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Microsoft Nets Piece of Facebook

Posted by: Rob Hof on October 24

OK, the deal’s done: In one of the most anticipated tech deals in recent years, Facebook just forged a deal with Microsoft Corp. that values the privately held social networking service at a stunning $15 billion. Microsoft will invest $240 million for the 1.6% stake and exclusively handle ads around the world for Facebook to complement its current U.S. ad deal.

The long-expected deal puts Microsoft on the map in the hot Internet service of the day, social networking. That gives it the potential to recoup much lost ground on the Net from Google, which was believed to be a contestant for the deal, Yahoo, and a raft of other companies. But given the limited scope of the deal, it’s uncertain how much benefit Microsoft will derive from paying what is by all accounts a huge sum for a piece of a company with unproven prospects.

The hope by social sites, advertisers, and investors is that social networking sites will be able to target ads more precisely to users’ stated interests and activities on the sites. But so far, the amount of ad revenue on social sites vs. search engines, portals, and other Web sites is minuscule. Facebook is expected to post about $150 million in sales this year, about half from a deal with Microsoft to place untargeted ads on Facebook profile pages.

Some observers even speculate that Google stayed close in the bidding to force Microsoft to pay up for the deal. Google execs at the company’s analyst meeting today were circumspect about the rumors before the deal was announced. Tim Armstrong, president of advertising and commerce for North America, said in response to an analyst’s query: “I don’t think we’ll comment at this point. We have a tremendous respect for them as a company. We have a tremendous amount of social networking on our properties.”

For Microsoft, there seems little downside to the deal, especially given that it’s putting up less than some had suggested–as much as $500 million. The $240 million is a very small fraction of Microsoft’s stash of cash. The downside is that a 1.6% stake implies virtually no control over Facebook, so this could prove to be more of a straight business deal than an entry into social networking. Just speculating here, but I wonder if such an investment could end up giving Microsoft no control but effectively prevent it from pursuing its own social networking initiatives.

The deal leaves Google, which has also lagged in social networking, to come up with another way to participate in social services. Its social network Orkut, which has been an also-ran for years, has recently grown quickly in some countries such as Brazil and India, but it’s still a distant competitor to Facebook. It also recently indicated it would provide ways for Facebook application developers to place Google ads on their apps.

It’s hard to blame Facebook for raising money when it can, since it will be enough to give it plenty of money to expand prior to an expected IPO as early as next year. The trick will be to avoid the common problem of spending too much on projects that are not laser-focused on the core utility of the site, instead of keeping heads down and improving the site.

Update: Google cofounder Sergey Brin, answering a question on how Google will participate in social networking, noted that Orkut is “one of the leading social networks” worldwide. “We don’t feel we need to own everything to be successful on the Internet,” he said. He noted that Google has an ad deal with MySpace, and “we’re very happy with that,” as well as partnerships with 20 other social networks.

Mike Arrington at TechCrunch kindly liveblogged the press call, which I couldn’t listen to because Eric Schmidt was talking at the Google analyst day. More detail and commentary too at Silicon Alley Insider.

Update 2, random musings: I can’t help thinking that everyone’s focus on the $15 billion is kind of off the mark. Nobody’s paying $15 billion for this company–since it’s not being sold–so does that valuation really mean anything? Even if Facebook did an IPO next year, would investors give it a $15 billion valuation? As valuable as I think Facebook is, and can be, I don’t think so. Too soon, and too many risk factors, like potentially fickle members and uncertain ad potential. As Todd Dagres of Spark Capital told me only semi-jokingly a couple weeks ago, Facebook’s IPO could end up being a down round.

In fact, Microsoft’s investment is almost certainly driven not by what it thinks it is worth but almost entirely by its strategic value: For pocket change, really, it locks up the Web’s hottest property for more than four years, boosts the profile of its ad system, keeps Google away, and learns a lot about the future of the Web.

On the other hand, did Google really lose all that much? The Microsoft deal doesn’t include search ads on Facebook, so that door is ajar, if not wide open. Google’s ad machine clearly isn’t hurting, either, judging from its latest quarter. And I wouldn’t count out its potential to make a play in social networking.

The picture will become clearer by Nov. 6, the day Facebook will announce its “SocialAds” network–and a day after Google is rumored could announce a way for software developers to get access to social data on Google’s Orkut social network and iGoogle, its personalized home page.

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Google’s OpenSocial: Take That, Facebook!

Posted by: Rob Hof on October 30

Google has just announced its long-expected blast back at Facebook, whose social applications platform has taken off like wildfire since its debut in May. Google tonight outlined plans for a common set of standards that it promises will make it easy for software developers to write programs that run on a wide range of social networks, including Google’s own Orkut, hi5 Networks, LinkedIn, Ning, Friendster, and others, representing a total of 100 million people. Salesforce.com and Oracle also are part of the initiative.

But not Facebook or MySpace, at least for now—as Ning founder Marc Andreessen told me, they don’t need to now, because developers are already writing programs just for them thanks to their large audiences. Photo slide shows, games, and musical taste sharing programs from companies such as Slide, RockYou, and iLike have attracted millions of people to install them in a matter of months. That has generated huge excitement in Silicon Valley, not least because Facebook is allowing them to make money from ads or other marketing promotions on those programs if they wish.

On Tuesday, Facebook also plans to announce an ad network that’s expected to enable advertisers to target precisely the people they want to reach based on their demographics and on the information on themselves that they type into their Facebook profiles. Google’s announcement comes just a week after it apparently lost a bid for a piece of Facebook to Microsoft.

The Google platform, called OpenSocial, potentially lets software developers create programs that will run on any social network that accepts the standards (though each site will have control over which programs, or widgets, will run on its real estate). Google’s Joe Kraus says it’s not just about making Google social, but “making the entire Web social.” “This is an open version of what Facebook has done,” says Andreessen. “This definitely poses a real challenge” to the prospect that Facebook would have the biggest platform for social programs on the Web. Developers can potentially reach even more people than on Facebook alone, and other social Web sites don’t have to persuade developers to write just for their sites, which they generally don’t have the resources to do.

The announcement was slated to go out Thursday night, but the New York Times broke the story, so Google moved up the release. More to come, but for now, there’s more detail at TechCrunch, which first reported it late last month.

Google’s OpenSocial: Take That, Facebook!

Posted by: Rob Hof on October 30

Google has just announced its long-expected blast back at Facebook, whose social applications platform has taken off like wildfire since its debut in May. Google tonight outlined plans for a common set of standards that it promises will make it easy for software developers to write programs that run on a wide range of social networks, including Google’s own Orkut, hi5 Networks, LinkedIn, Ning, Friendster, and others, representing a total of 100 million people. Salesforce.com and Oracle also are part of the initiative.

But not Facebook or MySpace, at least for now—as Ning founder Marc Andreessen told me, they don’t need to now, because developers are already writing programs just for them thanks to their large audiences. Photo slide shows, games, and musical taste sharing programs from companies such as Slide, RockYou, and iLike have attracted millions of people to install them in a matter of months. That has generated huge excitement in Silicon Valley, not least because Facebook is allowing them to make money from ads or other marketing promotions on those programs if they wish.

On Tuesday, Facebook also plans to announce an ad network that’s expected to enable advertisers to target precisely the people they want to reach based on their demographics and on the information on themselves that they type into their Facebook profiles. Google’s announcement comes just a week after it apparently lost a bid for a piece of Facebook to Microsoft.

The Google platform, called OpenSocial, potentially lets software developers create programs that will run on any social network that accepts the standards (though each site will have control over which programs, or widgets, will run on its real estate). Google’s Joe Kraus says it’s not just about making Google social, but “making the entire Web social.” “This is an open version of what Facebook has done,” says Andreessen. “This definitely poses a real challenge” to the prospect that Facebook would have the biggest platform for social programs on the Web. Developers can potentially reach even more people than on Facebook alone, and other social Web sites don’t have to persuade developers to write just for their sites, which they generally don’t have the resources to do.

The announcement was slated to go out Thursday night, but the New York Times broke the story, so Google moved up the release. More to come, but for now, there’s more detail at TechCrunch, which first reported it late last month.

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Confirmed: MySpace Joining Google’s OpenSocial

Posted by: Rob Hof on November 01

Now, it’s getting interesting: News Corp.’s MySpace is joining Google’s just-announced OpenSocial program. That’s Google’s shot at one-upping Facebook in the race to get outside software developers to create programs for social networks. The program allows developers of social applications, such as Slide, RockYou, and Flixster—which in turn have helped make Facebook the hot company of the year—to write programs once and have them run largely unchanged on any social site that signs on to OpenSocial.

While it’s not entirely surprising, given Google’s ad deal with MySpace, the deal is a huge win for Google’s plan to stake out a place on the social Web. “OpenSocial is going to become the defacto standard for developers instantly out of the gate,” MySpace cofounder Chris DeWolfe declared at a hastily arranged press conference at Google today. MySpace has 70 million activen users worldwide, still more than Facebook’s 51 million.

Google CEO Eric Schmidt says the two companies have been working together on this front for more than a year. Most recently, Schmidt met with Peter Chernin, president and chief operating officer of News Corp., to seal the deal. “The Web has moved to its next stage,” Schmidt says—the social Web.

And MySpace isn’t the only new member. The popular international social network Bebo has also joined, along with Friendster, hi5, LinkedIn, Ning, Xing, Engage.com, Hyves (no, I don’t know who they are either), Imeem, Plaxo, Viadeo, Tianji (ditto), and software developers Oracle, Salesforce.com, and SixApart, as well as “many, many” social apps developers. “We are talking to everyone,” says Vic Gundotra, a Google VP of engineering.

Facebook too? He wouldn’t name Facebook but said Google is talking to everyone, clearly implying that Google has approached it. Added Schmidt: “Everyone can join. There’s no intent to discriminate or exclude.”

For now, at least, the battle lines have been drawn: Google, MySpace and the rest of the social networking pack vs. Microsoft and Facebook. (Where’s Yahoo!? Who knows?)

On the other hand, it’s not clear those lines will stay drawn that sharply for long. Google said it’s not planning to maintain firm control over the OpenSocial application programming interfaces, details of which will be made public tonight. Gundotra says outright: “We plan to open-source everything in a matter of weeks. It’s going to happen as fast as we can.”

A number of blogs, including Silicon Alley Insider and TechCrunch, had broken the story earlier today, prompting Google and MySpace to jettison a planned embargo until late this afternoon.

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Job Candidates Gone Wild: be careful what you post online

By Jacqui Cheng | Published: March 28, 2007 – 02:43PM CT

Be careful what you post online if you want to be able to get a job in the future. Your blog, web site, Facebook, MySpace, online dating profile, or even forum postings might “out” your salacious activities to a potential employer. According to a survey conducted by business social networking site Viadeo, one-fifth of hiring managers have used the Internet to find personal information about potential job candidates, and a quarter of those have rejected candidates based on what they found.

The survey was conducted in March, and covered nearly 600 employers and over 2,000 average adults online, revealing that employers are becoming more and more Google-happy when interviewing new candidates. 25 percent said that they had rejected a candidate outright based on what was found online, while 59 percent of employers who used the Internet to find personal information said that their discoveries play a role in their decision making. Some examples provided in the survey results included one employer being put off by a candidate’s seemingly excessive drinking, another being dismayed by a candidate’s postings about company information, and another mentioning that a candidate’s topless modeling left them with the impression that she wasn’t a good fit with the organization’s ethics.

Examples of this phenomenon are everywhere, and many young professionals know of someone who has had information posted online bite them in the behind. A friend of mine was once all the way into the second round of interviews with a new company when he posted some frustrations with the hiring process on his personal blog. The company looked him up soon thereafter, read what he had written, and decided to cancel his next interview.

But there are cases where information found online works to the candidate’s benefit. The report pointed out that 13 percent of employers had decided to actually recruit someone based on what they had found online, such as various personal achievements or skills demonstrated through a web site. I have another friend who maintains a very professionally-oriented blog which he regularly updates with industry news and personal projects; said friend simply gets a constant flow of e-mails from hiring managers asking whether he is looking for a job. And never mind what happens when he actually writes that he’s looking for a job.

The report showed that, especially among younger candidates in the 18-24 age group, people are much more comfortable posting personal information online than perhaps they should be. MySpace and Facebook took the number one spots among this group, with 45 percent having posted personal info to MySpace and 44 percent to Facebook. Other sites in the list that people had posted to included Flickr, YouTube, Wikipedia, and “other” social networking sites. Further, over half of the 18-24 age group said that they primarily post “party pictures” online (hey, I’m guilty of this myself), with another 30 percent posting on personal blogs. 54 percent of 18-24 year olds responded that they had even had personal information posted about them online by someone else, with or without their consent.

Viadeo manager Peter Cunningham told Ars that the social networking phenomenon is still very new, and people are posting things online without thinking about the future consequences to their careers. “Information, pictures, forum comments, jokes, and outdated CVs are now in the public domain and available for anyone,” he said.

“We all have a personal brand the same way that a company has a brand for its products and services,” Cunningham added. “We invest in developing our brand—education, training, work experience—and we develop our brand equity, that is to say our network of trusted personal contacts, so why don’t we look after this the same way a company does?”

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Social web sites often easy pickings for phishers, malware writers

By Jeremy Reimer | Published: September 17, 2007 – 11:34PM CT

Social networking sites like MySpace and Facebook have become a regular part of many people’s daily Internet usage. Malware authors, who are always on the lookout for new and undefended avenues of attack, have noticed this and increased their attacks on social networking sites accordingly, since many of these sites are vulnerable to these attacks. According to the latest Symantec Internet Security Threat Report (PDF), a total of 1,501 vulnerabilities—61 percent of all security weaknesses studied—were found in web-based applications from January 1 to June 30 of this year. This is, however, a drop from 66 percent in the July to December 2006 period, which may indicate that social networking sites are improving—albeit slowly—their security procedures.

Prior to this decrease, Symantec had reported a rise in the proportion of Web application vulnerabilities, starting in the first half of 2004 and ending in the first half of 2006. This period roughly corresponds to the surge in popularity of social networking sites and “Web 2.0” in general. The exuberance over these then-new technologies left security considerations little more than an afterthought, not only for web site designers but for their users as well. Security attacks such as the WMF exploit on MySpace brought the issue to the public attention, and so did third-party security audits such as the Month of MySpace bugs.

Social networking sites are attractive to hackers not only because of potential security holes in the applications themselves, but the fact that the very nature of the site works as a way to spread attacks to more people. “In such a scenario, the attacker may use the legitimacy of the Web site to attract victims of subsequent attacks,” the Symantec report said. “Sites with large user bases, such as MySpace, have already been abused in this manner.”

Because the site is known and trusted, users are more likely to fall victim to unsolicited e-mails or invites and be tempted to download unknown attachments. Once compromised by a trojan, attackers gain access to personal information about the victim, including passwords to other sites, and can easily find other victims to attack via the user’s own friend lists.

The malware problem in general continues to grow. According to the latest report from security firm PandaLabs, there has been more malware detected in the most recent quarter than was found in all of 2000-2004, putting a strain on traditional key signature methods of malware identification. The number of virus-laden e-mails and phishing attacks are trending slightly downwards according to the latest data from MessageLabs, but this is more a function of increased targeting of attacks to specific people rather than a decrease in the number of attacks in general—the bad guys have had a busy harvest season collecting e-mail addresses and are trying to reap what they sowed as quickly as possible.

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