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Subscription music services -- the kind that let you hear an unlimited amount of music per month for a flat fee -- made their debut almost seven years ago, and yet the public remains stubbornly cool to the idea of paying for music you don't get to keep. Now, Microsoft is offering the first significant sweetener to the deal since the services added portability by letting subscribers to the Zune Pass service keep some of the songs they play. Ten, to be precise, and the songs will be in the DRM-free MP3 format.
The point, said Chris Stephenson, general manager of global marketing for Microsoft's Zune product line, is to make the concept of music subscription services more alluring to average consumers who still think of music as a product (like CDs) and not a service (like cable TV). The new Zune offer is a halfway house for recovering music collectors. The standard Zune offer had been $14.99 per month just to play songs freely from Zune's 4.4-million track library. The new offer carries the same price, but the inclusion of roughly $10 worth of MP3s means that subscribers pay a little more than $5 for unlimited access to the online tracks. For consumers, $5 a month for music you can't keep is a considerably smaller leap than $15.
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Money talks. But are Web surfers listening?
Microsoft's Live Search Cashback program, which offers incentives to Web surfers who click and buy goods from ads they are shown, hasn't necessarily increased the company's share of the search engine market. But the software giant says it's making progress in increasing its commercial search traffic.
It's pointing to a ComScore study it commissioned that reports that, among key retail categories in the second quarter, Microsoft had nearly 12% of the commercial transactions on websites in the U.S. and about 13% of total U.S. online spending.
According to Microsoft, users are responding in greater numbers than is typical on other search engines, driving up its share of ad dollars -- although not its share of the search market, which is about 10%.
Microsoft is trying to build loyalty among customers and advertisers. It says Live Search is getting a strong response from advertisers, with 30% growth in Cashback offers to customers from 20 of the top 50 online retailers in the U.S., including Gap and Saks Fifth Avenue. EBay has increased its search marketing spend with Microsoft threefold, Microsoft said.
What is unclear is the percentage of transactions and percentage of spending Microsoft had before it launched the Cashback program. And even less clear: Is paying people to use your search engine a viable long-term strategy?
-- Jessica Guynn
Photo: A Pakistani money changer shows U.S. dollar bills. Credit: Fareed Khan / Associated Press
Microsoft is making a social networking play. The Redmond, Wash.-based software giant is adding social networking features to its latest release of Windows Live.
An investor in popular social networking site Facebook, Microsoft has hundreds of millions of e-mail and instant-messaging users. But, like Yahoo, it has yet to tap the underlying social networks that connect those users.
In coming weeks, Microsoft plans to offer its users new ways to engage and share with their online friends. They can pull together contact lists, set up networks of people and create news feeds that feature Twitter updates, Flickr photos, Yelp reviews and other popular online activities.
Brian Hall, general manager for Windows Live, says Microsoft is trying to create a central hub where people can interact easily, whether sharing photos or planning events. That's an ambition that mirrors Yahoo's, and it puts Microsoft in competition with News Corp.'s MySpace and Facebook. Google is pursuing a similar strategy with its OpenSocial initiative.
Hall underscored that Microsoft is trying to simplify the Web experience by bringing together people and content scattered all over the Web and across personal computers, phones and other devices. Having one central place to organize and manage information relieves some of the social networking fatigue people are experiencing, he said. To that end, Microsoft formed partnerships with a number of companies including LinkedIn, Photobucket and Twitter.
-- Jessica Guynn
Windows Live profile page screen shot by Microsoft
 Microsoft, a distant third in the search market, has inked a distribution deal with a former foe in a bid to increase its share of search traffic.
U.S. Web surfers who are downloading Sun Microsystems' Java software will be asked if they'd like to also download a toolbar featuring a Microsoft Live Search box, under the deal announced today.
The Java software, which is needed to view some websites, is on 800 million desktops worldwide -- more than nine out of 10 personal computers connected to the Internet -- and gets tens of millions of downloads each month, according to Sun. The companies did not disclose the financial details of the pact. Sun has had similar deals with Google and Yahoo in the past.
Striking distribution deals is a key part of Microsoft's grand plan to catch up to Google. "This is the beginning of the execution of a new strategy for us," said Brad Goldberg, general manager of Microsoft Live Search. "Building out distribution is one of the key things we are focused on."
Redmond, Wash.-based Microsoft has been looking for ways to gin up more traffic since abandoning its effort to buy Yahoo in May. Microsoft Chief Executive Steve Ballmer last week dismissed speculation that he was still interested in buying Yahoo.
Microsoft is battling Google, which dominates search. Yahoo ranks second. Google snared 63% of the U.S. Web search market share in August, leaving Yahoo with 19.6% and Microsoft with 8.3%, according to research firm ComScore. Several analysts believe that Microsoft will still attempt to buy Yahoo's search business.
Microsoft seems focused, for the time being, on other strategies such as distribution deals. Its biggest coup so far was striking a deal with Hewlett-Packard to make its search engine the default on all personal computers shipped in the U.S. and Canada starting in January.
This time, Microsoft has teamed with one of the primary adversaries from its antitrust battles. In 2004, Sun netted nearly $2 billion in a patent and antitrust settlement from Microsoft. The computer-server maker is now struggling, posting a $1.7-billion loss last quarter.
-- Jessica Guynn
Photo: Microsoft Chief Executive Steve Ballmer. Credit: Tomohiro Ohsumi / Bloomberg News
 He had traded his trademark sandals for tennis shoes, but Facebook Chief Executive Mark Zuckerberg was still sporting his same old North Face fleece and that uncanny confidence beyond his 24 years.
Sitting with his back straighter than a steel rod, he calmly fielded questions from John Battelle at the Web 2.0 Summit in San Francisco today, batting a bemused smile from time to time.
"Do you need money?" Battelle asked about Facebook.
"No," Zuckerberg replied.
Last year, Battelle revved up the audience at the Internet industry gathering by asking Zuckerberg, "How's the financing going?" right before Facebook -- the Web darling du jour -- received a $240-million cash injection from Microsoft at a $15-billion valuation.
Now speculation is spreading in Silicon Valley that the social networking site, which last year also got another $120 million from Hong Kong billionaire Li Ka-Shing, is again raising money as it ...
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"It has been an amazing year," said Yahoo CEO Jerry Yang, taking the stage in front of about 1,000 people attending the Web 2.0 Summit in San Francisco. That's one way to put it.
 Just this morning, with the Department of Justice threatening to sue to block a proposed search advertising partnership, Google announced it was walking away rather than face a protracted legal fight.
"It's disappointing to us that Google didn't want to defend this deal," Yang told conference program chair John Battelle. Battelle interviewed Yang as part of the three-day conference, which is focused on the theme "Web meets world."
Google scuttling the search advertising partnership was just the latest setback in the tumultuous last nine months as Yang tries to save the company he founded 15 years ago. He has faced a testy takeover attempt by Microsoft and a bitter skirmish with activist investor Carl Icahn, who now sits on the Yahoo board.
And despite popular opinion on Wall Street, Yang insisted that he was and still is open to a sale to Microsoft. He also insisted that he is ...
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Google pulled out of its controversial advertising agreement with Yahoo this morning because of fears of a "protracted legal battle" with federal and state antitrust regulators concerned about the deal's impact on the online market.
The decision ends a four-month quest to get regulatory approval and a broader attempt to keep Yahoo out of the hands of Google rival Microsoft. The software giant led the charge against the Web advertising deal, stirring up opposition among advertisers and raising worries within the Bush administration and Congress about the potential impact of a partnership between the top two search engines.
With the deal already delayed and then revised in hopes of overcoming strong concerns from the Justice Department, Google announced in a blog post this morning it was pulling the plug because those steps were not enough to ...
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Wireless Internet access is about to undergo its largest ever expansion after federal regulators today approved a controversial plan to allow a new generation of mobile devices to use the empty airwaves between television channels for free Web surfing.
 Dubbed "Wi-Fi on steroids" by its supporters in the high-tech industry, the plan promises to offer free wireless Internet service across America and spur new systems for transmitting video and other data seamlessly between devices in their homes. The plan overcame staunch opposition from the entertainment industry, which is worried about the signals interfering with TV broadcasts and wireless microphones.
Though expected to be slower and possibly less secure than commercial services from cable and phone companies, the new Internet connections would ride on the highest-quality airwaves, able to carry signals long distances and easily penetrate trees and walls.
For decades, those airwaves have been reserved for TV stations. But, hoping to increase high-speed Internet access, the Federal Communications Commission unanimously approved a plan advocated by public interest groups and technology companies, including Google and Microsoft, to allow the use of the airwaves by new laptops, mobile phones and other gadgets with built-in equipment that's being developed.
The high-tech companies say the white spaces have the potential to provide revolutionary new wireless services that people could use for free,
unlike the spectrum leased by the government to cellphone companies,
which charge customers to access it. Google Chief Executive Eric Schmidt and Microsoft co-founder Bill Gates personally ...
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 Calling all soccer moms, Joe Six Packs and anyone else who doesn't play video games. Microsoft wants you.
The Redmond, Wash., technology giant is sprucing up its Xbox Live online game service next month to become more inviting to average consumers who may not know, or care, about Halo. The new look, scheduled to launch Nov. 19, lets people use Microsoft's Xbox 360 console to create and customize avatars, try out games and navigate through a library of 30,000 movies, TV shows and video clips.
To veteran Xbox players, this may not be overwhelming news. They already know how to get around Xbox Live to buy episodes of "South Park," download games and squeeze in a few live rounds of Halo with their friends -- all before breakfast.
For everyone else, Xbox Live can appear to be an intimidating playground for teenage males. That's why Microsoft has been working hard to make its service more approachable to lure in other consumers. It's also adding more mainstream content, such as on-demand movies from Netflix so viewers can stream films to their televisions from their Xboxes. Next year, Microsoft will host live game shows, called Primetime, that anyone can jump into.
Microsoft has some serious couch-time competition. Sony, which makes the PlayStation 3 console, has also announced ...
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Yahoo shares fell to a five-year low of $13.20 today before rebounding to close down 5.6% at $13.76, below even the lowest of the deflated price targets set by Wall Street analysts.
And this time, the Sunnyvale, Calif., company couldn’t even chalk up the drop to a bear market. Investors are increasingly concerned about how vulnerable Yahoo’s online display advertising business is as advertisers pull back on spending. The outlook continues to worsen as the economic slowdown and credit crunch spread around the globe.
 These days, nothing seems to be going Yahoo Chief Executive Jerry Yang's way. The company continues to lose Web search market share. Regulatory scrutiny has held up a proposed advertising partnership with Google that could deliver hundreds of millions of dollars in additional annual revenue. Two analysts cut price targets today ahead of what is projected to be a disappointing third-quarter earnings call on Oct. 21. Yahoo may have missed its best window to sell or spin off its stakes in Asian Internet firms, which have fallen in value. It is expected to lay off a significant chunk of its workforce as consultants from Bain & Co. scour the company for ways to save money. And investors are still hoping for a stock buyback, something, anything, to realize some value.
"We don’t see any change in operating trends. If there is a change, it's a change for the worse," Stanford Group Co. analyst Clayton Moran said. "With the global macro economic slowdown deepening, there really is no end in sight to Yahoo’s operational struggles."
So what's Yahoo to do? "Everything should be on the table," Moran said.
Hard to believe that it was just nine months ago that Yahoo spurned an unsolicited $31-a-share takeover offer from Microsoft. Despite an American Technology Research report today speculating that Microsoft would again bid for Yahoo, analysts say the chances of the software giant doing so are remote.
"Yahoo is trading on its fundamentals again," said Anthony Valencia, media analyst for TCW Group in Los Angeles. "People are much less confident, or not confident at all, that there is going to be another offer from Microsoft, which was keeping the stock a little higher than it should have been."
Microsoft is far more interested in Yahoo’s search business -- and AOL's too, if Yahoo's on-again, off-again merger talks with Time Warner to snap up the AOL Internet business bear fruit.
The possible combination of Yahoo and AOL gets mixed reviews. Some analysts and investors hope the two companies would be stronger together than they have been on their own. Collectively, they would have a huge stake in advertising, content and communications. And AOL would add about 5 percentage points to Yahoo’s 14% domestic search market share, Moran said.
That said, not everyone is a fan.
"AOL is a Band-Aid to a bigger problem," Moran said. "It could appear to address the issues, but in reality I think it would come up short."
Yet, even as talks intensify, one major investor who wants the deal to move forward said he was not holding his breath. "It’s like waiting for Godot," he said.
-- Jessica Guynn
Photo: Jerry Yang Credit: Mark Lennihan / Associated Press
Shortly after Google unveiled Chrome, Chief Executive Eric Schmidt said the new Web browser "represents some of the best Google can do." Then he encouraged everyone to try it.
But not many people are. Chrome gained market share within the first 24 hours of its release on Sept. 2, but since then it has given back much of those small gains to the leaders, Microsoft's Internet Explorer and Mozilla's Firefox, according to Vince Vizzaccaro, executive vice president of marketing and strategic alliances at Internet measurement firm Net Applications.
Chrome shot up to 1% of the market but has since fallen to 0.77% as of last week, according to Net Applications. Apple's Safari was not affected since Google has yet to release a version to run on the Mac operating system. Chrome is currently duking it out with Opera Software ASA's Opera for fourth place. Net Applications bases its findings on tracking the browsers of unique visitors to 2 million websites around the globe. As you can see in the accompanying chart, Chrome use spiked after it launched the week of Aug. 31 and rose a little the following week but then slipped.
"Chrome started off pretty fast and furious," Vizzaccaro said. "Within 24 hours they surpassed 1% of usage market share which was shocking and impressive. Since then, they have been slowly fading in market percentages. The trend has a slight downward angle to it."
Microsoft declined to comment other than to pump up its latest version of Explorer as "faster, easier, more safe and reliable than ever before."
Mozilla's John Lilly said it was premature to draw any conclusions. "It's only been three weeks," he said. "That's not a helluva lot of time. We don't know anything about anything yet." That said: "We are seeing lots and lots of users come back."
So, if users are returning to Explorer and Firefox, why? Are they not convinced that Chrome offers the speed or features that would get them to ditch their current browsers? Are they concerned about privacy? It's hard to tell, although Chrome gets more usage at night than during the day when people are at work using corporate-sanctioned browsers. A Google spokeswoman issued the following statement: "We're pleased with the response we've gotten from users thus far."
To reverse the slide, Google will have to market Chrome, Vizzaccaro said. Thus far, Google has settled for promoting it on its home page and sponsoring links on the Google and Yahoo search engines.
So far, there have been no announcements about deals with vendors such as Dell and Hewlett-Packard to get Chrome preloaded on personal computers. (That's how Microsoft trounced Netscape during the first browser wars back in the 1990s, although Firefox has captured market share without crafting such deals.)
But, like with most things Google, Chrome is not your ordinary browser. Consider how Schmidt described Chrome: "Chrome is more than a browser, it is a platform for applications," he said. "From my perspective, the Chrome announcement is the beginning of a new platform."
That platform will host Google's online applications such as word processing and spreadsheets to compete with Microsoft's lucrative office software empire.
-- Jessica Guynn
Market share graphic by Wil Ramirez / Los Angeles Times
Photo: Google CEO Eric Schmidt. Credit: Matthew Staver / Bloomberg News
* Post updated to explain why Chrome was showing up on the research firm's measurements Aug. 31 when the browser launched Sept. 2; the measurements covered the week of Aug. 31.
 The presidential race between Republican John McCain and Democrat Barack Obama is a virtual dead heat in much of the real world. But it's not so close in one virtual world.
Obama leads McCain 43% to 31% among the nearly 100,000 votes cast as of Friday on Xbox Live, according to Microsoft, which runs the online game service. The voting is part of a partnership between Microsoft and Rock the Vote, which allows Xbox 360 users to cast their presidential preferences via their game controllers.
The initiative also allows Xbox Live members to register to vote for real. So far, 55,000 registration forms have been downloaded since the program began on Aug. 25, the first day of the Democratic National Convention. (You've got to be 18 to vote, but there's no age restriction on the Xbox Live poll.)
Rock the Vote, which mobilizes young people to get involved in the political process, wants to register 2 million young voters for this fall's election. The group noted that if XBox Live were a state, its 12 million members would make it the country's 7th largest, with the same number of electoral votes as Ohio.
But Xbox Live isn't a state in play. It's a state of play, where making a presidential choice can be done with a flick of the thumb in about the time it takes to slice up a Jawa in Star Wars: The Force Unleashed. Casting a real ballot is much harder: You can't do it from the comfort of your home; it often involves more cumbersome technology; and the lines can be long (for gamers who've never voted, think of the wait some people endured to get their hands on the Xbox 360 when it was released).
So although Xbox Live users represent a chunk of the youth demographic, which could swing key states such as Nevada, a big question remains: Will online gamers rip themselves away from the likes of Guitar Hero and Madden NFL 09 to go to the polls Nov. 4?
-- Jim Puzzanghera
Photo: Xbox 360 controller. Credit: Dominic via Flickr
 UPDATED 2:05 P.M.: Another group added its voice to a growing chorus of opposition. The World Federation of Advertisers, which says it represents 55 national advertiser associations around the globe, said today that it has asked European regulators to block the partnership.
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Let the dissent begin.
Tomorrow Yahoo's revamped board of directors will meet for the first time with billionaire activist Carl Icahn taking a seat -- and apparently taking a stand on his previous argument that Yahoo needs to craft a deal with Microsoft. Oh, to be a fly on that boardroom wall.
Icahn and two of his allies were elected after Yahoo's annual meeting last month in a truce brokered to end an acrimonious proxy fight for control of the Internet company.
Icahn replaced Activision Blizzard honcho Bobby Kotick on the board. Former Viacom CEO Frank Biondi Jr. and former Nextel CEO John Chapple were also appointed to the expanded 11-member board.
Icahn will get the opportunity to push for a Microsoft deal from Yahoo's board. He told CNBC on Friday: "Yahoo is a really great company, but I think they have to do something with Microsoft or Google is going to kill them."
That's not the prevailing view among Yahoo managers, who have been forcefully making the case that a controversial search advertising partnership with Google would be its salvation. It's a key part of the argument advanced by Chief Executive Jerry Yang and others that Yahoo is a viable, independent company. Yahoo is also said to continue serious talks with Time Warner's AOL unit.
The proposed Google partnership faces intense scrutiny from U.S. and European regulators and attorneys general, including in California, as well as opposition from some U.S. advertisers and the World Assn. of Newspapers. Yet Yahoo and Google say they are committed to the deal, which they expect to launch next month.
In a letter on Friday to Assn. of National Advertisers President and CEO Robert Liodice regarding his organization's opposition to the search advertising pact, Yahoo's head of U.S. operations, Hilary Schneider, argued the pact would give advertisers more and better options while strengthening Yahoo's ability to compete in all aspects of online advertising, including search. She also rejected the contention that the pact would raise prices for advertisers.
Yang will also make his case to advertising executives this week with an address in New York.
-- Jessica Guynn
Photo: Carl Icahn. Credit: Mark Lennihan / Associated Press
The reviews are in on Microsoft's newest TV ads, which began airing Thursday night.
Taking on Apple's "I'm a Mac. I'm a PC," campaign, in which the PC looks out of touch and clumsy, the Microsoft ads include celebrities such as Eva Longoria and Microsoft co-founder Bill Gates, plus numerous Microsoft employees and regular people. With the refrain, "I'm a PC," each person adds something about themselves: I'm a PC and I wear glasses. I'm a PC and my name is Roger. The upshot: all kinds of human beings use PCs.
My favorite is writer Deepak Chopra's, "I'm a PC and a human being. Not a human doing. Not a human thinking. A human being."
Maria Russo of Web Scout says the message is too fuzzy, expressing the vague idea that the world is a place of interconnected PCs. Kara Swisher at AllThingsD says the ads are better than the Jerry Seinfeld/Gates ones that aired earlier this month, but they're still a little too it's-a-small-world-after-all. But the ads do succeed in diffusing the elitism of the Apple ads, says Michael Arrington at TechCrunch. Yes, Apple has been outmaneuvered, says Gizmodo.
Microsoft is asking people to make their own video about being a PC, which the company will air on videos in Times Square. Of course, that means there will be some "I'm a Mac" submissions, says Mashable.
The whole campaign of course raises the question: Do people really identify as a PC or a Mac? Maybe so, if you are a Mac person. But it seems as if PC people (and this is obviously the point of the ad) tend to identify as other things. For example, as someone who wears glasses.
Still, Microsoft's campaign must be working. When was the last time we talked about the Redmond, Wash., software giant so much?
-- Michelle Quinn
 Google is aggressively campaigning for its proposed search advertising partnership with Yahoo, trying to ease fears among advertisers as the Justice Department weighs whether to bless, block or curb the deal.
Last week it was Yahoo's turn, with U.S. operations head Hilary Schneider defending the deal. Here's a recap of the week's Google spin:
First, it trotted out its chief economist, Hal Varian, to argue for the deal on the company's policy blog. Varian took issue with a SearchIgnite study claiming the partnership would result in higher prices for advertisers.
Then, Tim Armstrong, Google's president of advertising and commerce in North America, joined co-founders Larry Page and Sergey Brin and chairman and CEO Eric Schmidt in a media roundtable during the Internet search giant's Zeitgeist conference. They argued that the partnership not only complied with antitrust laws but would benefit users, advertisers and publishers.
Brin said that Google owed it to Yahoo to move forward with the partnership and to help assure that Yahoo would remain an independent company. After all, it was Yahoo co-founders Jerry Yang and David Filo
who convinced Brin and Page ...
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 After ending its Bill Gates and Jerry Seinfeld TV commercials, Microsoft today begins rolling out the second phase of its advertising campaign for Windows. The new spots, which will begin airing on TV tonight, play off Apple's "I'm a Mac." "I'm a PC" ad campaign, in which young Mac guy makes older, stuffier PC guy look out of touch and clumsy.
Microsoft is embracing the "I'm a PC" identity with cameos from writer Deepak Chopra, actress Eva Longoria, singer Pharrell Williams and a handful of Microsoft employees, including Sean, pictured above, a software engineer. He is dressed like John Hodgman, the actor who plays the PC in the Apple ads, and gets right to the point when he says, "Hi, I'm a PC. And I've been turned into a stereotype."
 The ad campaign, which Microsoft calls "Life without walls," is part of a broader effort by the Redmond, Wash.-based software company to engage directly with its customers. That's something the company hasn't done as much in recent years, allowing its hardware partners to take the lead.
"Life without walls" is reminiscent of other ad campaigns in which a competitor takes on the message of its rival's marketing, such as Hertz taking on Avis, says the New York Times.
The small bits I've seen ironically echo identity politics ("I'm queer and proud").
Eric Hollreiser, a Microsoft spokesman, said the ad campaign was "about showing a community of 1 billion users and looking at the diversity of people using a PC to connect in a way that doesn't create barriers."
"It tells the Windows story in our own voice and takes back what being a PC is all about," he said.
Power to the PC.
-- Michelle Quinn
I'm a PC ad campaign images by Microsoft
Google held its version of the World Economic Forum today, except the setting wasn't Davos but the Internet search giant’s Mountain View, Calif., campus for its Zeitgeist conference. The guests held similar stature in the worlds of business and entertainment: former vice president and current board member Al Gore, General Electric Chief Executive Jeffrey Immelt and Hollywood actors Leonardo DiCaprio and Forrest Whitaker.
 Google CEO Eric Schmidt and co-founders Larry Page and Sergey Brin took a timeout from the festivities to hold a media roundtable. They discussed a broad range of topics, including the new Google-powered Android phone (although Page declined to show reporters the one he was toting). As they have for months, they fielded a flurry of questions about the proposed search advertising partnership with Yahoo being scrutinized by the Justice Department, European Commission and attorneys general in a number of states including California.
Here are some of the highlights:
ON YAHOO
Schmidt says Google will go forward with the advertising partnership with or without regulators’ blessing in October. He noted that both companies delayed the partnership for four months to give regulators a chance to review it. He called it a "signed and binding contract."
"Time is money in our business," he said. "We spent months and months and months to come up with a deal that is good for both companies. We are very committed to the deal."
Asked a series of hypothetical questions about what Google would do if the Justice Department tried to limit or block the deal, Schmidt said: "We have been talking to regulators. We do not know their position. We do not know if they think it’s a great deal, a poor deal or if they want changes. I think it’s a mistake for Google to speculate. We honestly just don’t know."
But the details worked out over five months do matter, Schmidt said. So any changes would ...
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 Microsoft is preparing to pull its TV ads featuring comedian Jerry Seinfeld and Microsoft's co-founder and chairman Bill Gates.
Microsoft spokesman Frank Shaw said the end of the Seinfeld ads was planned well in advance, and wasn't coming in response to any criticism of the spots. "All along we said we were having a teaser campaign," he said. "We're getting ready to start the second phase. This was the plan all along."
The news, broken this afternoon by Valleywag, comes just days after Microsoft aired the latest in the series of commercials, produced by Crispin Porter + Bogusky, featuring the two men in comic situations. The ads have been largely panned as a strained effort on the software giant's part to not only promote Windows but also portray Microsoft as cool and in touch with regular consumers -- basically, to counter the stodgy image painted in Apple's "I'm a Mac, I'm a PC" ads.
Seinfeld, who reportedly received $10 million for his efforts, was a superstar in the 1990s with his hit show. Using him now, in 2008, only added to Microsoft's image as being behind the times, critics said. Some viewers, such as the writers on Ars Technica, said the ads just left them scratching their heads. (If you can't easily find the ads on YouTube, Microsoft provides them on its site).
In the first ad, the two meet each other in a mall and pick out new shoes. In the next ad, which is in two parts, Gates and Seinfeld stay with a so-called normal family so they can work on a shared problem: To break out of their elite bubbles and connect with real people.
But the stay with the family doesn't go well, culminating with Bill Gates telling a little girl, "You're not so real." (I actually howled.)
Just unleash Gates, without the cardigan and avuncular image, sticking it to the smug "I'm a Mac" guy.
-- Michelle Quinn
Bill Gates and Jerry Seinfeld in a TV ad by Microsoft
 Who better than Google's chief economist to defend the company's proposed search advertising partnership with Yahoo?
In a blog post on the company's website today, Hal Varian countered growing public criticism and antitrust scrutiny of the partnership by rejecting fears that it would increase the cost of search advertising. He also contended that the partnership would provide Yahoo with better advertising.
In particular, he took aim at a study released in July by SearchIgnite. It concluded that the cost of buying keywords on Yahoo would jump by an average of 22%. On the contrary, Varian argued, advertisers will get more bang for their buck. Google and Yahoo have been making a similar argument behind the scenes.
"The report fails to acknowledge that ad prices are not set by Yahoo or Google, but by advertisers themselves, through the auction process. Since advertisers set prices themselves via an auction, the prices must ultimately reflect advertiser values. That process will remain completely unchanged by our agreement."
Varian noted that neither company would be privy to the auction prices of the other. And, he said, Google has thrived not simply by charging marketers each time someone clicks on their ads but by delivering advertising that's "highly relevant" to the terms Google users are searching for. Further, Yahoo will serve Google ads only next to search results for which Yahoo itself has few relevant ads, Varian wrote: We have found that advertisers are generally willing to pay more per click so long as those clicks result in more sales. We anticipate that our agreement with Yahoo will bring more relevant ads to Yahoo users -- which is better for both advertisers and users.
Varian is a professor of economics, information management and business who's on leave from UC Berkeley. His academic gravitas comes in handy in sensitive situations. He also weighed in when Wall Street feared Google would suffer in the economic downturn.
Google says the search advertising pact, announced in June after merger talks between Yahoo and Microsoft collapsed, was designed to increase competition and help Yahoo remain independent. But the partnership has drawn concern that it would reduce competition in online advertising.
The partnership is expected to begin next month. Google and Yahoo executives say they voluntarily postponed it to give regulators a chance to review it. Attorneys general in California and other states, as well as regulators in Canada and Europe, are also scrutinizing the pact. Microsoft opposes it. The U.S. Justice Department has hired a top litigator to review the deal for possible antitrust violations. Yahoo executive Hilary Schneider said last week that Yahoo was confident that regulators would clear the deal.
-- Jessica Guynn
Photo: Hal Varian. Credit: UC Berkeley
The European Union's Competition Commission said today it was reviewing Google's proposed Web search advertising pact with Yahoo, another potential roadblock to a deal that is drawing increasing fire from advertisers.
Jonathan Todd, a spokesman for the competition commission, told The Times that an informal review began in July. Although Google and Yahoo have limited their deal to the United States and Canada, the cooperation between the two companies could violate European Commission rules on price-fixing and sharing of sensitive business information, he said.
"The European Commission is looking at possible effects of the Yahoo/Google agreement on the European Economic Area market in relation to EC Treaty rules on restrictive business practices," Todd said.
If the commission decides to launch a formal investigation, it could pose major problems for Google and Yahoo. Under Competition Commissioner Neelie Kroes (pictured above), European regulators have been more aggressive than U.S. officials about enforcing antitrust regulations in recent years.
Google spokesman Adam Kovacevich said this morning the Mountain View, Calif., company was cooperating with European regulators.
"The agreement is limited in scope to Yahoo's U.S. and Canadian websites, and it will not have any significant effect on Europe," he said. "We are of course cooperating with the commission and are confident that they will reach the same conclusion."
A Yahoo spokesman did not immediately respond to a request for comment.
The informal European review comes as U.S. Justice Department antitrust regulators study the deal, along with ...
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 The music industry discovered a few years ago that the DRM it was using to deter copying wasn't locking down songs as well as it was locking customers to a particular vendor: Apple's iTunes Store. So the major labels have grudgingly abandoned Digital Restrictions Management, or DRM, on paid downloads, although they still require encryption to be used on other products such as all-you-can-eat music subscription services.
Now, Hollywood is looking at a similar problem posed by DRM. It hasn't stopped piracy, and it's certainly not helping the sale of downloadable movies. It's also laid the groundwork for a repeat of the iTunes phenomenon: with dueling DRMs that work with different sets of devices, consumers may flock to a single supplier to avoid compatibility problems.
Against that backdrop, a group of studios and record labels have joined with a handful of major technology companies, ISPs and retailers in a coalition to develop a new approach to distributing content digitally. Think of it as a standard for media delivered through the Net, in the way that DVD is a standard for packaged movies and CD is a standard for packaged songs. It's also a very ambitious attempt to make DRM palatable to consumers. Some anti-DRM forces might argue that the effort is a bit like, let's see, what's an analogy that no one will misinterpret ... painting lipstick on a pig. But the proponents say it's really about giving customers what they want. If the initiative works as intended, it will remove the barriers to customers watching or listening to the content they acquire on any of their devices, wherever they happen to be. No one will notice the locks on a file until they try to IM it to a friend. That's the theory, at least.
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Today, for the first time since it fought off an unsolicited takeover bid from Microsoft, Yahoo threw open its doors to give the media a glimpse of what it has planned to improve its waning fortunes.
The event at its Sunnyvale, Calif., headquarters was all about Yahoo's new mantra: be open. It featured a lineup of executives who showed off how they plan to redesign popular parts of Yahoo to include more content from elsewhere on the Web.
 Executives say the changes are designed to enhance the Yahoo experience for its more than 500 million users worldwide and for its advertisers. It's a bid to help Yahoo attract and engage more users while recapturing momentum it has lost to Internet search giant Google and up-and-comers such as Facebook. Yahoo's Web traffic in August fell 10% from the previous year, according to research firm ComScore.The company's stock price reflects its struggles, recently falling to its lowest level in nearly five years, well below Microsoft's offer of $33 a share (the stock had a good day today, rising nearly 5% to $18.55).
Users want different things from the Yahoo home page, said Ash Patel (pictured at right), executive vice president of Yahoo's audience product division. One or two extra features might make the home page perfect for someone, he said. "But what those one or two things are is different for me, different for you, different for everybody."
So Yahoo is trying a lot. Among the highlights:
Yahoo will redesign its home page for the first time since 2006. Patel said users would be able to tailor the home page and the Yahoo Mail inbox to their personal interests. They'll be able to add applications or widgets so they can see, for example, how their friends rate movies on Netflix, without having to leave the home page or the inbox. The redesign will roll out over the next few months.
 Yahoo plans to open up its music site to rival services such as Apple's iTunes and Amazon.com, said Scott Moore (pictured at left), who heads Yahoo's media operations. Yahoo will also revamp its news section to include more user-friendly features and to feature more local content. And Moore said Yahoo was getting traction with users and sponsors for its original content such as Primetime in No Time and Tech Ticker.
On mobile devices, Yahoo is trying to attract software developers to use its Blueprint platform to create new applications. On television, Yahoo is working with Intel and others to bring widgets such as Flickr, Yahoo's photo-sharing service, to television. The widgets would display Web content along the bottom or side of the TV screen.
Time Warner's AOL made some similar moves this week, launching a redesigned home page and welcoming content from rivals. The idea for big Internet portals is to appeal to more people by bringing the best of the Web to users on and off their sites.
 Hilary Schneider (pictured at right), who runs Yahoo's U.S. operations, said Yahoo remained committed to an advertising partnership with Google that's set to debut next month despite intensifying scrutiny from the Justice Department. Regulators have hired veteran antitrust lawyer Sanford Litvack to review the matter. Microsoft and some advertisers oppose the partnership, saying it would reduce competition and lead to higher prices. The Assn. of National Advertisers has asked the DOJ to block the deal.
Combined, Yahoo and Google control more than 80% of the U.S. search advertising market. Yahoo says the partnership, which would involve using some of Google's technology to sell ads on Yahoo, could boost its annual revenue by $800 million.
Schneider said the two companies voluntarily waited until October to give regulators a chance to assess the situation. She said that she was "confident" regulators would be comfortable with the partnership and that Yahoo planned to move forward next month even if the review wasn't finished. She would not say how crucial the partnership is to Yahoo, which has been buffeted by takeover battles, management turmoil and other problems.
"Our users are in control," Moore said. "We're not doing this open thing because it is the flavor of the month."
Then he offered the line of the day. In a twist on the famous line by country singer Barbara Mandrell, Moore said:"We were open before open was cool."
-- Jessica Guynn
Photos: From top, Yahoo executives Ash Patel, Scott Moore and Hilary Schneider. Credit: Yahoo
Microsoft today unveiled its fall line up of Zunes ($249 for the 120 gigabyte model; $199 for the 16 gigabyte model and $149 for the 8 gig flash model) and a bunch of new features, such as the ability to buy music if you hear a song on the Zune's FM receiver and search wirelessly for new music.
And yes, Microsoft is introducing a Pandora-like algorithm that gives you music recommendations and channels from scanning your music library. The service will create channels for you as well, based on what you listen to and what others similar to you like.
But the thing that intrigued me comes with the Zune free PC software download. It's a program called "Mixview."
The service creates a visual map of artists' influences, similar acts, bands they influence and the libraries of the top listeners of the artists. In other words, this could settle epic battles among friends and spouses, some whom like to lord their music knowledge over others who didn't happen to see the Clash live four times. I plan to consult Mixview as soon as it is available (next week) to see if it agrees with my contention that the Montreal band Arcade Fire has genetic links to David Bowie and to Prefab Sprout, an indie band from the 1980s.
Mixview could have an addictive quality. At Microsoft, the Zune team plays with Mixview as if it were the game "Six degrees of Kevin Bacon," Microsoft spokesman Adam Sohn said.
They challenge each other over who can guess the connections between the music of Sarah McLachlan and Ozzy Osbourne, he said.
If you don't have a Zune Marketplace subscription ($14.99 a month), you won't be able to listen to more than 30 seconds of any tracks. Nor can you take Mixview with you on your non-Zune MP3 player. Sohn says Microsoft is hoping that Mixview and other Zune social networking experiences will be "on-ramps" for people to buy into the Zune hardware and marketplace. "We think this experience is so cool, people will want to transact at the store," Sohn says.
-- Michelle Quinn
Photo: New Zunes. Credit: Microsoft
One thing about the folks at Microsoft: They don't give up. And that has been true for the Zune, its digital music player, which the company keeps upgrading even with Apple dominating the market.
 Today, in advance of an Apple event Tuesday, Microsoft released a host of new features for the Zune, which has about 4% of the market, compared with 71% for Apple's iPod, according to NPD Group.
Among the new features, Zune will enable its users to download music wirelessly and to buy songs they hear on the built-in FM radio. A new crop of Zunes will come in 16 gigabytes and 120 gigabytes and in new colors -- blue on silver and all black. And Zune will start offering recommendations based on the music users listen to.
I'm meeting with the Zune folks this afternoon, so I'll update soon with more information.
But the timing of the Zune news, which was leaked one day early by a retailer, comes as Apple is expected to refresh its iPod line as well as possibly make changes to the iTunes online store. Whatever the news, excitement is waning. In the last five 5 days, Apple shares have fallen more than 8% as analysts have lowered expectations for the event.
Expect a revamped iPod Nano and maybe a slimmer, cheaper iPod Touch, Shaw Wu of American Technology Research said in a note this morning. "While there is always room for surprise, it seems this event may be somewhat underwhelming vs. previous expectations and events," he said.
-- Michelle Quinn
Photo: From left, a Zune MP3 player and an iPod in November 2006. Credit: George Frey Bloomberg News
How low will it go?
That's the question Yahoo shareholders are asking themselves as the stock price fell today to $17.75, the lowest in five years and nearly a dollar below where it was in May when Microsoft offered Yahoo $33 a share.
Yahoo rejected the $47.5-billion offer only to agree to it after Microsoft walked away.
The Sunnyvale, Calif., company argued that Microsoft's offer undervalued the Internet pioneer. Now it seems the market is undervaluing Yahoo.
"I am surprised that we haven't seen more action from Yahoo in terms of doing things to create more shareholder value," Standard & Poor's analyst Scott Kessler said.
To make matters worse for down-in-the-dumps Yahoo shareholders, the stock drop coincided with an analyst report predicting that the nation's economic downturn would hurt display advertising sales.
Yahoo had hoped that its strength in display advertising could help fuel a comeback and competition with Google, which makes its money from text search ads. Yahoo must still clear regulatory hurdles to consummate a partnership with Google by which Google is going to sell ads alongside Yahoo search results. Yahoo has estimated that the partnership could boost annual revenue by $800 million.
Could Yahoo's slumping stock price spell trouble for Yahoo co-founder and Chief Executive Jerry Yang? Yang drew investor ire for his role in the Microsoft negotiations and skepticism for his pledge to increase Yahoo's net revenue by at least 25% in each of the next two years.
"You've been Yanged," one disgruntled Yahoo shareholder wrote on -- where else? -- the Yahoo Finance message board today after the stock dropped.
Yahoo's board has stood by Yang, but now it has three new members: billionaire activist Carl Icahn, who gave up a proxy fight in return for the seats, Frank Biondi Jr. and John Chapple.
And investors have made their feelings clear. In a vote at Yahoo's annual meeting last month, nearly 34% opposed Yang's reelection to the board and nearly 40% opposed Bostock's reelection.
"If Yahoo continues to over-promise and under-deliver, I imagine that management will become even more vulnerable," Kessler said.
Canaccord Adams analyst Colin Gillis says the true test for Yang will be this quarter's results.
"Yahoo does have a strategy," Gillis said. "They have to get out there and keep telling the story. They have to build up a long-term investor base."
But as the stock sinks lower, Yahoo could find itself right back where it started: the subject of another takeover attempt, Gillis said.
For its part, Microsoft today put the chances of reviving its bid for Yahoo at "negligible."
-- Jessica Guynn
Photo by Paul Sakuma / Associated Press
 Google is making another aggressive move to woo business customers with a new product it is pitching as the YouTube for business.
As part of its package of online software that includes e-mail, instant messaging, calendars, word processing and spreadsheets, Google is now offering video to companies.
YouTube helped jump-start the online video craze with consumers. Corporate parent Google Inc. is banking that it can do the same in the business world.
The free add-on to Google Apps allows employees to upload a video -- say a training video, a corporate announcement or highlights of a sales conference -- and then invite colleagues to view it securely. Employees can also comment on videos, add descriptions and tags, embed videos in internal Web pages, search for any video to which they have access or download videos to their laptops or phones.
It's another salvo in the clash of the tech titans, which has heated up with Google's marketing of online software to compete with Microsoft's lucrative Office business. Microsoft, meanwhile, has spent billions and tried to buy Yahoo to compete with Google in search and advertising. And the companies also battle over online maps, cellphones and, yes, video.
Microsoft is fighting back by throwing lots of money and talent to make more of its software ...
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UPDATED SEPT. 2: Read the story about Google's browser from Tuesday's LA Times for analyst reaction and more details about what's at stake.
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Google is releasing its own Web browser to compete with the likes of Internet Explorer and Firefox, trying to dominate not only what people do on the Web but also how they get there.
It’s yet another salvo in the intensifying battle with Microsoft, which recently released a new version of Internet Explorer that makes it easier to block ads from Google and others.
A beta version of Google's browser for Windows, called Google Chrome, will debut Tuesday in more than 100 countries. It will offer features that make it easier and faster to browse the Web. It will also be an open source product, meaning anyone can modify the software code.
The move is considered audacious given Microsoft’s dominance with the Explorer browser. It also could spell trouble for Firefox, a free browser that is gaining in popularity. Mozilla, the nonprofit organization that runs Firefox, has benefited from engineering help and money from Google. Just last week, Google and Mozilla extended their partnership through 2011.
News about the Google browser, rumored for years, broke Monday after the blog Google Blogoscoped reported receiving a comic book from Google outlining the details of the new browser. A Google blog post explained that it inadvertently released the news.
"We believe we can add value for users and, at the same time, help drive innovation on the Web," the post said.
The browser, which Google says was built from scratch, has been in the works for two years. It is intended as a "modern platform for Web pages and applications" that can run faster and be more responsive, according to the post.
-- Jessica Guynn
Lots of parents don't like their kids to play violent video games. Some are even more concerned about their kids playing Grand Theft Auto than they are about their kids watching porn or drinking beer.
But what they don't know is that video games may help their kids get jobs. As screenwriters. And agents.
Well, kind of. A group of young Hollywood execs started playing Gears of War together on Xbox Live so they wouldn't get mocked by teenagers who were better at the game than they were. They dubbed their group Nerd Poker, and it has grown to nearly 100 members. It also has led to networking opportunities (including some elusive Hollywood "meetings") between players who barely knew each other before they started blowing each others' heads off. See, Mom? Games are good for you.
You can check out the full story about Nerd Poker here.
-- Alana Semuels
Photo: From left, Nerd Poker founders Derek Douglas, Ben Fritz, Kevin Chang and Justin Marks. Credit: Ringo H.W. Chiu / For the Times
As we wrote earlier this year, Google is getting the hang of influencing policy in Washington. The company took another step -- albeit a small one -- today as it pushed federal regulators to open up a swath of wireless airwaves to Internet access.
For the first time, Google has launched an advocacy website, FreeTheAirwaves.com, to urge the Federal Communications Commission to allow yet-to-be-developed mobile gadgets to surf the Internet on vacant TV channels. The site includes an online petition that produces a form letter to the FCC, and it also allows people to upload to a special YouTube channel their own video testimonials about the importance of expanded wireless broadband access (such as the one above by Matthew Rantanen of Tribal Digital Village, which provides wireless Internet service to Indian tribes in San Diego and Riverside counties).
"Google is a strong believer in the potential of this spectrum to bring Internet access to more of the country," Minnie Ingersoll, product manager for Google's Alternative Access Team, told reporters in a conference call today. "Now is an important time for people who care about the future of the Internet to make their voices heard."
Google, joined by other leading high-tech companies such as Microsoft and Dell, as well as some public interest groups, is locked in a battle with broadcasters over access to the unused TV channels in each market. Those airwaves are known as "white spaces."
The tech and public interest groups want the FCC to treat those airwaves like Wi-Fi, allowing anybody to use them for free with any mobile device they want. That's different from the spectrum that wireless phone companies such as Verizon and AT&T lease from the federal government; they limit the type of devices that can access it.
TV has some of the best airwaves, able to carry ...
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 Yahoo today named former Viacom chief Frank Biondi Jr. and ex-Nextel boss John Chapple to its board of directors, fulfilling a promise it made to settle the proxy fight with agitator-investor Carl Icahn.
Both men had been on a slate of candidates for the board Icahn put forward after Yahoo failed to sell itself to Microsoft. After it became likely that Icahn wouldn't win enough shareholder votes to get control of the board, he accepted a compromise that gave him one seat and Yahoo's pick of his allies two more.
"Frank's extensive experience in the entertainment and media industries, combined with John's deep management experience in telecommunications, will provide valuable perspectives to our already diverse board," Yahoo Chairman Roy Bostock said in a prepared statement. "We look forward to working with them as our board continues its ongoing efforts to enhance stockholder value."
Biondi was CEO of Universal Studios between 1996 and 1998; before that, he spent more than eight years as CEO of Viacom. Chapple was CEO of Nextel Partners from 1998 until 2006, when Sprint bought the company.
Former AOL Chief CEO Jonathan Miller, an ally of both Icahn and Yahoo CEO Jerry Yang, had been seen as a shoo-in for the board. But Miller's candidacy was derailed when AOL parent Time Warner invoked the noncompete clause he had signed.
-- Joseph Menn
Photo: Frank Biondi. Credit: Sam Mircovich / Reuters
 Acclaimed Internet security researcher Dan Kaminsky detailed a flaw in the current architecture of the Internet today, firing the starting gun for a race between hackers who can now take advantage of the vulnerability and the big companies who have yet to patch their systems.
Speaking to hundreds of technology security professionals and enthusiasts at the annual Black Hat conference in Las Vegas, Kaminsky said that a majority of the Fortune 500 have protected their machines with a series of fixes developed in secret since March.
Kaminsky coordinated an industry-wide effort that brought out patches from Microsoft, Cisco, Sun Microsystems and other major technology vendors, and customers began applying them after he issued a public warning a month ago.
The hole lies in the Domain Name System, which steers Internet users seeking a site by title, such as www.google.com, to a numerical address. Kaminsky showed today how hackers could corrupt the process, taking users to an imitation site that could install malicious programs.
He called the problem the worst discovered since 1997. The standing-room only crowd gave Kaminsky two ovations, in part for the technical significance of the find and in part for his handling of the crisis. Microsoft, Google, Yahoo, Facebook, MySpace, EBay and many Internet service providers have secured their machines.
"We got lucky with this bug," Kaminsky said in his talk, saying other profound flaws are lurking that will be just as hard to resolve. "We have to have disaster-recovery planning. The 90-days-to-fix-it thing isn't going to fly."
 Kaminsky also showed how the flaw could be used to attack places that some professionals had believed immune.
The Secure Sockets Layer, signified by "https://" at the beginning of a website address, could be circumvented, as one example. Impostors could fool the authentication companies, such as Verisign, and so get an approved digital certificate shown to site visitors, though Kaminsky said those companies have revamped their procedures. A large number of firms simply sign their own certificates, which an impostor could do, without dissuading consumers from continuing.
"Everywhere you look, SSL shoots itself in the face," Kaminsky said.
Corporate firewalls can likewise be thwarted through computers connecting to outside partners, such as payment processors.
Other scary scenarios include intercepted and manipulated e-mail coming from trusted parties and the fact that automatic software updates, which are a key way to get security fixes installed automatically, can easily be hijacked.
There are so many different ways for malicious actors to try to use the flaw that Kaminsky said it marked the start of a new era of hacking.
"DNS is the Achilles' heel of the Internet," agreed Joris Evers, a spokesman for security company McAfee Inc. "There's a lot of attention that's been focused on this -- and that's good."
In an interview, Kaminsky said that more than 120 million home broadband users have already been protected, and that workplace systems might be more at risk. Some attacks have already occurred, and Kaminsky said he was most worried about the tens of millions of sites that have a link to click on if users forget their passwords. A hacker could pretend to be specific users and get the passwords sent to them.
Ordinary computer users can't do much to patch their own machines, though they can prod their employers or Internet service providers to act. They can check to see if patches have been applied by visiting www.doxpara.com and clicking on "Check my DNS."
-- Joseph Menn
Black Hat company logo from richardmasoner via Flickr; photo of Kaminsky courtesy of the subject.
It's been a journey longer than the meandering, months-long trip the Olympic torch is taking to Friday's opening ceremonies in Beijing. But Google, Yahoo and Microsoft said today that they were close to finishing a voluntary code of conduct for doing business in China and other countries that censor the Internet -- a project they started in January 2007.
In letters released by Sen. Dick Durbin, an Illinois Democrat, the companies said they have agreed on principles "protecting and advancing the enjoyment of freedom of expression and privacy globally." The letters are very similar, with few details. (You can download a PDF of Google's here, Yahoo's here and Microsoft's here.)
Durbin and Sen. Tom Coburn, an Oklahoma Republican, held a hearing on the issue in May. They wrote to the companies last month urging them to finish their work before the Olympics open in China to protect information about athletes, journalists and tourists who use the Internet during the games.
The issue of Internet access at the Beijing games flared last week, when the Chinese government blocked access by foreign journalists to some international human rights websites. After complaints, Chinese officials stopped the blocking.
But that's only for journalists. Chinese users (such as those at a Beijing Internet cafe pictured above) still cannot access websites that display information critical of the country's Communist government and face constant monitoring of their Web surfing.
Durbin commended Google, Yahoo and Microsoft on their progress, but said they shouldn't wait ...
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 The leaders of a powerful congressional committee today wrote to the largest U.S. Internet service providers, asking whether they have snooped on their customers' Web habits and what they have done with the information.
The letter (download a Word document here) from the senior Democrats and Republicans on the House Energy and Commerce Committee to AT&T, Comcast, AOL and 30 others follows a July hearing and their grilling of Embarq, a Kansas-based service provider that has tested personalized data collection. Among those getting letters were top search companies Google, Yahoo and Microsoft.
Embarq used software from a Silicon Valley start-up, NebuAd, as have other ISPs. One of the larger clients, Charter, dropped NebuAd under the glare of congressional scrutiny. It's unclear how many other ISPs engage in similar profiling with the massive data they have on hand. Historically, ad networks have done most of the spying aimed at targeting ads to consumers. But they have far less information than the people who provide the basic pipes for all Internet communications.
"The committee is interested in learning how pervasive this practice is among cable, phone and Internet companies, what safeguards are in place to ensure that consumers are aware of the practice and how best to preserve their privacy," Rep. John D. Dingell, a Michigan Democrat who is chairman of the committee, said in a written statement.
The committee is officially trying to learn if any of the targeting practices violate wiretapping and other anti-snooping laws. But the sheer exposure of what might otherwise be relegated to the fine print in user agreements might be enough to convince many more ISPs to drop their projects.
-- Joseph Menn
Photo: An actual watchdog on duty. Credit: fergie_lancealot via Flickr
There were a lot of empty chairs and raw feelings at Yahoo's anti-climatic annual shareholder meeting today at a San Jose hotel. The purple tote bags and free pastries didn't do much to soothe those who showed up.
In fact, some joked that Yahoo's public relations staffers outnumbered shareholders and members of the media.
To add insult to injury, free Wi-Fi at the hotel pointed browsers to the Google home page.
But in the end, the Yahoo board claimed victory. Investors overwhelmingly voted to re-elect the board of directors. Here are the numbers released by Yahoo shortly after the meeting: Roy J. Bostock: 79.5% for, 20.5% withheld
Ronald W. Burkle: 81.2% for, 18.8% withheld
Eric Hippeau: 90.7% for, 9.3% withheld
Vyomesh Joshi: 92.9% for, 7.1% withheld
Arthur H. Kern: 77.9% for, 22.1% withheld
Robert A. Kotick: 92.4% for, 7.6% withheld
Mary Agnes Wilderotter: 92.2% for, 7.8% withheld
Gary L. Wilson: 81.8% for, 18.2% withheld
Jerry Yang: 85.4% for, 14.6% withheld
Whether that was a true vote of confidence remains to be seen. Some investors seem to be voting with their feet and selling the stock, which has declined 15% this year and is down 33% from its peak ...
Read on »
 Is Facebook getting chummier with Microsoft?
Microsoft said today it will bring its Web search ads to the popular social networking site by year's end, extending a partnership between the two companies.
Microsoft, which owns a small stake in Facebook, already has an exclusive agreement to deliver banner ads on Facebook pages.
It's unclear if the deal will be exclusive. But it's yet another move from Microsoft against its arch nemesis and search market leader Google.
The deal is only in the U.S., Facebook says. Facebook has yet to work out the details of how it will display Web search on its site.
"Facebook is working with Microsoft to design the best search experience for Facebook's users and advertisers," a spokesman said in an e-mail.
Microsoft outmaneuvered Google to buy a 1.6% stake in Facebook for $240 million in October. It also struck an advertising deal.
The expansion of that deal was announced during a meeting at Microsoft's Redmond, Wash., headquarters, attended by our intrepid Microsoft reporter Joseph Menn. The announcement comes as Chief Executive Steve Ballmer argues that Microsoft must continue to focus on search despite collapsed talks to buy Yahoo.
-- Jessica Guynn
Photo: Facebook founder and Chief Executive Mark Zuckerberg. Credit: Paul Sakuma / Associated Press
Microsoft Chief Executive Steve Ballmer today defended his company's massive and so far unrewarded investment in online search and advertising, arguing that the software power was the only real threat to Google and that a major "ante" in search was the best shot at a $1-trillion market for | |
