All Things Digital

This morning, Peter Chernin, the chief operating officer of News Corp. (NWS) (which owns Dow Jones and this site), acknowledged that Fox Interactive Media, which includes MySpace, will fall short of its goal of generating $1 billion in revenue for fiscal 2008. A surprising shortfall for a division that operates the strongest social-networking offering on the Web.

But not to worry, MySpace has a solution for that. It’s just one that lacks an obvious monetization strategy. It’s called Data Availability and it’s a way for MySpace members to share and sync profile data across partner sites–starting with Yahoo (YHOO), eBay (EBAY), Twitter and Photobucket. “The walls around the garden are coming down–the implementation of Data Availability injects a new layer of social activity and creates a more dynamic Internet,” enthused Chris DeWolfe, CEO and co-founder of MySpace, in a statement. “We, alongside our Data Availability launch partners, are pioneering a new way for the global community to integrate their social experiences Web-wide.”

That’s all well and good. But how about pioneering a new way to, you know, make money off that integration? Data portability is wonderfull and all. But so is revenue. And right now, MySpace’s Data Availability initiative doesn’t include any advertising deals.

EBay (EBAY) may yet find a way to justify the astonishing $2.6 billion it paid for Skype. This morning, the Internet phone service launched an aggressive new international calling plan. For flat fees of up to $9.95-a-month, Skype is offering unlimited calls to computers, landlines and some cellphones in 34 countries.

“For example if you live in London, for just 2.95 euros a month, you can call your grandmother in Poland, whenever you like, talk for up to six hours at a time, and not worry about how much it’s costing you,” explained Stefan Oberg, VP and GM of telecoms at Skype. “Your grandmother doesn’t need to understand the Internet. You just use your Skype subscription to make the call and she just picks up the phone.”

An interesting move, and one that comes just days after incoming eBay CEO John Donahoe said the company will consider selling Skype at the end of the year if it can’t find ways to use it to support its core business. “What we’re testing this year are the synergies,” Donahoe told the Financial Times. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it.”

While consensus has long held that the synergies to which Donahoe refers are anything but strong, that may be changing. Last week eBay reported earnings, noting that Skype added 33 million subscribers in the first quarter of this year, boosting its total membership to 309 million. Revenue also hit $126 million, up 61% from the same quarter last year.

“There is of course, a corollary to safer browsers–what might be called ‘unsafe browsers.’ … Letting users view the PayPal site on one of these browsers is equal to a car manufacturer allowing drivers to buy one of their vehicles without seat belts.” This according to PayPal (EBAY) Chief Information Security Officer Michael Barrett, who says the company plans to block browsers that lack anti-phishing features and support for EV (extended validation) certificates.

In the interest of public safety, of course. Among those browsers, older versions of Microsoft’s (MSFT) Internet Explorer and Firefox and, presumably, all versions of Apple’s (AAPL) Safari browser that PayPal recently cautioned users against. “Apple, unfortunately, is lagging behind what they need to do to protect their customers,” Barrett said this past February. “Our recommendation at this point, to our customers, is use Internet Explorer 7 or 8 when it comes out or Firefox 2 or Firefox 3, or indeed Opera.”

UPDATE: PayPal now says it never planned to block Safari.

PayPal is developing features to block customers from logging in to PayPal when using obsolete browsers on outdated or unsupported operating systems. An example of such a browser/OS combination might be, for example, Internet Explorer 4 running on Windows 98. In doing so, we better protect our customers from viewing a phishing site through their browser. We have absolutely no intention of blocking current versions of any browsers, including Apple’s Safari, from our Web site.”

So to recap:

• PayPal Chief Information Security Officer Michael Barrett warns against using Safari.

• PayPal publishes a paper, authored by Barrett, saying the company will soon protect users against unsafe browsers that lack phishing protections like blacklists, anti-fraud warning pages and Extended Validation SSL Certificates.
• Safari lacks these protections.
• PayPal says: Go ahead and use Safari. We have absolutely no intention of blocking it. But God forbid, don’t use IE4 on Windows 98.

Know what IE4’s share of the browser market was in 2007?

0.01%.

I’d imagine its share of the market on Windows 98 machines in 2008 is quite a bit less than that. You might as well warn against using IE4 on MS-DOS.

F-14 components are tough to find these days, now that the United States has retired its F-14 fleet. A tough break for the countries that still use the aircraft–countries like Iran. Lucky for them, finding those components is about as difficult as digging up a spare fender for your classic car. All that’s required is a quick search or three on eBay (EBAY) or Craigslist.

According to a new report from the Government Accountability Office, all manner of sensitive or stolen military gear is available for purchase online. GAO investigators apparently had no trouble at all picking up night-vision goggles, U.S.-issue body armor, nuclear-biological-chemical gear and the aforementioned F-14 fighter components at online marketplaces. Many of these items could easily be used against U.S. troops or reverse-engineered to develop countermeasures or equivalent technology, yet they were shipped to the GAO “no questions asked.”

“Given that the United States has retired its fleet of F-14s, these components could only be used by the Iranian military,” the GAO noted in its report. “By making these components available to the general public, the eBay sellers provided an opportunity for these components to be purchased by an individual who could then transfer them to Iran. The continued ability of Iran to use its F-14s could put U.S. troops and allies at risk.”

A sobering revelation. Funny that eBay and Craigslist policies and procedures prohibit the sale of things like bootlegs, animals and whatnot, but F-14 fighter components are perfectly acceptable.

eBay (EBAY) may have finally figured out a way to get the sort of return it needs from its infamous $2.6 billion (+$1.4-billion writedown) misstep - the 2005 acquisition of Skype. Unload it. Word on the street has it that Google (GOOG) is considering a partnership with the the telephony service - and perhaps even an acquisition. Which would make sense. Certainly, with Gmail, Google Talk, and the massive distribution platform that is Google.com, Google’s in a far better position to make good use of Skype than eBay is.

The only difference between Yahoo CEO Jerry Yang’s letter to shareholders and his all-hands memos to employees is the capital letters. Besides that, it’s really just another restatement of the same “we have a lot to be excited about” arguments Yang’s restated thrice already to employees (see “Yahoo CEO to Employees: Thank You for Not Quitting,” “May the Head Winds Be Always at Your Back, Yahoo” and “Yang to Employees: Nothing to See Here. Please Disperse.“)

In short, Microsoft (MSFT) bid BAD, Yahoo’s continued independence GOOD. Also, Yahoo’s (YHOO) board is “continuously evaluating all of Yahoo!’s strategic options.” Yeah, all two of them–”Yes, we’ll accept your bid” and “No, we’d prefer a nasty proxy fight.”

Anyway, here’s the letter in all its redundant glory …

Dear Stockholders,

On Feb. 1, 2008, Microsoft made an unsolicited proposal to acquire your company. As much has been reported in the press recently, I wanted to reach out to you personally to let you know why your Board of Directors, after a careful review by Yahoo!’s management along with our financial and legal advisers, believes that Microsoft’s proposal substantially undervalues Yahoo! and is not in the best interests of our stockholders.

Most importantly, I want you to know that your Board is continuously evaluating all of Yahoo!’s strategic options in the context of the rapidly evolving industry environment, and we remain committed to pursuing initiatives that maximize value for all our stockholders.

Read more »

Jerry Yang’s rallying the troops over at Yahoo again. In an all-hands memo this morning (see below, corrected for capitalization and punctuation), he explained Yahoo’s decision to reject Microsoft’s hostile bid for the company and thanked employees for all they do to “maintain and enhance Yahoo!’s leadership position in the online world.” Presumably, “leadership” in this context refers to the company’s leadership in underachievement.

Subject: our board’s decision

Yahoos,

As you’ll see from the news release we issued today, our Board of Directors has reviewed Microsoft’s unsolicited proposal with Yahoo’s management, financial and legal advisers. After a careful evaluation, the board has unanimously concluded that the proposal is not in the best interests of Yahoo and our stockholders. Of course, the Board of Directors is continuously evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for stockholders.

We believe Microsoft’s proposal substantially undervalues Yahoo–including our highly recognizable global brand, large worldwide audience, significant recent investments in advertising platforms, future growth prospects, our ability to generate free cash flow and our earnings potential as well as substantial unconsolidated investments (like Alibaba and Yahoo Japan).

You deserve the credit for the tremendously valuable business we have built. All of us in management, as well as the members of the board, deeply appreciate and respect what you have done and continue to do in order to maintain and enhance Yahoo’s leadership position in the online world.

Read more »

So much for eBay’s Feedback Profile. The online auction pioneer has been getting quite a bit of negative feedback for its decision to ban sellers from leaving “negative” or “neutral” comments about buyers.

Announced last week along with some other changes, the move is designed to eliminate retaliatory feedback. Apparently, eBay believes its slowing growth is due at least in part to dissatisfied buyers put off by vindictive sellers. “… [T]he original intent of eBay’s public feedback system was to provide an honest, accurate record of member experiences,” Bill Cobb, president of eBay North America, wrote in a message to the eBay Community Forum. “Over the years, we’ve adjusted the system to add nonpublic means of providing feedback to try to improve its accuracy. … But overall, the current feedback system isn’t where it should be. Today, the biggest issue with the system is that buyers are more afraid than ever to leave honest, accurate feedback because of the threat of retaliation. In fact, when buyers have a bad experience on eBay, the final straw for many of them is getting a negative feedback, especially of a retaliatory nature. Now, we realize that feedback has been a two-way street, but our data shows a disturbing trend, which is that sellers leave retaliatory feedback eight times more frequently than buyers do … So we have to put a stop to this and put trust back into the system.”

Suffice it to say, eBay’s sellers, who view feedback as one of their few means of protecting themselves against shady buyers, are not at all happy with the change. Some are threatening boycotts. Others are just taking their auctions elsewhere. “The feedback is the only carrot a seller has to make sure a person buying from them is fair,” said one veteran eBay seller who’s closing up shop. “Now I’ve got virtually no way to protect myself against negative feedback. … As for the weight or gravity of this situation, it’s a major life decision–right up there with getting married, picking a school and deciding whether to have children.”

Going, Going, Gone …

eBay President and CEO Meg Whitman is indeed retiring, and John Donahoe, president of eBay’s auction business unit, will succeed her.

Previously: eBay CEO High Bidder in Auction for Romney Presidential Cabinet Spot?

Q: You said in the past that a CEO should probably serve 10 years. You’ve served eight. What are your plans? Will you follow your own advice?

A: The first piece of advice I wish someone had given me as a freshman CEO is to keep your mouth shut. Somehow I didn’t get that advice, which is don’t talk about when you’re coming or when you’re going because it just creates a set of questions that probably aren’t productive.

–eBay CEO Meg Whitman, San Francisco Chronicle, Nov. 19, 2006

Looks like eBay CEO Meg Whitman may make good after all on her pledge that no CEO should stay more than a decade. Whitman, the public face of eBay for the past 10 years, is reportedly preparing to retire. She has been delegating more tasks to deputies over the last few months and is expected to decide on her retirement in the coming weeks, The Wall Street Journal reports, quoting “people familiar with the matter.”

John Donahoe, who joined eBay in 2005 to lead its auction business unit, is the leading candidate to succeed her.

Rumors of Whitman’s imminent departure come at a critical time for eBay. The company is due to report earnings for the fourth quarter tomorrow. And though this quarter includes the traditionally strong year-end holiday period, it will likely be marred by a general slowing in eBay’s core auction business and the company’s continued struggles with Skype, the Internet telephony outfit for which it recently took a $1.4 billion write-down.

So perhaps it’s a perfect time for Whitman to step aside. Certainly she leaves a storied career behind her. She led the company through its 1998 initial public offering, and from there through some 40 quarters of sequential revenue growth. An impressive achievement by any measure–Skype acquisition be damned. Now, maybe it’s time to move on to bigger things.

Much bigger. Like perhaps a position in the cabinet of friend and Republican presidential candidate Mitt Romney (shown below, left, with Whitman and VC Steve Jurvetson)? Whitman can’t be suffering through those Romney fund-raising telethons for nothing, right?