Monday, May 26, 2008

Online social networking

Online social networking today is more about hanging out with friends behind gated communities than exploring the World Wide Web: Visit another site and you'll have to rebuild your profile from scratch.

That's like having to get a new driver's license for every state you drive through.

Although the walls that keep users from taking their data wherever they go are starting to erode, how much three recently announced programs will help users move among the networks remains to be seen. Google Inc.'s attempt to break those fortifications was quickly blocked by Facebook.

The two leading online hangouts, News Corp.'s MySpace and Facebook, have promised to release tools in the coming weeks for Web sites to incorporate profile data, friends lists and other social functions. Google followed with its own program for bridging various networks.

MySpace users, for instance, can soon have their biographical information appear on eBay Inc. profiles. A social network focused on skiing will be able to incorporate Facebook photos and friends list rather than build its own.

It's all done through software hooks that let eBay and others grab profile data from MySpace and Facebook. Changes made at MySpace and Facebook are quickly propagated because third-party sites can't store the data and must check back frequently.

The new programs come as users increasingly complain about having to retype basic profile information over and over. By holding onto users' information while letting them bring temporary copies of it elsewhere, Facebook and MySpace can remain at the core of users' social interactions and keep them from leaving.

More important than saving keystrokes, the programs bring along the meaning and connections behind the data, allowing social circles to travel from site to site, much as friends going bar hopping together don't have to start conversations afresh at each pub.

That said, there are no current plans to exchange profile data between MySpace and Facebook. Message postings at one won't show up at the other, and party invites still will have to be copied and pasted to cross services.

Google's new Friend Connect comes close to merging those lives, though. When announced, it was to pool profile data from Facebook, Google Talk, Google's Orkut, LinkedIn, Plaxo and hi5, though not MySpace.

But within days, Facebook began blocking Google, saying it couldn't ensure anyone's privacy if Google were the intermediary.

Such concerns are simply a convenient way to play down underlying desires for control, said Deborah Pierce, who tracks social-networking privacy as executive director of Privacy Activism.

"They get to say, `We're being the good guys on privacy,' but they are still retaining control of your personal data," Pierce said.

Some startups aren't waiting. Minggl and Zude both promise to help users aggregate data from their various networks, including MySpace and Facebook.

There are some legitimate privacy concerns.

"In many models, something becomes public once and it becomes public forever," said Dave Morin, a senior platform manager at Facebook. "We believe in giving users control. If we move too quickly we might not achieve that."

Users must agree before a third-party site can access their data, but they sometimes change their minds. Facebook and MySpace say restricting outside storage of data ensures that other sites get the latest information, whether it's an updated user photo or a revocation of consent.

Service providers also have to consider that people may agree to be friends in the specific community — not across the Web.

So with Google's and Facebook's programs, both parties have to agree to be on a third-party site before appearing on a friends list. Although that policy extends only to minors on MySpace, adults can opt out of appearing on friends lists on other sites by visiting a new online control panel.

E-mail addresses and other non-profile data are off limits under the programs, as are profiles the services have assembled behind the scenes for ad targeting.

MySpace said it is working on giving users even more privacy controls. Eventually, MySpace users will be able to specify that only photos go to site A and friends lists to site B, rather than all or nothing for a particular site. Facebook said third-party developers could build that granularity themselves, while Google was considering it.

Ultimately, users will have to decide whether they really want to mix work-related LinkedIn contacts with the party photos on Facebook.

"I don't know if people want their worlds colliding," said Rachel Happe, a research manager at IDC. "I don't think this push to share data should go too quickly."

Fred Stutzman, a University of North Carolina researcher who tracks online social networks, said users sometimes leave for other networks so they can start over.

Jim Benedetto, senior vice president for technology at MySpace, said social networks will likely open more once they sort out the technical and privacy challenges — much as AOL and CompuServe users can now send e-mail to people who use all other e-mail services. Instant-messaging services, meanwhile, remain in walled gardens even today.

Bill Washburn, whose OpenID Foundation promotes universal usernames and passwords, said social networks will come to realize that openness makes their respective services even more powerful.

They just need to work on a common approach, said Bob Bickel of Ringside Networks, a startup building tools to bridge networks.

"It's kind of a step forward and a half-step back," Bickel said. "It may take a year or two to shake all that out, but it definitely accelerates the timeline."

Tuesday, May 20, 2008

Microsoft and Yahoo are still dancing around the edges

SAN FRANCISCO - Just two weeks after breaking off merger talks, Microsoft Corp. and Yahoo Inc. have been pulled back to the bargaining table by their fears about what might happen if they don't work out a deal.

For now, Microsoft and Yahoo are still dancing around the edges as they explore possible business arrangements without melding the two companies.

The notion of a half-baked deal didn't excite investors Monday as they got their first chance to react to Sunday's news that Microsoft and Yahoo are talking again.

Yahoo shares rose a scant 0.7 percent, or 2 cents, to close at $27.68 on Monday, while Microsoft shares fell 1.8 percent, or 53 cents, to close at $29.46.

But most analysts remain convinced the preliminary talks will culminate in Microsoft buying Yahoo for somewhere between $33 to $37 per share, a price that translates to $47.5 billion to $53 billion.

Both Microsoft and Yahoo issued statements Sunday acknowledging they haven't ruled out the possibility of a merger even though they aren't discussing one now.

Although their discussions fell apart this month in a disagreement over price, both Yahoo and Microsoft have powerful incentives to reach a compromise within the next few weeks.

If Yahoo doesn't stop demanding $37 per share, its board could be overthrown in a shareholder mutiny led by activist investor Carl Icahn.

To pressure Yahoo into reviving the talks, he has nominated an alternate slate of 10 directors scheduled to stand for election at Yahoo's July 3 annual meeting. Icahn didn't respond to a request for comment Monday.

Meanwhile, Microsoft's unwillingness to pay more than $33 per share created an opportunity for its nemesis, Google Inc., to enter an advertising partnership with Yahoo.

"It's becoming pretty clear that Yahoo is either going to work something out with Microsoft or do a deal with Google," said Standard & Poor's equity analyst Scott Kessler. "If Yahoo winds up with Google after all this, it would be pretty damaging to Microsoft."

Microsoft began pursuing a Yahoo takeover in late January largely as a means to counter Google's dominance of the Internet search and advertising markets.

After Microsoft pounced, Yahoo became more receptive to an idea that it had resisted in the past — allowing Google to show some of the ads alongside Yahoo's search results.

A two-week trial last month demonstrated Google's technology could help boost Yahoo's profits, and the two sides began exploring a long-term alliance. But any partnership between Google and Yahoo likely would face antitrust obstacles because the two companies control more than 80 percent of the U.S. search advertising market.

A similar deal between Yahoo and Microsoft wouldn't pose the same antitrust problems because Google still would control more than half the market.

"We believe that a core issue for Microsoft is to acquire Yahoo on friendly terms," UBS analyst Benjamin Schachter wrote in a Monday research note. "A near-term deal (in search) could act as an intermediate step that would go a long way toward testing the waters."

Microsoft also might buy key pieces of Yahoo's online operations instead of doing a search advertising partnership or acquiring the entire company, Collins Stewart analyst Sanded Aggarwal said in a Monday research note. He values Yahoo's search technology at $21 billion, its display advertising service at $14 billion and its Internet holdings outside the United States at $9.25 billion.

Yahoo Chief Executive Jerry Yang believes the Sunnyvale-based company is on the verge of a turnaround that will prove it's worth more $50 billion. Starting next year, he has promised Yahoo's net revenue will increase by 25 percent annually — more than doubling its recent rate of growth.

But Icahn, who owns a 4.3 percent stake in Yahoo, so far has indicated he isn't willing to wait until next year. And many other major shareholders appear ready to back him.

Kessler doubts Yahoo will be able to placate its shareholders by entering a partnership with Google, particularly if the alliance could hurt Yahoo in the long run by subverting its own technology in the critical search advertising market.

"It's almost a no-win situation for Yahoo because they aren't going to get sufficient time to prove they are worth $33 per share or more," Kessler said