyers called it "inaccurate."
The two companies, which have flatly denied providing any government agency with direct access to their servers, filed the lawsuits to try to clear their names. They say they respond to government requests for individual account data only when they're legally compelled to do so -- in cases ranging from kidnapping to missing persons to terrorist investigations -- and want permission to divulge more information publicly.
Microsoft says it received a combined total of "between 6,000 and 7,000" orders from federal, state, and local government agencies for "between 31,000 and 32,000 consumer accounts" during the six months that ended in December 2012. Facebook's total: up to 10,000 requests for up to 19,000 accounts. Apple's total: up to 5,000 requests for up to 10,000 accounts or devices. Yahoo disclosed receiving up to 13,000 requests, but did not say how many user accounts were swept in. Google has asked for permission to be far more specific.
Walton, the FISC's presiding judge, gave the Justice Department until July 9 to respond to the requests from Google and Microsoft to disclose summary statistics about orders received under Section 702 of the FISA Amendments Act, which became look in 2008. The pair of companies have until July 16 to submit their replies.
Section 702 requires that the government obtain the secret Foreign Intelligence Surveillance Court's approval of "targeting" and "minimization" procedures, and that the court review the agencies' certification describing how proposed surveillance techniques will comply with the law. Judges must consider whether the targeting procedures are "reasonably designed" to exclude Americans and purely domestic surveillance.
The Justice Department had the option of objecting to allowing this phase of the litigation to take place publicly by claiming either of the company's requests "contains classified information" or "information that is or should be sealed."
Walton defended the court last week against charges it allowed bulk surveillance by the NSA with limited oversight. In a statement to Reuters, he said: "The perception that the court is a rubber stamp is absolutely false. There is a rigorous review process of applications submitted by the executive branch, spearheaded initially by five judicial branch lawyers who are national security experts, and then by the judges, to ensure that the court's authorizations comport with what the applicable statutes authorize."
A Foreign Intelligence Surveillance Court judge breaks with tradition by taking a tiny step toward more openness in lawsuits brought by Google and Microsoft. They're trying to clear their names.
The most secretive court in the nation, which has been criticized for authorizing domestic surveillance by the National Security Agency, has taken a tiny step toward openness in lawsuits brought by Google and Microsoft.
CNET has learned that Reggie Walton, the presiding judge of the Foreign Intelligence Surveillance Court, told the Obama administration last week that -- barring any objections from the government -- he would take the unusual step of disclosing procedural information about the Internet companies' litigation.
The Department of Justice responded yesterday by saying it had no objections. Neither Google nor Microsoft's legal briefs "contain information that is now classified, nor information that should be held under seal," the department said in a response submitted by John Carlin, the acting assistant attorney general for national security.
Edward Snowden, the former NSA contractor now staying in the transit area of Moscow's Sheremetyevo Airpot, has leaked a series of classified documents that outlined how the spy agency vacuums up Americans' confidential communications. The disclosures have roiled Washington officialdom and prompted a high-level diplomatic tussle over whether or not Russia will deport Snowden to face criminal charges under the Espionage Act.
Google, Apple, Yahoo, Microsoft, Facebook, and other Internet companies were left reeling after a pair of articles earlier this month, based on one of Snowden's disclosures, alleged that they provided the NSA with "direct access" to their servers through a so-called PRISM program.
By the next day, however, CNET reported that was incorrect, and the Washington Post backtracked from its original story on PRISM, eventually concluding there is no evidence that "the privacy of any American was illegally or improperly invaded." Google's filing before the surveillance court said the initial news coverage was "misleading," and Microsoft's lawyers called it "inaccurate."
The two companies, which have flatly denied providing any government agency with direct access to their servers, filed the lawsuits to try to clear their names. They say they respond to government requests for individual account data only when they're legally compelled to do so -- in cases ranging from kidnapping to missing persons to terrorist investigations -- and want permission to divulge more information publicly.
Microsoft says it received a combined total of "between 6,000 and 7,000" orders from federal, state, and local government agencies for "between 31,000 and 32,000 consumer accounts" during the six months that ended in December 2012. Facebook's total: up to 10,000 requests for up to 19,000 accounts. Apple's total: up to 5,000 requests for up to 10,000 accounts or devices. Yahoo disclosed receiving up to 13,000 requests, but did not say how many user accounts were swept in. Google has asked for permission to be far more specific.
Walton, the FISC's presiding judge, gave the Justice Department until July 9 to respond to the requests from Google and Microsoft to disclose summary statistics about orders received under Section 702 of the FISA Amendments Act, which became look in 2008. The pair of companies have until July 16 to submit their replies.
Section 702 requires that the government obtain the secret Foreign Intelligence Surveillance Court's approval of "targeting" and "minimization" procedures, and that the court review the agencies' certification describing how proposed surveillance techniques will comply with the law. Judges must consider whether the targeting procedures are "reasonably designed" to exclude Americans and purely domestic surveillance.
The Justice Department had the option of objecting to allowing this phase of the litigation to take place publicly by claiming either of the company's requests "contains classified information" or "information that is or should be sealed."
Walton defended the court last week against charges it allowed bulk surveillance by the NSA with limited oversight. In a statement to Reuters, he said: "The perception that the court is a rubber stamp is absolutely false. There is a rigorous review process of applications submitted by the executive branch, spearheaded initially by five judicial branch lawyers who are national security experts, and then by the judges, to ensure that the court's authorizations comport with what the applicable statutes authorize."
RIP Google Reader
Originally Appeared on CNET
Today, Google's RSS reader is kaput. Maybe most don't notice, maybe some are relieved not to have another box with 396,955,428 unread items. But the loss casts a shadow over a stalwart contingent.
Google Reader is no more.
The reason for that is directly correlated to the fact its passing will go unnoticed by most people who ever set up the service to funnel RSS feeds from Web sites, news blogs, and other publishers. For them, if there is any reaction, it may be the heart-lightening realization that another box cluttered with neglected items is neatly wiped away.
But still, this sunset leaves an impassioned cohort of Google Reader fans in the dark, nearly eight years after the service's dawn.
"This is a sad day," CNET reader trhoads82 wrote in March when Google announced the coming demise for Reader. "I won't switch to anything else. It just means I won't take the time to go to each site to read my content each day."
Here's how Google had heralded the birth of the service in 2005.
"The amount of information on the Web is rapidly increasing," Google said on the day of the site's launch. "Google Reader helps you keep up with it all by organizing and managing all the content you're interested in. Instead of continuously checking your favorite sites for updates, you can let Google Reader do it for you."
It embodied Google's stated mission of organizing the world's information, and it matured into one of the most popular ways of tracking a swath of sites. It was also an early experiment for Google in social networking.
But Google Reader's relevance to the Web-going public eroded with the rising tide of Facebook and Twitter. That tidal shift to other social-networking sites hurt Google Reader, but not as much as Google's own reaction to the networking competition.
When Google instilled changes to Google Reader sharing in 2011 to encourage more Google+ usage, an incensed cohort of ardent Reader fans protested. As Google+ became the golden child doted upon by the parent, that fervent Google Reader usership recognized the beginning of the end.
Today that end becomes reality, and with echoes across the tech firmament. Yahoo is shutting down its RSS Alerts today too, according to a post of its official Tumblr Friday, replacing that service with e-mail alerts.
Meanwhile, a couple one-time titans are eager to pick up what Google is casting aside. Digg has pushed through a revamp to cater to Google Reader users in a couple months. Feedly has been refreshing its site, now compatible with all major browsers, with a new interface that doesn't require plug-ins or browser extensions, though first it had to wean itself off Google's servers. And AOL last month launched its own offering.
And plenty of other alternatives are available.
It's the opposite phenomenon of a behemoth like Google entering a space and sucking all the oxygen out of the room. Google leaving means the fires of competitors can burn brighter, at least for those who are left looking for somewhere to warm up.
Today, Google's RSS reader is kaput. Maybe most don't notice, maybe some are relieved not to have another box with 396,955,428 unread items. But the loss casts a shadow over a stalwart contingent.
Google Reader is no more.
The reason for that is directly correlated to the fact its passing will go unnoticed by most people who ever set up the service to funnel RSS feeds from Web sites, news blogs, and other publishers. For them, if there is any reaction, it may be the heart-lightening realization that another box cluttered with neglected items is neatly wiped away.
But still, this sunset leaves an impassioned cohort of Google Reader fans in the dark, nearly eight years after the service's dawn.
"This is a sad day," CNET reader trhoads82 wrote in March when Google announced the coming demise for Reader. "I won't switch to anything else. It just means I won't take the time to go to each site to read my content each day."
Here's how Google had heralded the birth of the service in 2005.
"The amount of information on the Web is rapidly increasing," Google said on the day of the site's launch. "Google Reader helps you keep up with it all by organizing and managing all the content you're interested in. Instead of continuously checking your favorite sites for updates, you can let Google Reader do it for you."
It embodied Google's stated mission of organizing the world's information, and it matured into one of the most popular ways of tracking a swath of sites. It was also an early experiment for Google in social networking.
But Google Reader's relevance to the Web-going public eroded with the rising tide of Facebook and Twitter. That tidal shift to other social-networking sites hurt Google Reader, but not as much as Google's own reaction to the networking competition.
When Google instilled changes to Google Reader sharing in 2011 to encourage more Google+ usage, an incensed cohort of ardent Reader fans protested. As Google+ became the golden child doted upon by the parent, that fervent Google Reader usership recognized the beginning of the end.
Today that end becomes reality, and with echoes across the tech firmament. Yahoo is shutting down its RSS Alerts today too, according to a post of its official Tumblr Friday, replacing that service with e-mail alerts.
Meanwhile, a couple one-time titans are eager to pick up what Google is casting aside. Digg has pushed through a revamp to cater to Google Reader users in a couple months. Feedly has been refreshing its site, now compatible with all major browsers, with a new interface that doesn't require plug-ins or browser extensions, though first it had to wean itself off Google's servers. And AOL last month launched its own offering.
And plenty of other alternatives are available.
It's the opposite phenomenon of a behemoth like Google entering a space and sucking all the oxygen out of the room. Google leaving means the fires of competitors can burn brighter, at least for those who are left looking for somewhere to warm up.
N.J.'s largest newspaper says closure looms
Originally Appeared in USA TODAY
NEWARK, N.J. (AP) — The owners of The Star-Ledger plan to close New Jersey's largest newspaper by year's end if its production unions don't make concessions in contract negotiations, the publisher said Wednesday.
In a letter to staff, publisher Richard Vezza said the company felt "pushed into a corner" by the unions, whose contracts expire in July. Vezza said the unions have until Sept. 27 to make compromises or else the paper will shut down.
"This is not a threat. This is reality," Vezza said in an interview with The Associated Press.
The paper's website, nj.com, is owned by a separate company and will continue to publish "no matter what happens with the Ledger," Vezza said.
The unions issued a joint statement saying their studies of the paper's ad revenues came up with different figures than the company's, and accusing the Ledger of trying to force the press workers, drivers and other production employees to accept a steep wage cut.
"Vezza's announcement that he will cease publication unless a settlement is reached with all the unions is another sad and pathetic attempt to pound all of our union brothers and sisters into a state of submission," said Ed Shown, president of the Council of Star-Ledger Unions and one of the Teamsters locals.
Vezza said the unions had shown little interest in "meaningful negotiations." Shown said the Ledger demanded a 55% cut in the entire wage package, which he said showed a lack of meaningful negotiation on the part of the company.
He said the unions are willing to "do whatever we have to so that the Star-Ledger may remain a thriving newspaper in these challenging economic times."
In his letter, Vezza said the paper lost $19.8 million last year, and is on track to do the same in 2013. The Star-Ledger lost $12 million in 2011.
In January, the paper laid off 34 employees from its newsroom, which is not unionized. In recent years, wages and benefits have been cut and staff members have been forced to take unpaid furlough days.
Vezza said the paper asked the unions to negotiate in December over the possibility of outsourcing production, a move he said could save $9 million a year. He said outsourcing without a union agreement would likely lead to a protracted court fight.
Shown said the unions do not believe the company was ever serious about outsourcing production but still wants the $9 million the company says it would save by doing so.
"This is a very serious and painful situation," Vezza told the AP. "It is certainly something we wouldn't have done unless we felt that we really sort of had our backs to the wall on this."
This is not the first time the Star-Ledger has threatened to shut down. In 2008, the then-publisher said the paper would cease to print if union concessions weren't met. The two sides reached an agreement a few months later.
"I am optimistic that we're going to be able to strike a deal with the union," Vezza said.
Shown said the unions "look forward to settling their differences with the company so the Star-Ledger will remain a vital resource providing valuable news coverage to our state."
The Star-Ledger is part of Advance Publications, a privately held company owned by the Newhouse family.
Unlike some of its sister papers, the Star-Ledger has no plans to reduce its print edition to three days a week, Vezza said. The company has said the market is too competitive to make that a cost-cutting option.
The Star-Ledger has 771 employees, 240 on the production staff and 170 in the newsroom.
NEWARK, N.J. (AP) — The owners of The Star-Ledger plan to close New Jersey's largest newspaper by year's end if its production unions don't make concessions in contract negotiations, the publisher said Wednesday.
In a letter to staff, publisher Richard Vezza said the company felt "pushed into a corner" by the unions, whose contracts expire in July. Vezza said the unions have until Sept. 27 to make compromises or else the paper will shut down.
"This is not a threat. This is reality," Vezza said in an interview with The Associated Press.
The paper's website, nj.com, is owned by a separate company and will continue to publish "no matter what happens with the Ledger," Vezza said.
The unions issued a joint statement saying their studies of the paper's ad revenues came up with different figures than the company's, and accusing the Ledger of trying to force the press workers, drivers and other production employees to accept a steep wage cut.
"Vezza's announcement that he will cease publication unless a settlement is reached with all the unions is another sad and pathetic attempt to pound all of our union brothers and sisters into a state of submission," said Ed Shown, president of the Council of Star-Ledger Unions and one of the Teamsters locals.
Vezza said the unions had shown little interest in "meaningful negotiations." Shown said the Ledger demanded a 55% cut in the entire wage package, which he said showed a lack of meaningful negotiation on the part of the company.
He said the unions are willing to "do whatever we have to so that the Star-Ledger may remain a thriving newspaper in these challenging economic times."
In his letter, Vezza said the paper lost $19.8 million last year, and is on track to do the same in 2013. The Star-Ledger lost $12 million in 2011.
In January, the paper laid off 34 employees from its newsroom, which is not unionized. In recent years, wages and benefits have been cut and staff members have been forced to take unpaid furlough days.
Vezza said the paper asked the unions to negotiate in December over the possibility of outsourcing production, a move he said could save $9 million a year. He said outsourcing without a union agreement would likely lead to a protracted court fight.
Shown said the unions do not believe the company was ever serious about outsourcing production but still wants the $9 million the company says it would save by doing so.
"This is a very serious and painful situation," Vezza told the AP. "It is certainly something we wouldn't have done unless we felt that we really sort of had our backs to the wall on this."
This is not the first time the Star-Ledger has threatened to shut down. In 2008, the then-publisher said the paper would cease to print if union concessions weren't met. The two sides reached an agreement a few months later.
"I am optimistic that we're going to be able to strike a deal with the union," Vezza said.
Shown said the unions "look forward to settling their differences with the company so the Star-Ledger will remain a vital resource providing valuable news coverage to our state."
The Star-Ledger is part of Advance Publications, a privately held company owned by the Newhouse family.
Unlike some of its sister papers, the Star-Ledger has no plans to reduce its print edition to three days a week, Vezza said. The company has said the market is too competitive to make that a cost-cutting option.
The Star-Ledger has 771 employees, 240 on the production staff and 170 in the newsroom.
Tuesday, June 18, 2013
Judge orders Google to release data to FBI
Story Originally Appeared in USA TODAY
A federal judge has ordered Google to comply with FBI warrantless demands for customer data.
U.S. District Court Judge Susan Illston on Tuesday rejected Google's argument that the so-called "National Security Letters" the company received from the FBI were unconstitutional and unnecessary.
Illston ordered Google to comply with the secret demands even though she found the same letter requests unconstitutional in March in a separate case filed by the Electronic Frontier Foundation.
In a four-page May 20 order in the Google case obtained by the The Associated Press Friday, the judge acknowledged the conflicting rulings.
Google could appeal Illston's decision. The company declined comment Friday.
The Google ruling legally is on hold until the 9th U.S. Circuit Court of Appeals can decide the matter. But until then, Judge Illston said the Mountain View, Calif.-based company would have to comply with the FBI's request for data unless the company can show the federal law enforcement agency didn't follow proper procedures in making its demands for customer data in the 19 letters Google is challenging.
After receiving sworn statements from two top-ranking FBI officials, Illston said she was satisfied that 17 of the 19 letters were issued properly. She wanted more information on two other letters.
The letters, along with the recent seizure of reporters' phone records by President Obama's administration, have prompted widespread complaints of government privacy violations in the name of national security.
In 2007, the Justice Department's inspector general found widespread violations in the FBI's use of the letters, including demands without proper authorization and information obtained in non-emergency circumstances.
The FBI has tightened oversight of the system. The agency made 16,511 National Security Letter requests for information regarding 7,201 people in 2011, the latest data available.
In March, Illston found that the FBI's demand that letter request recipients refrain from telling anyone — including customers — that they had received the requests was a violation of free speech rights.
"We are disappointed that the same judge who declared these letters unconstitutional is now requiring compliance with them," Kurt Opsah, an EFF attorney, said Friday.
Opsah said it could be many months before the appeals court rules on the constitutionality of the letter requests, which the FBI sends to telecommunication companies, Internet service providers, banks and others durring war-on-terror investigations.
The letter requests are used to collect unlimited kinds of sensitive, private information, such as financial and phone records. It is unclear from the judge's May 20 ruling what types of information the government is seeking to obtain or who the government is targeting in its letter request to Google.
Illston's order omits any mention of Google or that the proceedings have been closed to the public.
But the judge said "the petitioner" was involved in a similar case filed on April 22 in New York federal court. That's how the AP determined Illston was ruling about Google on May 20.
Public records show that on April 22, the federal government filed a "petition to enforce National Security Letters" against the Internet giant after it declined to cooperate with government demands.
A federal judge has ordered Google to comply with FBI warrantless demands for customer data.
U.S. District Court Judge Susan Illston on Tuesday rejected Google's argument that the so-called "National Security Letters" the company received from the FBI were unconstitutional and unnecessary.
Illston ordered Google to comply with the secret demands even though she found the same letter requests unconstitutional in March in a separate case filed by the Electronic Frontier Foundation.
In a four-page May 20 order in the Google case obtained by the The Associated Press Friday, the judge acknowledged the conflicting rulings.
Google could appeal Illston's decision. The company declined comment Friday.
The Google ruling legally is on hold until the 9th U.S. Circuit Court of Appeals can decide the matter. But until then, Judge Illston said the Mountain View, Calif.-based company would have to comply with the FBI's request for data unless the company can show the federal law enforcement agency didn't follow proper procedures in making its demands for customer data in the 19 letters Google is challenging.
After receiving sworn statements from two top-ranking FBI officials, Illston said she was satisfied that 17 of the 19 letters were issued properly. She wanted more information on two other letters.
The letters, along with the recent seizure of reporters' phone records by President Obama's administration, have prompted widespread complaints of government privacy violations in the name of national security.
In 2007, the Justice Department's inspector general found widespread violations in the FBI's use of the letters, including demands without proper authorization and information obtained in non-emergency circumstances.
The FBI has tightened oversight of the system. The agency made 16,511 National Security Letter requests for information regarding 7,201 people in 2011, the latest data available.
In March, Illston found that the FBI's demand that letter request recipients refrain from telling anyone — including customers — that they had received the requests was a violation of free speech rights.
"We are disappointed that the same judge who declared these letters unconstitutional is now requiring compliance with them," Kurt Opsah, an EFF attorney, said Friday.
Opsah said it could be many months before the appeals court rules on the constitutionality of the letter requests, which the FBI sends to telecommunication companies, Internet service providers, banks and others durring war-on-terror investigations.
The letter requests are used to collect unlimited kinds of sensitive, private information, such as financial and phone records. It is unclear from the judge's May 20 ruling what types of information the government is seeking to obtain or who the government is targeting in its letter request to Google.
Illston's order omits any mention of Google or that the proceedings have been closed to the public.
But the judge said "the petitioner" was involved in a similar case filed on April 22 in New York federal court. That's how the AP determined Illston was ruling about Google on May 20.
Public records show that on April 22, the federal government filed a "petition to enforce National Security Letters" against the Internet giant after it declined to cooperate with government demands.
Google declines to back NHTSA guidelines on self-driving cars
Story Originally Appeared in The Detroit News
Washington Search engine giant Google Inc. on Friday declined to endorse the Obama administration’s guidelines on self-driving cars, including the government’s recommendations that states shouldn’t allow general use of self-driving cars.
“We are introducing autonomous vehicle technology to improve people’s lives by making driving safer, more enjoyable, and more efficient. We have already driven over a half million miles and expect the technology to continue to progress rapidly,” Google said in a statement.
The new guidelines from the National Highway Traffic Safety Administration say states — if they eventually allow the sale of self-driving cars — should require special licenses for drivers of autonomous vehicles and require that they sit in the driver seat ready to take over if the vehicle fails.
A company spokesman, Jay Nancarrow, declined to say if Google supports the recommendations.
Google has said it thinks the technology could be commercially available within five years. “We can make cars that drive safer than people do,” Anthony Levandowski, product manager for Google’s self-driving car technology, said during in a speech in February in Washington. “I can’t tell you you’ll be able to have a Google car in your garage next year. We expect to release the technology in the next five years. In what form it gets released is still to be determined.”
But NHTSA says an autonomous driving car is still a long way off, and plans to write rules.
The Michigan legislature plans to revise a proposed bill to allow testing of autonomous vehicles in the wake of NHTSA’s guidance, said Dave Biswas, legislative director to state Sen. Mike Kowall, R-White Lake, the sponsor of the bill. Kowall spoke with the Michigan Department of Transportation this week about his bill in the wake of NHTSA’s new guidance and plans to have talks with federal officials, Biswas said Friday.
The bill is currently on the Senate floor and the goal is to win approval before the legislature goes on break in June. Kowall is working on a separate bill to address liability issues that hasn’t yet been introduced.
California, Nevada and Florida have already approved self-driving vehicles for testing, as long as a person is sitting in the driver seat, ready to take over in the event of a problem. Gov. Rick Snyder called for the legislature to act in his state of the state speech earlier this year, noting that Michigan automakers and parts companies are interested in exploring the technology in the state.
In November, Google hired the No. 2 official at NHTSA, Ron Medford, as its director of safety for self-driving cars.
NHTSA said it has had “numerous” talks with Google and other companies about the technology.
Last year, Levandowski said Google wants to log at least 1 million miles before it offers the technology to the general public.
“We’re probably going to put more miles on this technology than any car that was ever released. They don’t put 5 million miles on cars before they launch them,” Levandowski.
Google plans to expand its testing fleet to several dozen — and initially to a small fleet similar to the size of General Motors Corp.’s EV1 program, he said.
“You have to work before you run,” he said.
Levandowski says Google doesn’t want to eliminate driving by people — but make it safer.
“We only want to drive cars when they are fun,” he says.
Even when semi-autonomous driving capability is available on vehicles, the system will have operational limitations based on external factors such as weather and visibility of lane markings. When reliable data is unavailable, the driver will need to steer.
Washington Search engine giant Google Inc. on Friday declined to endorse the Obama administration’s guidelines on self-driving cars, including the government’s recommendations that states shouldn’t allow general use of self-driving cars.
“We are introducing autonomous vehicle technology to improve people’s lives by making driving safer, more enjoyable, and more efficient. We have already driven over a half million miles and expect the technology to continue to progress rapidly,” Google said in a statement.
The new guidelines from the National Highway Traffic Safety Administration say states — if they eventually allow the sale of self-driving cars — should require special licenses for drivers of autonomous vehicles and require that they sit in the driver seat ready to take over if the vehicle fails.
A company spokesman, Jay Nancarrow, declined to say if Google supports the recommendations.
Google has said it thinks the technology could be commercially available within five years. “We can make cars that drive safer than people do,” Anthony Levandowski, product manager for Google’s self-driving car technology, said during in a speech in February in Washington. “I can’t tell you you’ll be able to have a Google car in your garage next year. We expect to release the technology in the next five years. In what form it gets released is still to be determined.”
But NHTSA says an autonomous driving car is still a long way off, and plans to write rules.
The Michigan legislature plans to revise a proposed bill to allow testing of autonomous vehicles in the wake of NHTSA’s guidance, said Dave Biswas, legislative director to state Sen. Mike Kowall, R-White Lake, the sponsor of the bill. Kowall spoke with the Michigan Department of Transportation this week about his bill in the wake of NHTSA’s new guidance and plans to have talks with federal officials, Biswas said Friday.
The bill is currently on the Senate floor and the goal is to win approval before the legislature goes on break in June. Kowall is working on a separate bill to address liability issues that hasn’t yet been introduced.
California, Nevada and Florida have already approved self-driving vehicles for testing, as long as a person is sitting in the driver seat, ready to take over in the event of a problem. Gov. Rick Snyder called for the legislature to act in his state of the state speech earlier this year, noting that Michigan automakers and parts companies are interested in exploring the technology in the state.
In November, Google hired the No. 2 official at NHTSA, Ron Medford, as its director of safety for self-driving cars.
NHTSA said it has had “numerous” talks with Google and other companies about the technology.
Last year, Levandowski said Google wants to log at least 1 million miles before it offers the technology to the general public.
“We’re probably going to put more miles on this technology than any car that was ever released. They don’t put 5 million miles on cars before they launch them,” Levandowski.
Google plans to expand its testing fleet to several dozen — and initially to a small fleet similar to the size of General Motors Corp.’s EV1 program, he said.
“You have to work before you run,” he said.
Levandowski says Google doesn’t want to eliminate driving by people — but make it safer.
“We only want to drive cars when they are fun,” he says.
Even when semi-autonomous driving capability is available on vehicles, the system will have operational limitations based on external factors such as weather and visibility of lane markings. When reliable data is unavailable, the driver will need to steer.
Report: Yahoo's board approves $1.1B purchase of Tumblr
Story Originally Appeared in The Detroit News
Yahoo! Inc.'s board has approved a $1.1 billion acquisition of Tumblr Inc., a service that hosts 108 million blogs, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Tumblr would continue to operate as an independent business and a deal may be announced as early as tomorrow, the people told the newspaper.
Yahoo has scheduled a press event in New York tomorrow, where it will unveil updates to its Flickr photo-sharing site, a person familiar with the matter told Bloomberg News. While Tumblr is based in New York, there were no indications that the event was related to a potential deal with Tumblr.
Founded in 2007 by entrepreneur David Karp, Tumblr had more than 13 billion global page views in the past month. The site recently began letting advertisers pay for prominent placement, putting the company on a path to achieve profitability this year, executives said in March. Yahoo Chief Executive Officer Marissa Mayer has been adding features designed to win back users who have fled the Web portal in favor of competing sites such as Facebook Inc. and Google Inc.
Katherine Barna, a spokeswoman for Tumblr, didn't respond to multiple requests for comment. Sara Gorman, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment.
CEO since July, Mayer had little to show for her efforts to turn around the company as of last month, when Yahoo reported a drop in its main display-advertising business and issued a sales forecast for this quarter that may fall short of analysts' estimates. Mayer's push to revamp products such as Yahoo's home page and e-mail have made little headway to reverse a decline in display, an area where Google and Facebook are gaining ground.
Yahoo! Inc.'s board has approved a $1.1 billion acquisition of Tumblr Inc., a service that hosts 108 million blogs, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Tumblr would continue to operate as an independent business and a deal may be announced as early as tomorrow, the people told the newspaper.
Yahoo has scheduled a press event in New York tomorrow, where it will unveil updates to its Flickr photo-sharing site, a person familiar with the matter told Bloomberg News. While Tumblr is based in New York, there were no indications that the event was related to a potential deal with Tumblr.
Founded in 2007 by entrepreneur David Karp, Tumblr had more than 13 billion global page views in the past month. The site recently began letting advertisers pay for prominent placement, putting the company on a path to achieve profitability this year, executives said in March. Yahoo Chief Executive Officer Marissa Mayer has been adding features designed to win back users who have fled the Web portal in favor of competing sites such as Facebook Inc. and Google Inc.
Katherine Barna, a spokeswoman for Tumblr, didn't respond to multiple requests for comment. Sara Gorman, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment.
CEO since July, Mayer had little to show for her efforts to turn around the company as of last month, when Yahoo reported a drop in its main display-advertising business and issued a sales forecast for this quarter that may fall short of analysts' estimates. Mayer's push to revamp products such as Yahoo's home page and e-mail have made little headway to reverse a decline in display, an area where Google and Facebook are gaining ground.
Mozilla delays blocking advertisers' cookies in Firefox
Story Originally Appeared in THE VERGE
After announcing that it would soon start blocking cookies from third-party advertisers by default in Firefox, Mozilla has walked back on its plans while it continues to test the system. In a blog post, Mozilla's Brendan Eich said that the patch needed more testing and data in order to refine it for release. "The idea is that if you have not visited a site (including the one to which you are navigating currently) and it wants to put a cookie on your computer, the site is likely not one you have heard of or have any relationship with," he said. "But this is only likely, not always true."
Eich cited false positives — cookies from a site you visit being blocked because it has multiple addresses — and false negatives, in which an ad is clicked accidentally or a formerly trusted site starts adding cookies. The patch, developed by Stanford law student Jonathan Mayer, was initially set to be deployed in Firefox 22. Now, there's no set timeline for its release, but Eich will provide a progress update sometime in the next six weeks.
Advertisers, who depend on third-party cookies to target users across sites, condemned Mozilla for the move, just as they have generally fought Do Not Track efforts by other companies and legislators. Firefox currently has an option to block third-party cookies, but it's previously left off by default. This contrasts with Microsoft, which entered into a protracted fight last year to turn it on automatically in Internet Explorer.
After announcing that it would soon start blocking cookies from third-party advertisers by default in Firefox, Mozilla has walked back on its plans while it continues to test the system. In a blog post, Mozilla's Brendan Eich said that the patch needed more testing and data in order to refine it for release. "The idea is that if you have not visited a site (including the one to which you are navigating currently) and it wants to put a cookie on your computer, the site is likely not one you have heard of or have any relationship with," he said. "But this is only likely, not always true."
Eich cited false positives — cookies from a site you visit being blocked because it has multiple addresses — and false negatives, in which an ad is clicked accidentally or a formerly trusted site starts adding cookies. The patch, developed by Stanford law student Jonathan Mayer, was initially set to be deployed in Firefox 22. Now, there's no set timeline for its release, but Eich will provide a progress update sometime in the next six weeks.
Advertisers, who depend on third-party cookies to target users across sites, condemned Mozilla for the move, just as they have generally fought Do Not Track efforts by other companies and legislators. Firefox currently has an option to block third-party cookies, but it's previously left off by default. This contrasts with Microsoft, which entered into a protracted fight last year to turn it on automatically in Internet Explorer.
Facebook’s IPO One Year Later: Mobile Growth, Legal Headaches, and a Stalled Stock Price
Originally Appeared on TIME
One year ago tomorrow, social networking phenomenon Facebook went public in one of the most highly anticipated initial public offerings of the last decade.
Leading up to the IPO, which valued the company at a whopping $104 billion — or 100 times revenue — the hype was intense. Facebook, market prognosticators predicted, would soar in the first day of trading, generating easy gains for the investors who rushed for a piece of the action. Indeed, investor demand was so intense that Facebook boosted by 25% the amount of shares it planned to sell to the public. Finally, on the morning of May 18, after months, even years, of anticipation, Facebook founder and CEO Mark Zuckerberg rang NASDAQ’s opening bell by remote from Facebook’s campus in Menlo Park, California.
And then all hell broke loose.
Technical glitches on the NASDAQ exchange delayed the first trades for 30 hair-raising, white-knuckled minutes. After the NASDAQ commenced trading, Facebook shares jumped 13% to hit $43, only to retreat quickly to the initial offering price of $38. At that point, Facebook’s IPO underwriters, including the largest banks on Wall Street led by Morgan Stanley, stepped in and waged a furious buying battle to support the offering level. Thanks to their efforts, Facebook closed a frenetic first day of trading at $38.23, essentially flat.
Although Facebook shares slowly climbed back above $30 by January of this year, momentum stalled and Facebook shares are currently bouncing around $26 per share, down more than 30% since the IPO. For Facebook, the IPO was a major success because it raised over $10 billion for the company. But for investors, Facebook’s IPO is widely considered to be one of the most disappointing public stock offerings in U.S. history.
One year ago, TIME published an article examining the kind of revenue opportunities Facebook might seize upon to justify its sky-high valuation. Looking back at the list, many of those opportunities remain untapped. The company has only scratched the surface, for example, when it comes to leveraging the vast hoard of user data it is accumulating. A true Facebook phone hasn’t materialized, nor has a credit card-based E-commerce “passport.” And though Facebook recently announced a “semantic” search engine, it shows no signs of threatening Web search titan Google’s dominance.
But there have also been some notable successes. Facebook’s mobile efforts, in particular, are starting to achieve impressive results. Last quarter, 30% of Facebook’s ad revenue came from mobile devices, up from 23% during the previous quarter and 14% the quarter before that. In the first quarter of 2012, Facebook’s mobile revenue constituted 0% of its total revenue. Perhaps most important, Facebook’s share of mobile time spent online is soaring, offsetting desktop declines. Facebook’s share of mobile minutes has doubled from 11% to 22% over the last year, according to JP Morgan. The company has also begun packing more ads into the News Feed.
A year ago, we also asked if Facebook could possibly maintain its “cool factor” in the long term. The answer is that it might not matter: Although there are signs that younger users are increasingly flocking to other social services, Facebook remains far and away the top social network on the web. Overall, in fact, Facebook seems to be maturing into a reliably profitable public company, even if its share price remains more than 30% below the IPO level.
The ill-effects of that IPO, however, still represent a lingering cloud hanging over the company. In the immediate aftermath of the offering, recriminations flew fast and furious. NASDAQ CEO Robert Greifeld told a conference of corporate directors at Stanford University’s Law School that “arrogance” and “overconfidence” among NASDAQ officials were partly to blame for the technical breakdowns that plagued the offering. Simply put, NASDAQ’s systems, which had been repeatedly tested before the offering, couldn’t handle the massive volume of trading. NASDAQ’s breakdown may have spooked investors, causing many to sell, driving the stock price down, as Facebook suggested in a legal filing last year.
Irate investors filed dozens of lawsuits against Facebook, its underwriters, and the NASDAQ. One set of suits alleged that Facebook’s IPO documents “were negligently prepared and failed to disclose material information about Facebook’s business, operations and prospects.” Specifically, the lawsuits charged that Facebook hid the financial impact of challenges to its mobile advertising business — challenges that would have been material information for prospective Facebook investors.
Another set of Facebook lawsuits charged that company executives gave the underwriters more detail about the financial impact of challenges to its mobile advertising business than they did to the investing public. The underwriters, in turn, lowered their financial forecasts, which they then “selectively disclosed” to big, favored clients like hedge funds and institutional investors, but not the public, according to the lawsuits.
Predictably, Facebook maintained that it acted appropriately by updating its IPO documents with the SEC before the offering to reflect that the number of daily users was increasing faster than the number of ads the company was serving, a change it attributed to its fast-growing mobile user base. (Facebook’s SEC update was delivered in dense, financial legalese, but may in fact have satisfied the disclosure requirements.)
Thirty-one of the lawsuits have now been consolidated into one umbrella case before a judge in the Southern District of New York. Earlier this month, Facebook asked a judge to throw out the umbrella lawsuit, arguing that it had no obligation to disclose internal data on how increased mobile usage might affect the company’s financial performance. But Facebook’s legal headaches continue. Less than two weeks ago, the company was hit by a new IPO-related lawsuit seeking to hold Zuckerberg and other executives responsible for the botched offering.
Given the immense financial windfall the IPO delivered to Facebook insiders, it’s not hard to understand why ordinary investors were upset. Zuckerberg cashed out to the tune of $1.14 billion. Early investors Accel Partners, DST Global, Mail.ru Group and Tiger Global generated $2.1 billion, $1.7 billion, $745 million, and $722 million, respectively. Tech mogul Peter Thiel sold $638 million worth of shares. And Wall Street titan Goldman Sachs cashed out to the tune of $923 million.
Of course, venture capitalists and early employees took big risks, and deserve to be rewarded. But the contrasting fortunes of company insiders, who made billions, and ordinary shareholders, who saw their Facebook investments fall off a cliff, raised basic questions about the fairness of the IPO process. Facebook’s IPO reinforced the stereotype that the IPO process gives deep-pocketed investors and well-connected insiders an advantage over everyday investors.
Facebook is making good progress on several fronts, especially mobile, but the company needs to boost earnings growth significantly if it wants to see its stock price return to its IPO level. Right now, the market just doesn’t see that happening. “Facebook’s share price is telling you that investors are more skeptical about the company’s prospects than a year ago,” Wedbush analyst Michael Pachter told MarketWatch. Another thing investors are likely skeptical about? The IPO process itself. As the old adage goes: “Fool me once, shame on you. Fool me twice, shame on me.”
One year ago tomorrow, social networking phenomenon Facebook went public in one of the most highly anticipated initial public offerings of the last decade.
Leading up to the IPO, which valued the company at a whopping $104 billion — or 100 times revenue — the hype was intense. Facebook, market prognosticators predicted, would soar in the first day of trading, generating easy gains for the investors who rushed for a piece of the action. Indeed, investor demand was so intense that Facebook boosted by 25% the amount of shares it planned to sell to the public. Finally, on the morning of May 18, after months, even years, of anticipation, Facebook founder and CEO Mark Zuckerberg rang NASDAQ’s opening bell by remote from Facebook’s campus in Menlo Park, California.
And then all hell broke loose.
Technical glitches on the NASDAQ exchange delayed the first trades for 30 hair-raising, white-knuckled minutes. After the NASDAQ commenced trading, Facebook shares jumped 13% to hit $43, only to retreat quickly to the initial offering price of $38. At that point, Facebook’s IPO underwriters, including the largest banks on Wall Street led by Morgan Stanley, stepped in and waged a furious buying battle to support the offering level. Thanks to their efforts, Facebook closed a frenetic first day of trading at $38.23, essentially flat.
Although Facebook shares slowly climbed back above $30 by January of this year, momentum stalled and Facebook shares are currently bouncing around $26 per share, down more than 30% since the IPO. For Facebook, the IPO was a major success because it raised over $10 billion for the company. But for investors, Facebook’s IPO is widely considered to be one of the most disappointing public stock offerings in U.S. history.
One year ago, TIME published an article examining the kind of revenue opportunities Facebook might seize upon to justify its sky-high valuation. Looking back at the list, many of those opportunities remain untapped. The company has only scratched the surface, for example, when it comes to leveraging the vast hoard of user data it is accumulating. A true Facebook phone hasn’t materialized, nor has a credit card-based E-commerce “passport.” And though Facebook recently announced a “semantic” search engine, it shows no signs of threatening Web search titan Google’s dominance.
But there have also been some notable successes. Facebook’s mobile efforts, in particular, are starting to achieve impressive results. Last quarter, 30% of Facebook’s ad revenue came from mobile devices, up from 23% during the previous quarter and 14% the quarter before that. In the first quarter of 2012, Facebook’s mobile revenue constituted 0% of its total revenue. Perhaps most important, Facebook’s share of mobile time spent online is soaring, offsetting desktop declines. Facebook’s share of mobile minutes has doubled from 11% to 22% over the last year, according to JP Morgan. The company has also begun packing more ads into the News Feed.
A year ago, we also asked if Facebook could possibly maintain its “cool factor” in the long term. The answer is that it might not matter: Although there are signs that younger users are increasingly flocking to other social services, Facebook remains far and away the top social network on the web. Overall, in fact, Facebook seems to be maturing into a reliably profitable public company, even if its share price remains more than 30% below the IPO level.
The ill-effects of that IPO, however, still represent a lingering cloud hanging over the company. In the immediate aftermath of the offering, recriminations flew fast and furious. NASDAQ CEO Robert Greifeld told a conference of corporate directors at Stanford University’s Law School that “arrogance” and “overconfidence” among NASDAQ officials were partly to blame for the technical breakdowns that plagued the offering. Simply put, NASDAQ’s systems, which had been repeatedly tested before the offering, couldn’t handle the massive volume of trading. NASDAQ’s breakdown may have spooked investors, causing many to sell, driving the stock price down, as Facebook suggested in a legal filing last year.
Irate investors filed dozens of lawsuits against Facebook, its underwriters, and the NASDAQ. One set of suits alleged that Facebook’s IPO documents “were negligently prepared and failed to disclose material information about Facebook’s business, operations and prospects.” Specifically, the lawsuits charged that Facebook hid the financial impact of challenges to its mobile advertising business — challenges that would have been material information for prospective Facebook investors.
Another set of Facebook lawsuits charged that company executives gave the underwriters more detail about the financial impact of challenges to its mobile advertising business than they did to the investing public. The underwriters, in turn, lowered their financial forecasts, which they then “selectively disclosed” to big, favored clients like hedge funds and institutional investors, but not the public, according to the lawsuits.
Predictably, Facebook maintained that it acted appropriately by updating its IPO documents with the SEC before the offering to reflect that the number of daily users was increasing faster than the number of ads the company was serving, a change it attributed to its fast-growing mobile user base. (Facebook’s SEC update was delivered in dense, financial legalese, but may in fact have satisfied the disclosure requirements.)
Thirty-one of the lawsuits have now been consolidated into one umbrella case before a judge in the Southern District of New York. Earlier this month, Facebook asked a judge to throw out the umbrella lawsuit, arguing that it had no obligation to disclose internal data on how increased mobile usage might affect the company’s financial performance. But Facebook’s legal headaches continue. Less than two weeks ago, the company was hit by a new IPO-related lawsuit seeking to hold Zuckerberg and other executives responsible for the botched offering.
Given the immense financial windfall the IPO delivered to Facebook insiders, it’s not hard to understand why ordinary investors were upset. Zuckerberg cashed out to the tune of $1.14 billion. Early investors Accel Partners, DST Global, Mail.ru Group and Tiger Global generated $2.1 billion, $1.7 billion, $745 million, and $722 million, respectively. Tech mogul Peter Thiel sold $638 million worth of shares. And Wall Street titan Goldman Sachs cashed out to the tune of $923 million.
Of course, venture capitalists and early employees took big risks, and deserve to be rewarded. But the contrasting fortunes of company insiders, who made billions, and ordinary shareholders, who saw their Facebook investments fall off a cliff, raised basic questions about the fairness of the IPO process. Facebook’s IPO reinforced the stereotype that the IPO process gives deep-pocketed investors and well-connected insiders an advantage over everyday investors.
Facebook is making good progress on several fronts, especially mobile, but the company needs to boost earnings growth significantly if it wants to see its stock price return to its IPO level. Right now, the market just doesn’t see that happening. “Facebook’s share price is telling you that investors are more skeptical about the company’s prospects than a year ago,” Wedbush analyst Michael Pachter told MarketWatch. Another thing investors are likely skeptical about? The IPO process itself. As the old adage goes: “Fool me once, shame on you. Fool me twice, shame on me.”
Congress demands answers from Google over Glass privacy concerns
Story Originally Appeared on ZDNet
Summary: Members of Congress have highlighted privacy concerns over Google Glass and the possible misuse of information.
A group of Congress members have sent a letter to Google seeking answers to privacy and data concerns caused by Google Glass.
The letter, addressed to CEO Larry Page, was sent by eight members of Congress led by U.S. Rep. Joe Barton, Texas. The members of the Congressional bipartisan Privacy Caucus say they are concerned about possible misuse of information gathered by Google's new product, and whether Google Glass will "infringe on the privacy of the average American."
The headset, which is able to record video footage and take photos based on voice commands, has already been jailbroken within the developer phase. Modified enough, Glass could be used to innocuously record everything around you without any indicative behaviour or phrases.
The letter's delivery comes as the tech giant holds its annual developer conference, Google I/O in San Francisco. Developers -- and those who have paid $1500 for the prototype -- are currently being tutored on how to develop apps for Google Glass, and the Glass Explorer program is designed to create the application ecosystem before the product's official launch sometime next year.
The Congress members ask whether the product will use facial recognition technology to unveil personal information about others or objects, and whether data could be collected without the consent of others -- and if Google plans to prevent this in some way. In addition, the letter cites a case in 2010 where the tech giant was collecting information from unsecured wireless networks across the globe, which resulted in Google paying out $7 million in damages. The letter acknowledges this situation was rectified, but asks how Google plans to ensure Google Glass will not unintentionally collect data from either the user or non-users without permission.
Other concerns raised include whether the new product -- when launched -- will prove to be a catalyst for the tech giant to make additional changes within its privacy policies, and if Google Glass will both collect and store data on the device itself. If information is stored, the Congress members wish to know whether security measures will be put in place to safeguard stored data.
Additional signatories of the letter include Representatives John Barrow, Steve Chabot, Henry C. Johnson Jr., Walter Jones, Richard Nugent, Bobby Rush and Loretta Sanchez. Answers have been requested by June 14. The Congressional Bi-Partisan Privacy Caucus is focused on investigating the data and privacy implications and practices of large organizations and corporations, including Google, Amazon, Apple and the Social Security Administration.
Google Glass Picks Up Early Signal: Keep Out
Story Appeared on The New York Times
SAN FRANCISCO — Google’s wearable computer, the most anticipated piece of electronic wizardry since the iPad and iPhone, will not go on sale for many months.
But the resistance is already under way.
The glasseslike device, which allows users to access the Internet, take photos and film short snippets, has been pre-emptively banned by a Seattle bar. Large parts of Las Vegas will not welcome wearers. West Virginia legislators tried to make it illegal to use the gadget, known as Google Glass, while driving.
“This is just the beginning,” said Timothy Toohey, a Los Angeles lawyer specializing in privacy issues. “Google Glass is going to cause quite a brawl.”
As personal technology becomes increasingly nimble and invisible, Glass is prompting questions of whether it will distract drivers, upend relationships and strip people of what little privacy they still have in public.
A pair of lens-less frames with a tiny computer attached to the right earpiece, Glass is promoted by Google as “seamless and empowering.” It will have the ability to capture any chance encounter, from a celebrity sighting to a grumpy salesclerk, and broadcast it to millions in seconds.
“We are all now going to be both the paparazzi and the paparazzi’s target,” said Karen L. Stevenson, a lawyer with Buchalter Nemer in Los Angeles.
Google stresses that Glass is a work in progress, with test versions now being released to 2,000 developers. Another 8,000 “explorers,” people handpicked by Google, will soon get a pair.
Among the safeguards to make it less intrusive: you have to speak or touch it to activate it, and you have to look directly at someone to take a photograph or video of them.
“We are thinking very carefully about how we design Glass because new technology always raises new issues,” said Courtney Hohne, a Google spokeswoman.
Developers, however, are already cracking the limits of Glass. One created a small sensation in tech circles last week with a program that eliminated the need for gestures or voice commands. To snap a picture, all the user needs to do is wink.
The 5 Point Cafe, a Seattle dive bar, was apparently the first to explicitly ban Glass. In part it was a publicity stunt — extremely successful, too, as it garnered worldwide attention — but the bar’s owner, Dave Meinert, said there was a serious side. The bar, he said, was “kind of a private place.”
The legislators in West Virginia were not joking at all. The state banned texting while driving last year but hands-free devices are permitted. That left a loophole for Google Glass. The legislation was introduced too late to gain traction before the most recent session ended, but its sponsor says he is likely to try again.
In Las Vegas, a Caesars Entertainment spokesman noted that computers and recording devices were prohibited in casinos. “We will not allow people to wear Glass while gambling or attending our shows,” he said.
Louis Brandeis and Samuel Warren famously noted in 1890 that “numerous mechanical devices threaten to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the house-tops.’ ”
Glass is arriving just as the courts, politicians, privacy advocates, regulators, law enforcement and tech companies are once again arguing over the boundaries of technology in every walk of life.
The Senate Judiciary Committee voted last month to require law enforcement to have a warrant to access e-mail, not just a subpoena. The Federal Bureau of Investigation’s use of devices that mimic cellphone towers to track down criminals is being challenged in an Arizona case. A California district court recently ruled that private messages on social media were protected without a warrant.
“Google Glass will test the right to privacy versus the First Amendment,” said Bradley Shear, a social media expert at George Washington University.
Google has often been at the forefront of privacy issues. In 2004, it began a free e-mail service, making money by generating ads against the content. Two dozen privacy groups protested. Regulators were urged to investigate whether eavesdropping laws were being violated.
For better or worse, people got used to the idea, and the protests quickly dissipated. Gmail now has over 425 million users. In a more recent episode, the company’s unauthorized data collection during its Street View mapping project prompted government investigations in a dozen countries.
Like many Silicon Valley companies, Google takes the attitude that people should have nothing to hide from intrusive technology.
“If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place,” said Eric Schmidt, then Google’s chief executive, in 2009.
Glass is a major step in Google’s efforts to diversify beyond search, and potentially an extremely lucrative move. Piper Jaffray, an analyst firm, estimates that wearable technology and another major initiative, self-driving cars, could ultimately be a $500 billion opportunity for the company. In the shorter term, IHS, a forecasting firm, estimates that shipments of smart glasses, led by Google Glass, could be as high as 6.6 million in three years.
Thad Starner, a pioneer of wearable computing who is a technical adviser to the Glass team, says he thinks concerns about disruption are overblown.
“Asocial people will be able to find a way to do asocial things with this technology, but on average people like to maintain the social contract,” Mr. Starner said. He added that he and colleagues had experimented with Glass-type devices for years, “and I can’t think of a single instance where something bad has happened.”
An incident at a Silicon Valley event shows, however, the way the increasing ease in capturing a moment can lead to problems — even if unintentionally.
Adria Richards, who worked for the Colorado e-mail company SendGrid, was offended by the jokes two men were cracking behind her at the PyCon developers conference. She posted a picture of them on Twitter with the mildly reproving comment, “Not cool.”
One of the men, who has not been identified, was immediately fired by his employer, PlayHaven. “There is another side to this story,” he wrote on a hacking site, saying it was barely one lame sexual joke. “She gave me no warning, she smiled while she snapped the pic and sealed my fate,” he complained.
Critics lashed out at Ms. Richards, using language much more offensive than the two men used. SendGrid was hacked. The company dismissed Ms. Richards, saying there was such an uproar over her conduct, it “put our business in danger.”
“I don’t think anyone who was part of what happened at PyCon that day could possibly have imagined how this issue would have exploded into the public consciousness,” Ms. Richards reflected later. She has not posted on Twitter since.
SAN FRANCISCO — Google’s wearable computer, the most anticipated piece of electronic wizardry since the iPad and iPhone, will not go on sale for many months.
But the resistance is already under way.
The glasseslike device, which allows users to access the Internet, take photos and film short snippets, has been pre-emptively banned by a Seattle bar. Large parts of Las Vegas will not welcome wearers. West Virginia legislators tried to make it illegal to use the gadget, known as Google Glass, while driving.
“This is just the beginning,” said Timothy Toohey, a Los Angeles lawyer specializing in privacy issues. “Google Glass is going to cause quite a brawl.”
As personal technology becomes increasingly nimble and invisible, Glass is prompting questions of whether it will distract drivers, upend relationships and strip people of what little privacy they still have in public.
A pair of lens-less frames with a tiny computer attached to the right earpiece, Glass is promoted by Google as “seamless and empowering.” It will have the ability to capture any chance encounter, from a celebrity sighting to a grumpy salesclerk, and broadcast it to millions in seconds.
“We are all now going to be both the paparazzi and the paparazzi’s target,” said Karen L. Stevenson, a lawyer with Buchalter Nemer in Los Angeles.
Google stresses that Glass is a work in progress, with test versions now being released to 2,000 developers. Another 8,000 “explorers,” people handpicked by Google, will soon get a pair.
Among the safeguards to make it less intrusive: you have to speak or touch it to activate it, and you have to look directly at someone to take a photograph or video of them.
“We are thinking very carefully about how we design Glass because new technology always raises new issues,” said Courtney Hohne, a Google spokeswoman.
Developers, however, are already cracking the limits of Glass. One created a small sensation in tech circles last week with a program that eliminated the need for gestures or voice commands. To snap a picture, all the user needs to do is wink.
The 5 Point Cafe, a Seattle dive bar, was apparently the first to explicitly ban Glass. In part it was a publicity stunt — extremely successful, too, as it garnered worldwide attention — but the bar’s owner, Dave Meinert, said there was a serious side. The bar, he said, was “kind of a private place.”
The legislators in West Virginia were not joking at all. The state banned texting while driving last year but hands-free devices are permitted. That left a loophole for Google Glass. The legislation was introduced too late to gain traction before the most recent session ended, but its sponsor says he is likely to try again.
In Las Vegas, a Caesars Entertainment spokesman noted that computers and recording devices were prohibited in casinos. “We will not allow people to wear Glass while gambling or attending our shows,” he said.
Louis Brandeis and Samuel Warren famously noted in 1890 that “numerous mechanical devices threaten to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the house-tops.’ ”
Glass is arriving just as the courts, politicians, privacy advocates, regulators, law enforcement and tech companies are once again arguing over the boundaries of technology in every walk of life.
The Senate Judiciary Committee voted last month to require law enforcement to have a warrant to access e-mail, not just a subpoena. The Federal Bureau of Investigation’s use of devices that mimic cellphone towers to track down criminals is being challenged in an Arizona case. A California district court recently ruled that private messages on social media were protected without a warrant.
“Google Glass will test the right to privacy versus the First Amendment,” said Bradley Shear, a social media expert at George Washington University.
Google has often been at the forefront of privacy issues. In 2004, it began a free e-mail service, making money by generating ads against the content. Two dozen privacy groups protested. Regulators were urged to investigate whether eavesdropping laws were being violated.
For better or worse, people got used to the idea, and the protests quickly dissipated. Gmail now has over 425 million users. In a more recent episode, the company’s unauthorized data collection during its Street View mapping project prompted government investigations in a dozen countries.
Like many Silicon Valley companies, Google takes the attitude that people should have nothing to hide from intrusive technology.
“If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place,” said Eric Schmidt, then Google’s chief executive, in 2009.
Glass is a major step in Google’s efforts to diversify beyond search, and potentially an extremely lucrative move. Piper Jaffray, an analyst firm, estimates that wearable technology and another major initiative, self-driving cars, could ultimately be a $500 billion opportunity for the company. In the shorter term, IHS, a forecasting firm, estimates that shipments of smart glasses, led by Google Glass, could be as high as 6.6 million in three years.
Thad Starner, a pioneer of wearable computing who is a technical adviser to the Glass team, says he thinks concerns about disruption are overblown.
“Asocial people will be able to find a way to do asocial things with this technology, but on average people like to maintain the social contract,” Mr. Starner said. He added that he and colleagues had experimented with Glass-type devices for years, “and I can’t think of a single instance where something bad has happened.”
An incident at a Silicon Valley event shows, however, the way the increasing ease in capturing a moment can lead to problems — even if unintentionally.
Adria Richards, who worked for the Colorado e-mail company SendGrid, was offended by the jokes two men were cracking behind her at the PyCon developers conference. She posted a picture of them on Twitter with the mildly reproving comment, “Not cool.”
One of the men, who has not been identified, was immediately fired by his employer, PlayHaven. “There is another side to this story,” he wrote on a hacking site, saying it was barely one lame sexual joke. “She gave me no warning, she smiled while she snapped the pic and sealed my fate,” he complained.
Critics lashed out at Ms. Richards, using language much more offensive than the two men used. SendGrid was hacked. The company dismissed Ms. Richards, saying there was such an uproar over her conduct, it “put our business in danger.”
“I don’t think anyone who was part of what happened at PyCon that day could possibly have imagined how this issue would have exploded into the public consciousness,” Ms. Richards reflected later. She has not posted on Twitter since.
Retailers counting on service, tech, tax laws to win over web shoppers
Story Appeared in The Detroit News
Matt Norcross has been selling books for two decades, but lately he must contend with readers who go to his Petoskey shop to see and touch the printed works he offers, only to buy them later from Amazon.com at a savings.
Even if he offers the books at the exact same price, shoppers can save 6% by not paying sales tax online.
“Our store is being used as a selling tool for online retailers,” said Norcross, the owner of McLean & Eakin Booksellers. A few days ago, he added, he even caught a shopper taking pictures of recipes to avoid buying a cookbook. “Brick-and-mortar stores can’t continue that way.”
To address this trend, which the retail industry calls showrooming, small stores like McLean & Eakin are increasingly touting their personal service. Other retailers, including national chains, are offering price matching — and bringing more technology, such as iPads, computer kiosks and digital codes for scanning, into their shops to direct customers to their online sites.
The Michigan Retailers Association is organizing a promotional campaign to support local retailers. And in Washington, D.C., and Lansing, lawmakers are seeking to curb tax-free shopping online by forcing Internet sellers to collect sales taxes.
The U.S. Senate passed the Marketplace Fairness Act on Monday. The vote was 69-27, with opponents of the bill arguing that the legislation makes it harder for online businesses to sell in multiple states. It was sent to the House for consideration.
And in Lansing, lawmakers are discussing a state bill to force online retailers to collect 6% sales tax on items sold to Michigan customers.
“We’d all prefer the federal solution,” said bill sponsor state Rep. Eileen Kowall, R-White Lake Township. “It’s not a new tax, it’s a due tax. It’s trying to eliminate that built-in disadvantage the bricks-and-mortar stores have.”
Forty-five states and the District of Columbia require customers to pay sales tax. But unless an online retailer has a brick-and-mortar store or office on the ground in Michigan, it doesn’t have to collect the sales taxes. And while customers are still supposed to pay the tax when they file their state income tax returns, many don’t.
“Someone who’s strictly driven by price will come in and take advantage,” said Bo Brines, the owner of Little Forks Outfitters, an outdoors retailer in Midland. “Add that to a lack of a level playing field by not having to collect sales tax, and it’s a potent combination.”
A recent study, by Seattle-based group Placed, found 40% of the shoppers participated in showrooming and concluded the threat to retailers may be more serious than they realize. The study was based on survey results from nearly 15,000 people.
In addition to Best Buy and Target, the study found other national retailers, including Bed Bath & Beyond, PetSmart, Toys ‘R’ Us, Sears, Barnes & Noble, Kohl’s, JCPenney — even discount warehouse Costco — were at risk.
“There will be more showrooming,” Placed founder and CEO David Shim predicted. “Now, it’s as simple as ‘I’m going to open an app.’ ”
Some retailers — such as Best Buy and Target — started offering to match online prices to combat showrooming.
But competitive pricing is only part of the problem.
“Customers come in and look at the merchandise. Oftentimes they tie up an associate’s time for 10, 15, 20 minutes — and then they go buy the product on the Internet,” said Tom Scott, senior vice president of the Michigan Retailers Association. “The ruder ones take their phones out right in the store.”
Gorman’s President Tom Lias has a long list of reasons why shopping online can’t match the experience of shopping in the five Gorman’s Furniture stores.
Among them, he said, are the choices, customization and service that customers get when they walk in the store, and being able to rely on the company.
Lias said he’s also encouraging his employees to accept technology: They’re using e-mail and social media to keep in touch with customers. Some are now carrying iPads. And the stores have computer kiosks that customers can use to price and shop certain furniture brands.
“Customers want what they want, when they want it,” he said.
Showrooming was a big topic at this year’s National Retail Federation Expo in New York, as retail experts outlined how online technology is both a threat and an opportunity, said Andrew Cherwenka, the cofounder and CEO of analytics company Authintic in Toronto.
“If you get to the heart of it, retailers don’t care how or where people shop — as long as it’s with them,” said Vicki Cantrell, the executive director at Shop.org, a division of the National Retail Federation.
As an example of this, Walmart, the world’s largest retailer, started a program it called Endless Aisle, which encourages its customers to use smartphones in stores to read digital codes and to order products from its online store.
“We embrace showrooming instead of denying it,” Daniel Morales, Walmart’s director of communications, said in an e-mail. “We’re using e-commerce to make a store with a smaller footprint capable of offering a broader selection through Endless Aisle and by offering the ability to shop online and pick up items in a store.”
And, some retailers say, the only way to really fight technology is with technology.
Last month, the Michigan Retailers Association rolled out a campaign, Buy Nearby, that uses social media to urge customers to shop at local retailers. The campaign — symbolized by a blue, open hand — encourages customers to post stories and photos online of their favorite local shops and restaurants.
Getting shoppers to buy from local retailers, the association said, is the “ultimate anti-showrooming tactic.”
Matt Norcross has been selling books for two decades, but lately he must contend with readers who go to his Petoskey shop to see and touch the printed works he offers, only to buy them later from Amazon.com at a savings.
Even if he offers the books at the exact same price, shoppers can save 6% by not paying sales tax online.
“Our store is being used as a selling tool for online retailers,” said Norcross, the owner of McLean & Eakin Booksellers. A few days ago, he added, he even caught a shopper taking pictures of recipes to avoid buying a cookbook. “Brick-and-mortar stores can’t continue that way.”
To address this trend, which the retail industry calls showrooming, small stores like McLean & Eakin are increasingly touting their personal service. Other retailers, including national chains, are offering price matching — and bringing more technology, such as iPads, computer kiosks and digital codes for scanning, into their shops to direct customers to their online sites.
The Michigan Retailers Association is organizing a promotional campaign to support local retailers. And in Washington, D.C., and Lansing, lawmakers are seeking to curb tax-free shopping online by forcing Internet sellers to collect sales taxes.
The U.S. Senate passed the Marketplace Fairness Act on Monday. The vote was 69-27, with opponents of the bill arguing that the legislation makes it harder for online businesses to sell in multiple states. It was sent to the House for consideration.
And in Lansing, lawmakers are discussing a state bill to force online retailers to collect 6% sales tax on items sold to Michigan customers.
“We’d all prefer the federal solution,” said bill sponsor state Rep. Eileen Kowall, R-White Lake Township. “It’s not a new tax, it’s a due tax. It’s trying to eliminate that built-in disadvantage the bricks-and-mortar stores have.”
Forty-five states and the District of Columbia require customers to pay sales tax. But unless an online retailer has a brick-and-mortar store or office on the ground in Michigan, it doesn’t have to collect the sales taxes. And while customers are still supposed to pay the tax when they file their state income tax returns, many don’t.
“Someone who’s strictly driven by price will come in and take advantage,” said Bo Brines, the owner of Little Forks Outfitters, an outdoors retailer in Midland. “Add that to a lack of a level playing field by not having to collect sales tax, and it’s a potent combination.”
A recent study, by Seattle-based group Placed, found 40% of the shoppers participated in showrooming and concluded the threat to retailers may be more serious than they realize. The study was based on survey results from nearly 15,000 people.
In addition to Best Buy and Target, the study found other national retailers, including Bed Bath & Beyond, PetSmart, Toys ‘R’ Us, Sears, Barnes & Noble, Kohl’s, JCPenney — even discount warehouse Costco — were at risk.
“There will be more showrooming,” Placed founder and CEO David Shim predicted. “Now, it’s as simple as ‘I’m going to open an app.’ ”
Some retailers — such as Best Buy and Target — started offering to match online prices to combat showrooming.
But competitive pricing is only part of the problem.
“Customers come in and look at the merchandise. Oftentimes they tie up an associate’s time for 10, 15, 20 minutes — and then they go buy the product on the Internet,” said Tom Scott, senior vice president of the Michigan Retailers Association. “The ruder ones take their phones out right in the store.”
Gorman’s President Tom Lias has a long list of reasons why shopping online can’t match the experience of shopping in the five Gorman’s Furniture stores.
Among them, he said, are the choices, customization and service that customers get when they walk in the store, and being able to rely on the company.
Lias said he’s also encouraging his employees to accept technology: They’re using e-mail and social media to keep in touch with customers. Some are now carrying iPads. And the stores have computer kiosks that customers can use to price and shop certain furniture brands.
“Customers want what they want, when they want it,” he said.
Showrooming was a big topic at this year’s National Retail Federation Expo in New York, as retail experts outlined how online technology is both a threat and an opportunity, said Andrew Cherwenka, the cofounder and CEO of analytics company Authintic in Toronto.
“If you get to the heart of it, retailers don’t care how or where people shop — as long as it’s with them,” said Vicki Cantrell, the executive director at Shop.org, a division of the National Retail Federation.
As an example of this, Walmart, the world’s largest retailer, started a program it called Endless Aisle, which encourages its customers to use smartphones in stores to read digital codes and to order products from its online store.
“We embrace showrooming instead of denying it,” Daniel Morales, Walmart’s director of communications, said in an e-mail. “We’re using e-commerce to make a store with a smaller footprint capable of offering a broader selection through Endless Aisle and by offering the ability to shop online and pick up items in a store.”
And, some retailers say, the only way to really fight technology is with technology.
Last month, the Michigan Retailers Association rolled out a campaign, Buy Nearby, that uses social media to urge customers to shop at local retailers. The campaign — symbolized by a blue, open hand — encourages customers to post stories and photos online of their favorite local shops and restaurants.
Getting shoppers to buy from local retailers, the association said, is the “ultimate anti-showrooming tactic.”
Hackers stole $45 million in ATM card breach
Story Appeared in USA TODAY
NEW YORK — They didn't use guns, masks or even threatening notes passed to bank tellers.
But an alleged international gang of cyberthieves managed to steal $45 million from thousands of ATMs in carefully coordinated attacks conducted in a matter of hours, federal authorities charged Thursday.
A four-count indictment unsealed in Brooklyn charged that eight members of the alleged gang's New York City crew alone stole approximately $2.4 million from nearly 3,000 ATMs across the metropolitan area in secret strikes carried out on two days in February.
"In the place of guns and masks, this cybercrime organization used laptops and the Internet," said Brooklyn U.S. Attorney Loretta Lynch as federal authorities announced details of one of the largest 21st century versions of cyber-robbery yet uncovered. "Moving as swiftly as data over the Internet, the organization worked its way from the computer systems of international corporations to the streets of New York City, with the defendants fanning out across Manhattan to steal millions of dollars from hundreds of ATMS."
Federal prosecutors and investigators said the alleged attacks are known in the cyberunderworld as "Unlimited Operations" — because using sophisticated computer-hacking techniques enable those involved to gain access to virtually unlimited criminal proceeds.
The schemes involve hacking into the computer systems of credit card processors, stealing information involving prepaid debit card accounts and eliminating the withdrawal limits and balances of those accounts. The moves enable international organized crime cells that work in swift, surgically coordinated attacks to withdraw unlimited amounts of cash from ATMs before the operations are shut down.
According to the indictment, the alleged gang carried out two lucrative unlimited operations between October 2012 and last month. In the initial attack, hackers working with the gang on Dec. 22 allegedly targeted a credit card processor that handled prepaid MasterCard debit cards issued by the National Bank of Ras Al-Khaimah, a United Arab Emirates bank also known as Rakbank.
After penetrating the processor's computer network, the hackers fraudulently manipulated the balances and withdrawal limits on Rakbank prepaid debit card accounts. Then, teams of so-called cashers allegedly launched carefully timed attacks that caused more than $5 million in criminal losses from more than 4,500 ATMs in about 20 countries.
In just two hours and 25 minutes, the thieves allegedly conducted 750 fraudulent transactions that withdrew nearly $400,000 from approximately 140 New York City ATM locations, according to prosecutors and the indictment.
The alleged second unlimited operation unfolded between the afternoon of Feb. 19 and the pre-dawn hours of the following day. This time, the gang's hackers allegedly compromised computers of the processor of prepaid debit cards for the Bank of Muscat, located in Oman.
In approximately 10 hours, casher cells in 24 countries conducted approximately 36,000 ATM transactions worldwide, withdrawing an estimated $40 million, the indictment charged. The haul included $2.4 million withdrawn by the alleged New York crew.
Authorities in more than a dozen countries around the world are working with U.S. counterparts on the investigation. The allegations announced Thursday did not identify the suspected mastermind leading the cyberattacks or the suspected computer hackers.
However the indictment charged the gang's New York group was headed by Alberto Yusi Lajud-Pena, 23, who was also known as "Prime" and "Albertico." He and gang confederates Elvis Rafael Rodriguez, 24, and Emir Yasser Yeje, 24, allegedly laundered hundreds of thousands of dollars stolen from the ATMs by depositing the cash in bank accounts and using the money to buy luxury cars and expensive watches.
In a single transaction, a total of nearly $150,000 in $20 bills was deposited in a Miami account controlled by Lajud-Pena, the indictment charged. He was found murdered in the Dominican Republic last month, authorities said.
Federal authorities have so far seized hundreds of thousands of dollars in cash and bank accounts, two Rolex watches and a Mercedes SUV. They are also seeking forfeiture of a Porsche Panamera, which, like the SUV, was allegedly bought with money stolen in the cyber scheme.
In all, seven of the eight suspected members of the gang's New York crew have been arrested and indicted on charges of conspiracy to commit access device fraud, money laundering conspiracy and money laundering. If convicted, they would face a maximum 10-year prison terms on each money laundering charge, 7.5 years on the access device fraud count and up to $250,000 in fines.
NEW YORK — They didn't use guns, masks or even threatening notes passed to bank tellers.
But an alleged international gang of cyberthieves managed to steal $45 million from thousands of ATMs in carefully coordinated attacks conducted in a matter of hours, federal authorities charged Thursday.
A four-count indictment unsealed in Brooklyn charged that eight members of the alleged gang's New York City crew alone stole approximately $2.4 million from nearly 3,000 ATMs across the metropolitan area in secret strikes carried out on two days in February.
"In the place of guns and masks, this cybercrime organization used laptops and the Internet," said Brooklyn U.S. Attorney Loretta Lynch as federal authorities announced details of one of the largest 21st century versions of cyber-robbery yet uncovered. "Moving as swiftly as data over the Internet, the organization worked its way from the computer systems of international corporations to the streets of New York City, with the defendants fanning out across Manhattan to steal millions of dollars from hundreds of ATMS."
Federal prosecutors and investigators said the alleged attacks are known in the cyberunderworld as "Unlimited Operations" — because using sophisticated computer-hacking techniques enable those involved to gain access to virtually unlimited criminal proceeds.
The schemes involve hacking into the computer systems of credit card processors, stealing information involving prepaid debit card accounts and eliminating the withdrawal limits and balances of those accounts. The moves enable international organized crime cells that work in swift, surgically coordinated attacks to withdraw unlimited amounts of cash from ATMs before the operations are shut down.
According to the indictment, the alleged gang carried out two lucrative unlimited operations between October 2012 and last month. In the initial attack, hackers working with the gang on Dec. 22 allegedly targeted a credit card processor that handled prepaid MasterCard debit cards issued by the National Bank of Ras Al-Khaimah, a United Arab Emirates bank also known as Rakbank.
After penetrating the processor's computer network, the hackers fraudulently manipulated the balances and withdrawal limits on Rakbank prepaid debit card accounts. Then, teams of so-called cashers allegedly launched carefully timed attacks that caused more than $5 million in criminal losses from more than 4,500 ATMs in about 20 countries.
In just two hours and 25 minutes, the thieves allegedly conducted 750 fraudulent transactions that withdrew nearly $400,000 from approximately 140 New York City ATM locations, according to prosecutors and the indictment.
The alleged second unlimited operation unfolded between the afternoon of Feb. 19 and the pre-dawn hours of the following day. This time, the gang's hackers allegedly compromised computers of the processor of prepaid debit cards for the Bank of Muscat, located in Oman.
In approximately 10 hours, casher cells in 24 countries conducted approximately 36,000 ATM transactions worldwide, withdrawing an estimated $40 million, the indictment charged. The haul included $2.4 million withdrawn by the alleged New York crew.
Authorities in more than a dozen countries around the world are working with U.S. counterparts on the investigation. The allegations announced Thursday did not identify the suspected mastermind leading the cyberattacks or the suspected computer hackers.
However the indictment charged the gang's New York group was headed by Alberto Yusi Lajud-Pena, 23, who was also known as "Prime" and "Albertico." He and gang confederates Elvis Rafael Rodriguez, 24, and Emir Yasser Yeje, 24, allegedly laundered hundreds of thousands of dollars stolen from the ATMs by depositing the cash in bank accounts and using the money to buy luxury cars and expensive watches.
In a single transaction, a total of nearly $150,000 in $20 bills was deposited in a Miami account controlled by Lajud-Pena, the indictment charged. He was found murdered in the Dominican Republic last month, authorities said.
Federal authorities have so far seized hundreds of thousands of dollars in cash and bank accounts, two Rolex watches and a Mercedes SUV. They are also seeking forfeiture of a Porsche Panamera, which, like the SUV, was allegedly bought with money stolen in the cyber scheme.
In all, seven of the eight suspected members of the gang's New York crew have been arrested and indicted on charges of conspiracy to commit access device fraud, money laundering conspiracy and money laundering. If convicted, they would face a maximum 10-year prison terms on each money laundering charge, 7.5 years on the access device fraud count and up to $250,000 in fines.
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